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Old 18.10.2019, 20:56
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Re: UK tax on Swiss pension withdrawal

Interesting find with possible implications for withdrawing pillar 2 tax free?

It seems ESC A10 no longer applies and has been replaced. From the quote below, it seems things have changed again after the Finance act of 2017!

Application of ESC A10 after 5 April 2011
It was announced on 31 March 2011 that ESC A10 would largely be withdrawn as new legislation at Part 7A ITEPA 2003 would provide a ‘just and reasonable’ reduction in the amount of employment income chargeable to income tax for duties performed outside the UK. This new ‘just and reasonable’ reduction would operate for ‘overseas service’, however ESC A10 was to continue to apply to:
• payments of lump sum relevant benefits received directly from the employer; and
• payments of lump sum relevant benefits out of rights which had accrued before 6 April 2011.
To put this on a statutory footing, an Order was made on 4 February 2014 under section 160 Finance Act 2008. Article 5 of The Enactment of Extra-Statutory Concessions Order 2014 (SI 2014/211) inserted section 395B into ITEPA 2003 and this, together with the working of Part 7A ITEPA 2003, achieves the above limited continuation of the effect of ESC A10 where relevant benefits are provided in respect of ‘foreign service’.
ESC A10 does not, therefore, apply to lump sum payments made on or after 5 February 2014. Foreign service relief on such payments is given by section 395B ITEPA 2003 - see EIM15325 for details.
There are worked examples showing the operation of relief under both ESC A10 and section 395B at EIM15326.

Note: For lump sum payments made from a non-UK based arrangement on or after 6 April 2017 this treatment will only apply where the recipient of the payment is non-UK resident throughout the tax year of receipt.

If the recipient is UK resident, the payment may be a “relevant lump sum” taxable as pension income under Part 9 ITEPA 2003 rather than under the EFRBS provisions – see EIM74510 for more details
Does anyone understand whether a lump pillar 2 withdrawal would fall under Part 9 of Itepa or 395B ITEPA? OR to put simply, whether for people interested in doing this now (After 2017), this whole relying on the tax treaty still applies at all. Would they still be tax free?
(I am going to chase this with HMRC but previous posters have had a hard time getting to talk to right specialist).

I have posted here because not many people who will try this route will be non-UK resident for the entire year! So hopefully they can rely on part 9 Itepa 2003? Also, it is interesting that the law text only says non-resident. I assumed that would be relevant at the time of withdrawal. Yet the guidance says non-resident for the whole year!

PS. I am referring to build up before 2011.
edit: found a really good website explaining the 2017 changes:
still not 100% sure what that means, still tax free except for any interest rate build up after 2017?

Last edited by muze7; 18.10.2019 at 21:10.
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