NIM02731 | Earnings of employees and office holders: retirement benefits schemes from 6th April 2006 - overseas pension schemes: employer's payments that qualify for migrant member relief or transitional corresponding tax relief

From HM Revenue & Customs · National Insurance Manual

Paragraph 3(a) and (b) of Part 6 of Schedule 3 to the Social Security (Contributions) Regulations 2001 (as substituted by regulation 8(3) of the Social Security (Contributions) (Amendment No. 2) Regulations 2006)

For the meaning of migrant member relief and transitional corresponding relief see NIM02730 . An employer’s payment to which either:

paragraph 2 of Schedule 33 (tax relief for employer contributions to a “qualifying overseas pension scheme”); or
article 15 of the above Order (employers with pre-commencement entitlement to corresponding relief)

applies, is disregarded in the calculation of earnings for Class 1 NICs purposes:

Paragraph 2 will apply to an employer’s payment if

the payment is a “relevant migrant member contribution”. That is, a payment made to a “qualifying overseas pension scheme”; and
the employee is a “relevant migrant member” of the scheme.

In broad terms, article 15 will apply to an employer’s payment if:

their employee was, in the 2005/06 tax year, a member of a “corresponding” overseas pension scheme,
the employee is still a member of that scheme,
the scheme manager has undertaken to provide HMRC with information about payments made to the employee, and
the employer received a deduction in accordance with section 76(6A) and (6C) Finance Act 1989 for payments made in the 2005/06 tax year to that scheme in respect of the employee, and
the employer’s payment to that scheme is in respect of the employee.

For details of:

the Class 1A NICs position on a payment to a RPS, see NIM14510
the Class 1 NICs position on any benefit from the scheme which is referable to an employer’s payment to which either paragraph 2 or article 15 applies, see NIM02732