Overseas Pension Lump Sum

Whether a lump sum from overseas personal annuity taxable in the UK

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Hi there

I have been asked by a friend whether his lump sum payment is taxable.  The individual was born in South Africa and contributed to a personal retirement annuity fund (not linked to any employment) over about 25 years up to 1994.  He then moved to the UK and has not made any contributions since becoming UK resident.  He is able to withdraw the entire amount in one payment and has been told he must pay South African tax on the payment - he is getting advice in SA to check this as the treaty should give full taxing rights to the UK. 

Should he be paying UK tax on the receipt?  All contributions were paid pre April 2017 (and while he was non-UK resident) and there will be marginal growth since then.  Since it’s not related to employment the foreign service relief isn’t relevant.  I wondered whether this would qualify as a QNUPS, and in that case whether the payment is taxable at all if all contributions were pre 2017? 

Any advice would be greatly appreciated and help us in establishing the correct tax treatment. 

Thanks.

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By Accountant A
13th Oct 2018 18:58

I think with the amount of detail you have given, the (ab)use of the Anonymous facility was rather wasted, don't you? Presumably your friend will identify himself if he reads your question.

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By Montrose
15th Oct 2018 16:03

It seems questionable whether this payment is a "Pension" for the purposes of :-

i) UK domestic law or

ii)Article 17 of the UK/SA DTA or

iii) As a QNUPS.

Why is SA tax payable on its maturity- were the contributions tax deductible in SA when made?
Is it an overseas investment?
We do not have sufficient information to give an opinion

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