Stephen Ward BA (Econ), ACII, APMI, APFS, AIFP

Managing Director

Premier Pension Solutions SL

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By Stephen Ward BA (Econ), ACII, APMI, APFS, AIFP - Sat 6th Nov 2010

 

Tumbit Approved Partner

Well, I thought I knew a bit about pensions but recently another IFA I know muttered the irresistible words “have you heard of section 615 pension schemes - you should have a look...” - This one had managed to pass me by - and after all its only been around for 22 years!

The section 615 reference is to s615 Income and Corporation Taxes Act 1988. These pension funds are funds set up in the UK for overseas employees (HMRC guidance can be found at http://www.hmrc.gov.uk/manuals/tsemmanual/TSEM5365.htm. )

A Section 615 International Retirement Benefit Scheme enables the following benefits:

*No income tax liability to the employee as a benefit in kind.

*No National Insurance Contributions for the employer or employee.

*Pension rights may be taken entirely as a lump sum.

*100% cash commutation by UK tax residents is tax-free.

*A minimum benefit age of 55, or earlier on leaving service.

*Complete investment freedom

*Income arising from non UK investments and capital gains in the fund are tax free.

*Inheritance tax efficient.

*Employer contributions are allowable against Corporation Tax in the UK subject to the “wholly and exclusively test” as is usual in relation to pension contributions generally.

So who is able to benefit from such a scheme?

The market is not as limited as it perhaps first appears. They are mainly for employees (including shareholding directors) of UK employers where the employee carries out his or her duties entirely (or almost entirely) outside the UK.

There are broadly four categories of people who can benefit from a section 615 Pension Scheme :

1.) Any employee of a UK Limited Company whose duties are conducted wholly (or almost wholly) outside the UK.

2.) Executives of multi-national employers of overseas parentage with a United Kingdom presence.

3.) Self employed or contracting expatriates who are working outside the United Kingdom.

4.) UK resident Executives of a UK Limited Company who conducts specific duties outside the UK amongst their other UK responsibilities.

For those who do not currently have a UK employment relationship in place help is available to form and administer a special purpose company or alternatively through an umbrella employment company.

If you have any questions or comments regarding your pension please feel free to either post them (below) or contact us directly by clicking on the link to our page (above).