Section 615(6) ICTA 1988
There can be funds that are not strictly overseas retirement benefits schemes because they are administered within the UK. However, they may have as their principal purpose the provision of benefits for employees whose service in employment is carried out wholly or mainly overseas.
The responsibility for such schemes lies with Pension Schemes Services (PSS) who will decide on whether or not Section 615(6) ICTA 1988 applies.
If a scheme is clearly within Section 615(6) ICTA 1988 on the basis of a decision already given by Pension Schemes Services (PSS) and a claim for concessionary treatment under Extra-Statutory Concession A10 is received, then further reference to PSS is not required. The treatment of any lump sum received should follow that outlined above in EIM15083(penultimate paragraph of the concession).
Tuesday 27 September 2011
Who is the Section 615 International Retirement Benefit Scheme for?
A section 615 Benefit Scheme is for individuals who are carrying out duties outside the United Kingdom for a UK company irrespective of nationality, domicile or residency. Through s615, it is possible to use longstanding provisions within UK statute to achieve tax and social cost savings in other countries.
Greater incidence of cross-border employment has caused an increasing number of individuals to face problems in funding for their future. Overseas appointments are not always compensated by higher remuneration packages, contracts are usually short term and, as a result, often no thought is given by employers to the provision of employee benefits, including pension funding. Overseas appointments often result in exposure to a significantly higher combination of tax and social security charges, especially within the European Union.
Now expatriates have a unique opportunity to continue funding for their future by making tax-deductible contributions to a gross fund. The section 615 Benefit Scheme is the first such vehicle to offer this combination of advantages.
There are broadly four categories of people who can benefit from a section 615 Benefit Scheme:
1. Any employee of a UK Limited Company whose duties are conducted wholly outside the UK.
2. Executives of multi-national employers of overseas parentage with a United Kingdom presence.
3. Self employed or contracting expatriates, of any nationality, who are working in any country outside the United Kingdom.
4. UK resident Executives of a UK Limited Company who conducts specific duties outside the UK amongst their other UK responsibilities.
For those who do not currently have a UK employment relationship in place, s615(6) Limited can assist in forming and administering a special purpose company or alternatively, we can provide an umbrella employment company. For further details, please contact s615(6) Limited.
http://www.section615.co.uk/Eligibility.htm
Greater incidence of cross-border employment has caused an increasing number of individuals to face problems in funding for their future. Overseas appointments are not always compensated by higher remuneration packages, contracts are usually short term and, as a result, often no thought is given by employers to the provision of employee benefits, including pension funding. Overseas appointments often result in exposure to a significantly higher combination of tax and social security charges, especially within the European Union.
Now expatriates have a unique opportunity to continue funding for their future by making tax-deductible contributions to a gross fund. The section 615 Benefit Scheme is the first such vehicle to offer this combination of advantages.
There are broadly four categories of people who can benefit from a section 615 Benefit Scheme:
1. Any employee of a UK Limited Company whose duties are conducted wholly outside the UK.
2. Executives of multi-national employers of overseas parentage with a United Kingdom presence.
3. Self employed or contracting expatriates, of any nationality, who are working in any country outside the United Kingdom.
4. UK resident Executives of a UK Limited Company who conducts specific duties outside the UK amongst their other UK responsibilities.
For those who do not currently have a UK employment relationship in place, s615(6) Limited can assist in forming and administering a special purpose company or alternatively, we can provide an umbrella employment company. For further details, please contact s615(6) Limited.
http://www.section615.co.uk/Eligibility.htm
What benefits does the Section 615 International Retirement Benefit Scheme offer?
For the Employee
A Section 615 International Retirement Benefit Scheme offers for the first time, the following unrivalled combination of benefits:
* There is usually no tax liability to the employee.
* There are not usually any social security costs for the employer or employee.
* Pension rights may be taken entirely as a cash sum.
* 100% cash commutation by UK tax residents is tax-free.
* A minimum retirement age of 55, or earlier on leaving service.
* Individuals can select their own investment profile.
* Funds grow in a tax efficient, confidential environment.
* Employee contributions are permissible.
* Inheritance tax efficient.
* Continuity of pension contributions despite international relocation.
* Fund administration may be conducted by a number of sources.
* Generous contribution levels permitted by the Pension Scheme Office.
Most importantly of all, a section 615 International Retirement Benefit Scheme allows individuals to control and manage their exposure to local taxation and social security on their total remuneration package.
