NIM02735 | Earnings of employees and office holders: retirement benefits schemes from 6th April 2006 - overseas pension schemes: payments to pension schemes relieved from United Kingdom taxation under a double taxation agreement

Paragraph 7 of Part 6 of Schedule 3 to the Social Security (Contributions) Regulations 2001 (as amended by regulation 8(6) of the Social Security (Contributions) (Amendment No.2) Regulations 2006)

An employer will be eligible for UK tax relief on a payment it makes to an overseas pension scheme if the conditions specified in a double taxation agreement “DTA” are met. Those conditions will depend on the wording of the DTA, but normally will include the following:

• the individual was a member of the scheme before coming to work in the UK,

• the scheme is tax-recognised in the other country, and

• the UK accepts that the scheme corresponds to a UK tax-recognised pension scheme.

For Class 1 NICs purposes, a payment by an employer into an overseas pension scheme which qualifies for tax relief under a DTA with the countries in thefollowing table is disregarded in the calculation of earnings.

For the Class 1A NICs position, see NIM14510.