Income Tax (Earnings and Pensions) Act 2003 section 646D

Non-registered schemes: beneficiaries' annuities from unused funds

Section 646D sets out the circumstances in which annuities paid to beneficiaries from overseas pension schemes or relevant non-UK schemes can be received free of income tax, mirroring the exemptions that apply to equivalent annuities paid from UK registered pension schemes.

• Annuities paid to dependants or nominees of a deceased scheme member who died on or after 3 December 2014 and before age 75 are exempt from income tax under Part 9, provided they were funded from unused drawdown funds, unused uncrystallised funds, or purchased alongside the member's own lifetime annuity, and no payments were made before 6 April 2015.
• Annuities paid to successors following the death of a previous beneficiary (dependant, nominee or successor) who died on or after 3 December 2014 and before age 75 are similarly exempt, provided they were funded from undrawn funds and no payments were made before 6 April 2015.
• Guaranteed annuities that continue to be paid to a beneficiary after the death of the original member are also exempt where the member died on or after 3 December 2014 and before age 75, and any payments made before 6 April 2015 were made to the member themselves.
• The definition of "insurance company" for these purposes is broader than the standard UK definition, extending to any regulated provider of annuities operating outside the United Kingdom under the laws of its own country or territory.