For the Employer
Section 615 schemes are surprisingly simple to implement and manage - they offer an all-encompassing solution for a multinational, mobile workforce.
Because of the tax-efficiency of s615 benefits in the hands of an employee, the gross cost of employment is significantly reduced for scheme members. Put simply, the net benefit to a section 615 member entails a lower overall gross cost to the employer compared to a non-member.
In most countries, pension contributions are not treated as a benefit in kind for tax and social contribution purposes. By re-routing an employee's surplus of income over expenditure requirements in to a section 615 scheme, an employer will save on employer social contributions.
Perhaps more importantly, employer contributions are allowable against Corporation Tax in the UK.
http://www.section615.co.uk/Benefits.htm
A Section 615 International Retirement Benefit Scheme offers for the first time, the following unrivalled combination of benefits:
* There is usually no tax liability to the employee.
* There are not usually any social security costs for the employer or employee.
* Pension rights may be taken entirely as a cash sum.
* 100% cash commutation by UK tax residents is tax-free.
* A minimum retirement age of 55, or earlier on leaving service.
* Individuals can select their own investment profile.
* Funds grow in a tax efficient, confidential environment.
* Employee contributions are permissible.
* Inheritance tax efficient.
* Continuity of pension contributions despite international relocation.
* Fund administration may be conducted by a number of sources.
* Generous contribution levels permitted by the Pension Scheme Office.
Most importantly of all, a section 615 International Retirement Benefit Scheme allows individuals to control and manage their exposure to local taxation and social security on their total remuneration package.
For the Employer
Section 615 schemes are surprisingly simple to implement and manage - they offer an all-encompassing solution for a multinational, mobile workforce.
Because of the tax-efficiency of s615 benefits in the hands of an employee, the gross cost of employment is significantly reduced for scheme members. Put simply, the net benefit to a section 615 member entails a lower overall gross cost to the employer compared to a non-member.
In most countries, pension contributions are not treated as a benefit in kind for tax and social contribution purposes. By re-routing an employee's surplus of income over expenditure requirements in to a section 615 scheme, an employer will save on employer social contributions.
Perhaps more importantly, employer contributions are allowable against Corporation Tax in the UK.
http://www.section615.co.uk/Benefits.htm
Certain overseas government pensions paid in the United Kingdom
The governments of certain overseas territories may pay pensions in the United Kingdom through any public department, officer or agent. These are chargeable to income tax by virtue of Section 615 ITEPA 2003 and not under Section 573 ITEPA 2003 like other foreign pensions.
Certain conditions apply. The pension:
• must be paid to a person who has been employed in overseas government service, or
• to the widow, widower, surviving civil partner, child, relative or dependant of a person who has been employed in overseas government service and
• must be payable in respect of that service.
The pension must also be payable in the United Kingdom to a United Kingdom resident by or on behalf of the government of:
• any country forming part of Her Majesty's dominions
• any other country mentioned in Schedule 3, British Nationality Act 1981 (these are listed in a footnote to Section 320 ICTA 1988)
• any territory under Her Majesty's protection.
Pensions that are payable out of the public revenue of the United Kingdom or of Northern Ireland are not chargeable under Section 615 but will be chargeable as United Kingdom pensions under Section 569 ITEPA 2003 or as pensions under registered pension schemes under Section 579A ITEPA 2003.
Overseas government service
Overseas government service refers to persons employed outside the United Kingdom in the service of the Crown or of one of the countries or territories listed below.
Her Majesty's dominions
The Dependant Territories are:
Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, Pitcairn, Henderson, Ducie and Oeno Islands, St Helena, St Helena Dependencies (Ascension Island, Tristan da Cunha), South Georgia and South Sandwich Islands, Turks and Caicos Islands
Countries listed in Schedule 3 BNA 1981
Antigua and Barbuda, Australia, The Bahamas, Bangladesh, Barbados, Belize, Botswana, Brunei, Canada, Republic of Cyprus, Dominica, Fiji, The Gambia, Ghana, Grenada, Guyana, India, Jamaica, Kenya, Kiribati, Lesotho, Malawi, Malaysia, Maldives, Malta, Mauritius, Namibia, Nauru, New Zealand, Nigeria, Pakistan, Papua New Guinea, Saint Christopher and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Seychelles, Sierra Leone, Singapore, Solomon Islands, South Africa, Sri Lanka, Swaziland, Tanzania, Tonga, Trinidad and Tobago, Tuvalu, Uganda, Vanuatu, Western Samoa, Zambia, Zimbabwe.
