Chapter EIM15325
| Published date | 22 May 2014 |
| Record Number | EIM15325 |
| Court | HM Revenue & Customs |
| Issuer | HM Revenue & Customs |
This page explains about two similar but slightly different definitions of non-UK service, and when reliefs may apply to relevant benefits provided on or after 5 February 2014 for service in one or other of these categories. The two categories are:
- ‘foreign service’ - this term is:
- used in Extra-Statutory Concession A10 (ESC A10) and Section 395B ITEPA 2003,
- defined in Section 413(2) ITEPA 2003, and
- explained further in EIM13690); and
- ‘overseas service’ – this term is not a legislated term, but is used in this guidance as a convenient label for:
- the test in Section 554Z4 used in Part 7A ITEPA 2003, and
- for the criteria in Section 394(4C)(c) ITEPA 2003.
For such payments made before 5 February 2014 see EIM15083.
Note: After 5 April 2017, where a lump sum payment is made under an employer-financed retirement benefits scheme (EFRBS) established overseas to, or in respect of, a member resident in the UK, consider first whether the payment is a “relevant lump sum” under section 574A ITEPA 2003 - see EIM74510. This should also be considered where the member has died but they were UK resident immediately before their death, including where the beneficiary is not themselves resident in the UK. If the payment is a relevant lump sum it is taxable as pension income under Part 9 ITEPA, rather than under the EFRBS or Part 7A provisions. The provisions described on this page do not apply to relevant lump sums, but will continue to apply after 5 April 2017 where a payment is made under an overseas EFRBS to a non-UK resident.
The expression ‘third party arrangement’ is used on this page to refer to cases coming within the reach of Part 7A ITEPA 2003.
Lump sums paid directly by employer on or after 5 February 2014A lump sum paid as a relevant benefit may be paid from an employer directly, or through a third party arrangement.
Part 7A does not apply to direct provision of benefits by an employer. If Part 7A does not apply then the EFRBS rules must be considered to see if a charge arises under Section 394 on the provision of a relevant benefit.
For there to be a ‘foreign service’ exemption from such Section 394 charges, the appropriate conditions in Section 395B must be satisfied. These are described in detail further down on this page.
Lump sums paid through a third party arrangement on or after 5 February 2014The main ‘overseas service’ exemption from Part 7A...
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