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Income Tax (Earnings and Pensions) Act 2003

Overview

2562.This Chapter exempts certain pensions paid to non-residents in respect of government service overseas.

Section 647: Introduction and meaning of “foreign residence condition” etc.

2563.This section describes the foreign residence condition that must be satisfied if the exemptions identified later in the Chapter are to apply. It also expands the meaning of pension. It derives from section 615 of ICTA.

2564.Subsections (2) and (3) deal with the foreign residence condition. The taxpayer must make a claim to the Board to be non-resident.

2565.Subsection (4) identifies various payments that are also treated as pension income for the purposes of this Chapter. It derives from the definition of pension in section 615(7) of ICTA.

Section 648: The Central African Pension Fund

2566.This section exempts pensions paid from the Central African Pension Fund. It derives from section 615(2)(f) of ICTA.

Section 649: Commonwealth government pensions

2567.This section exempts pensions paid by various Commonwealth governments from funds established in the United Kingdom. It derives from section 615(2)(b) of ICTA.

2568.Subsection (2) defines “Commonwealth government”. The exemption does not apply to all the countries that are current members of the Commonwealth. But the term is not inaccurate because the section applies only to countries that have a former colonial connection to the United Kingdom.

2569.Subsections (3), (4) and (5) set out a number of other definitions used to establish the meaning of “Commonwealth government”. The reference to “colony” in section 615(2)(b) of ICTA has been rewritten as “British overseas territory”. This incorporates the change introduced into Schedule 1 to the Interpretation Act 1978 by section 1(3) of the British Overseas Territories Act 2002. Any reference to “colony” is now interchangeable with “British overseas territory”.

Section 650: Oversea Superannuation Scheme

2570.This section exempts pensions paid under the Oversea Superannuation Scheme. It derives from section 615(2)(c) of ICTA, and corrects a small error in ICTA, which refers to this scheme as the “Overseas Superannuation Scheme”.

2571.Subsection (2) cross-refers to the legislation under which the pensions must be paid. The schemes are now operated under the Overseas Pensions Act 1973.

Section 651: Overseas Pensions Act 1973

2572.This section exempts pensions paid under section 1 of the Overseas Pension Act 1973. It derives from section 615(2)(d) of ICTA.

2573.Subsection (2) prevents the exemption applying to any part of the pension paid under the Pensions (Increase) Acts. It derives from section 615(4) of ICTA. These increases have always been paid by the United Kingdom government and have always been taxed under Schedule E as United Kingdom pensions.

Section 652: Overseas Service Act 1958

2574.This section exempts pensions paid under the Overseas Service Act 1958. It derives from sections 615(2)(e) of ICTA.

2575.Subsection (4) cross-refers to the legislation under which the pensions must be paid. These schemes are now to be operated under the Overseas Pensions Act 1973.

2576.Subsection (5) requires the pensions to be paid in accordance with schemes made under the Overseas Pensions Act 1973. These are schemes that the Secretary of State certifies as corresponding to the 1958 Act. This subsection derives from section 615(8)(c) of ICTA.

2577.Subsections (6) and (7) give the conditions that must be satisfied for a person to be treated as employed in the service of an overseas territory. They are derived from section 615(9) and (10) of ICTA.

Section 653: Overseas Service Pensions Fund

2578.This section exempts pensions paid out of the Overseas Service Pensions Fund. It derives from section 615(2)(g) of ICTA.

2579.Subsection (3) extends the meaning of “pension” to include any gratuity or other sum payable in respect of ill health. It derives from the definition of “pension” in section 615(7) of ICTA.

Section 654: The Pensions (India, Pakistan and Burma) Act 1955

2580.This section exempts pensions paid under the Pensions (India, Pakistan and Burma) Act 1955. It derives from section 615(2)(a) of ICTA.

2581.In subsection (2)(b)(ii) “correspond to the provision made under the 1955 Act” is a reference to the provision for pensions to be paid.

2582.Subsection (3) prevents the exemption applying to any part of the pension that is paid under the Pension (Increase) Act 1971. These increases have always been paid by the United Kingdom government and have always been taxed under Schedule E as United Kingdom pensions.

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