2017 No. 398

Income Tax

The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) (Amendments) Regulations 2017

Made

Laid before the House of Commons

Coming into force

The Commissioners for Her Majesty’s Revenue and Customs, in exercise of the powers conferred by section 150(7) and (8) of the Finance Act 20041, and now exercisable by them2, make the following Regulations.

Citation and commencement1

These Regulations may be cited as the Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) (Amendments) Regulations 2017 and shall come into force on 6th April 2017.

Amendments to the Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 20062

The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 20063 are amended as follows.

Amendment of Regulation 23

In regulation 2 (requirements of an overseas pension scheme)—

a

in paragraph (1)—

i

insert “subject to paragraph (2A)” at the start of sub-paragraph (a), and

ii

omit “and satisfy the requirements in paragraph (4)” in sub-paragraph (b);

b

in paragraph (2)—

i

for sub-paragraph (c) substitute—

c

sub-paragraph (a) is not satisfied by reason only that no such regulatory body exists in the country or territory; or

ii

after sub-paragraph (c) insert—

d

sub-paragraph (b) is not satisfied by reason only that no such regulatory body exists in the country or territory and—

i

the scheme is established in another member State, Norway, Iceland or Liechtenstein; or

ii

there is in the country or territory in which the scheme is established a body—

aa

which regulates providers of pension schemes; and

bb

which regulates the provider for the purpose of establishing the scheme in question.

c

after paragraph 2 insert—

2A

An overseas public service pension scheme that falls within regulation 3(1B) is deemed to satisfy the requirements in paragraph (2).

d

omit paragraph (4);

e

omit the definition of “UK tax-relieved scheme funds” in paragraph (5).

Amendment of Regulation 34

In regulation 3 (recognised overseas pension schemes: prescribed countries or territories and prescribed requirements)5—

a

in paragraph (1)6—

i

omit “one or more of” in sub-paragraph (b);

ii

insert “and” at the end of sub-paragraph (b)(i);

iii

in sub-paragraph (b)(ii)—

aa

insert “for schemes established in Guernsey,” before “the”, and

bb

insert “.” after “(4)”; and

iv

omit the rest of sub-paragraph (b);

b

in paragraph (1B) after “(1A)” insert “and regulation 2(2A)”;

c

for paragraph (2)(c)7 substitute—

c

any country or territory in respect of which there is in force an Order in Council under section 173 of the Finance Act 20068 or section 2 of the Taxation (International and Other Provisions) Act 20109 giving effect in the United Kingdom to an agreement which contains provision about the exchange of information between the parties.

d

omit paragraph (3);

e

for paragraph 410 substitute—

4

At the time of the transfer of sums or assets which would, subject to these Regulations, constitute a recognised transfer, where the pension scheme is an exempt pension contract or an exempt pension trust within the meaning of section 157E of the Income Tax (Guernsey) Law, 197511, the scheme must not be open to non-residents of Guernsey.

f

omit paragraph (4A)12;

g

omit paragraph (5)13;

h

for paragraph (6A)14 substitute—

6A

The benefits payable to the member under the scheme, to the extent that they consist of the member’s relevant transfer fund or ring-fenced transfer funds—

a

are payable no earlier than they would be if pension rule 1 in section 165 applied; or

b

if payable earlier, are only payable in circumstances in which they would be authorised member payments if they were made by a registered pension scheme.

Amendment of Schedule 25

Omit Schedule 215.

Jennie GrangerRuth OwenTwo of the Commissioners for Her Majesty’s Revenue and Customs
EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations make amendments to The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006 (S.I. 2006/206) (“overseas pension scheme regulations”), which prescribes the requirements for a scheme to be an overseas pension scheme or a recognised overseas pension scheme.

Regulation 3 removes what is known as the 70% rule from the overseas pension scheme regulations, which required the rules of a scheme to designate a minimum of 70% of the funds that have had UK tax relief to be used to provide the member with an income for life.

Regulation 3 also introduces a requirement that a provider of a scheme which is not an occupational pension scheme must be regulated by a body in the country where the scheme is established if there is no body which regulates schemes that are not occupational pension schemes and the scheme is not established within the European Economic Area.

Regulation 4 amends the requirements for a scheme to be an overseas public service pension scheme. Regulation 4 also enables the country in which the scheme is established to be a prescribed country if there is a tax information exchange agreement providing for the exchange of information between fiscal authorities in the United Kingdom and the overseas country or territory. It also allows a scheme the ability to pay benefits earlier than pension rule 1 provides but only where such payments would be authorised member payments if made by a registered pension scheme.

Regulation 5 removes Schedule 2 to the overseas pension scheme regulations.

A Tax Information and Impact Note covering this instrument was published on 5 December 2016 and is available on the HMRC website at https://www.gov.uk/government/publications/foreign-pension-schemes. It remains an accurate summary of the impacts that apply to this instrument.