What annuities are taxable under section 610 of the Income Tax (Earnings and Pensions) Act 2003?

Section 610 taxes two categories of annuity as pension income: annuities paid directly under an occupational pension scheme that is not registered with HMRC, and annuities purchased using funds held for the purposes of such a non-registered scheme, including those bought from insurance companies on behalf of scheme members.

Are foreign-source annuities from non-registered occupational pension schemes taxable in the United Kingdom?

Foreign-source annuities from non-registered occupational pension schemes are only taxable under section 610 if the person receiving the annuity is resident in the United Kingdom. A non-UK resident receiving such an annuity from an overseas source would not be subject to the tax charge under this provision.

How does section 610 prevent a double tax charge on annuities?

Section 610 excludes any annuity already taxable under Chapter 5A of the pension income Part. This prevents a double charge where an annuity could fall within more than one charging provision. The exclusion preserves the historical priority given to Schedule E charges over Schedule D charges in United Kingdom tax law.

What is the definition of occupational pension scheme for the purposes of section 610?

For section 610, occupational pension scheme has the meaning given in Part 4 of the Finance Act 2004. It broadly covers employer-sponsored schemes relating to particular employments that provide for retirement, death, or disability, where part of the cost is borne by someone other than the employee, typically the employer.

Income Tax (Earnings and Pensions) Act 2003 section 610

Annuities under non-registered occupational pension schemes

Section 610 sets out which annuities paid under non-registered occupational pension schemes are taxable as pension income, including the treatment of foreign-source annuities.

Annuities paid under, or purchased with funds from, an occupational pension scheme that is not a registered pension scheme are taxable as pension income
Foreign-source annuities of this type are only taxable if the recipient is resident in the United Kingdom
Annuities already covered by Chapter 5A of the pension income Part are excluded to prevent a double charge
The term "occupational pension scheme" takes its meaning from Part 4 of the Finance Act 2004

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member