Our client built up an occupational pension through years of working in Canada. The pension was built up purely by foreign service pre-April 2017.
They’ve returned to the UK and are resident for tax purposes. a substantial lump sum has been received and I’m considering whether we can claim foreign service relief on this under ITEPA 2003 s574A
Foreign service relief only seems to apply at Step 2 which states that the lump sum must be paid under an EFRBS.
The following HMRC guidance indicates that “ An overseas scheme may be an EFRBS depending on the facts.” https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm021000
The scheme will be an “overseas pension scheme”, but can it also be an EFRBS.
ITEPA 2003 s393A states:
393A(1) In this Chapter “employer-financed retirement benefits scheme” means a scheme for the provision of benefits consisting of or including relevant benefits to or in respect of employees or former employees of an employer.
The lump sum payment would be a “relevant benefit” under s393B.
So to my simple mind, the facts are that the scheme would meet the definition of an EFRBS. As such, we would be able to claim foreign service relief.
First time I’ve dealt with a lump sum from a foreign pension so any guidance would be appreciated.