Govt outlines tax exemptions for overseas pension schemes

The government has published a policy paper on its proposed reform to tax exemptions for employer contributions into certain overseas pension schemes, first published in July 2018.

The legislation, set to be introduced in the Finance Bill 2018-19 on 6 April 2019, will mean premiums will be tax exempt “regardless of the relationship to the employee” and will also provide tax relief on charitable donations .

Currently, the premium is only tax exempt if the beneficiary of the employee’s death or retirement benefits is the employee, a member of their family of household.

Outlining the policy objective, the government said: “This exemption will be updated to make sure the tax system remains relevant and fair. Extending the exemption to include any individual as beneficiary, will provide equal tax treatment regardless of the beneficiary’s relationship to the employee.

“Extending the exemption to allow employees to nominate a registered charity is consistent with the government’s policy of providing tax relief on charitable donations.”

According to the government, the current tax definitions of family and household only cover spouse, civil partners, parents, children and dependents, domestic staff and the employee’s guests.

The change was first announced by the government in its 2017 Autumn Budget. It is expected the impact to the Exchequer will be negligible.

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