PTM113249 - International: UK tax charges on non UK schemes: the member payment charges and taxable property charges: overview of how the regulations attributing payments work from 6 April 2017
Glossary PTM000001
Regulations 4ZA to 4ZF The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 - SI 2006/207
Whilst a member has UK funds (that is a UK tax-relieved fund, relevant transfer fund, or ring-fenced transfer fund) under a relevant non-UK scheme (RNUKS), any payment made to or in respect of that member will be referable to the member鈥檚 UK funds.
From 6 April 2017, whilst any payment made to or in respect of a member is referable to a member鈥檚 UK funds, not every payment will reduce a member鈥檚 UK funds. Also from 6 April 2017 a member鈥檚 UK funds may be reduced by certain crystallisation events.
The regulations start by setting out which payments and events will reduce a member鈥檚 UK funds (regulation 4ZA).
Regulation 4ZB then describes the amount by which a member鈥檚 UK funds will be reduced by the payment or event.
Regulation 4ZC sets out the order of attribution. That is which fund or funds a payment will be referable to regardless of whether or not that payment will reduce the member鈥檚 UK funds. This regulation also sets how the member鈥檚 UK funds will be reduced by a payment or crystallisation event. The order of attribution will depend on the nature of the payment or event.
Regulation 4ZD provides for the depletion (or reduction) of a member鈥檚 UK funds to be reversed in certain circumstances. This is because when a member鈥檚 UK funds are reduced due to a crystallisation event they in effect are given an upfront deduction before the scheme makes a payment. Regulation 4ZD is designed to ensure the tax rules operate fairly and as intended.
Regulation 4ZE provides for how a member鈥檚 UK funds will be increased if HMRC repays an overseas transfer charge to the scheme manager.
Payments of scheme pension or drawdown pension will not reduce a member鈥檚 UK funds as the funds should already have been reduced when the pension crystallised. However if the pension crystallised before 6 April 2017 the member鈥檚 UK funds will not have been reduced by the crystallisation event. Regulation 4ZF makes provision for the treatment of drawdown pension and scheme pension payments made on or after 6 April 2017 in respect of pre-6 April 2017 crystallisations.
Detailed guidance on each provision can be found as shown below:
Payments that reduce a member鈥檚 UK funds - see PTM113250.
Crystallisation events that reduce a member鈥檚 UK funds - see PTM113255.
The order of attribution - see PTM113260.
When a member鈥檚 UK funds will be increased - see PTM113265.
Examples - see PTM113270.