Further information
Most pensions charged by Section 615 are dealt with by Public Departments and any questions about liability should be referred in the first instance to Public Departments (London).
Deduction allowed from pension income taxable under Section 615
Where Section 615 applies, Section 617 ITEPA 2003 provides for a special deduction of 10% from the full amount of the pension accruing in the tax year.
http://www.hmrc.gov.uk/manuals/eimanual/eim74006.htm
Certain conditions apply. The pension:
• must be paid to a person who has been employed in overseas government service, or
• to the widow, widower, surviving civil partner, child, relative or dependant of a person who has been employed in overseas government service and
• must be payable in respect of that service.
The pension must also be payable in the United Kingdom to a United Kingdom resident by or on behalf of the government of:
• any country forming part of Her Majesty's dominions
• any other country mentioned in Schedule 3, British Nationality Act 1981 (these are listed in a footnote to Section 320 ICTA 1988)
• any territory under Her Majesty's protection.
Pensions that are payable out of the public revenue of the United Kingdom or of Northern Ireland are not chargeable under Section 615 but will be chargeable as United Kingdom pensions under Section 569 ITEPA 2003 or as pensions under registered pension schemes under Section 579A ITEPA 2003.
Overseas government service
Overseas government service refers to persons employed outside the United Kingdom in the service of the Crown or of one of the countries or territories listed below.
Her Majesty's dominions
The Dependant Territories are:
Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, Pitcairn, Henderson, Ducie and Oeno Islands, St Helena, St Helena Dependencies (Ascension Island, Tristan da Cunha), South Georgia and South Sandwich Islands, Turks and Caicos Islands
Countries listed in Schedule 3 BNA 1981
Antigua and Barbuda, Australia, The Bahamas, Bangladesh, Barbados, Belize, Botswana, Brunei, Canada, Republic of Cyprus, Dominica, Fiji, The Gambia, Ghana, Grenada, Guyana, India, Jamaica, Kenya, Kiribati, Lesotho, Malawi, Malaysia, Maldives, Malta, Mauritius, Namibia, Nauru, New Zealand, Nigeria, Pakistan, Papua New Guinea, Saint Christopher and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Seychelles, Sierra Leone, Singapore, Solomon Islands, South Africa, Sri Lanka, Swaziland, Tanzania, Tonga, Trinidad and Tobago, Tuvalu, Uganda, Vanuatu, Western Samoa, Zambia, Zimbabwe.
Further information
Most pensions charged by Section 615 are dealt with by Public Departments and any questions about liability should be referred in the first instance to Public Departments (London).
Deduction allowed from pension income taxable under Section 615
Where Section 615 applies, Section 617 ITEPA 2003 provides for a special deduction of 10% from the full amount of the pension accruing in the tax year.
http://www.hmrc.gov.uk/manuals/eimanual/eim74006.htm
Section 615 introduction
A section 615 Benefit Scheme allows United Kingdom Limited Companies to establish bona fide retirement benefit packages for employees who have duties outside the United Kingdom
This Pension Scheme satisfies the criteria laid down by HMRC Pension Scheme Services.
Every scheme is submitted and accepted by them, ensuring that the benefits will not be subject to challenge. This grants full pension scheme status to a section 615 Benefit Scheme, which is recognised internationally as a genuine pension arrangement.Because of its accepted status, contributions to a section 615 Benefit Scheme are allowable against Corporation Tax in theUnited Kingdom
The section 615 Benefit Scheme affords a wide range of underlying investments; policies of assurance, direct equity holdings, fixed interest securities, collective investment schemes, money funds, property and cash deposits.
http://www.section615.co.uk/default.htm
This Pension Scheme satisfies the criteria laid down by HMRC Pension Scheme Services.
Every scheme is submitted and accepted by them, ensuring that the benefits will not be subject to challenge. This grants full pension scheme status to a section 615 Benefit Scheme, which is recognised internationally as a genuine pension arrangement.Because of its accepted status, contributions to a section 615 Benefit Scheme are allowable against Corporation Tax in the
The section 615 Benefit Scheme affords a wide range of underlying investments; policies of assurance, direct equity holdings, fixed interest securities, collective investment schemes, money funds, property and cash deposits.
http://www.section615.co.uk/default.htm
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