Income Tax (Earnings and Pensions) Act 2003 section 573

Foreign pensions

Section 573 sets out the rules for taxing pensions paid from overseas sources, establishing when such pensions count as taxable pension income and identifying the specific exemptions that apply, particularly in relation to pensions paid following the death of a scheme member.

• Pensions paid by or on behalf of a person outside the UK to a UK resident are taxable as pension income, unless they are already covered by more specific provisions in Chapters 5 to 14 of the pension income Part
• Certain death benefit pensions paid in respect of a scheme member who died before age 75 may be exempt from tax, provided no payments were made to the recipient before 6 April 2015 from the relevant fund
• The exemption is overridden where unused uncrystallised funds were designated for dependants' or nominees' drawdown pension but the designation was not made within two years of the scheme manager knowing (or reasonably being expected to know) of the member's death
• The section also applies to relevant lump sums paid from overseas pension schemes to non-UK residents, where the scheme member is or was resident in the UK at or immediately before death