Tax tip: Employer contributions to international pension arrangements

Section 307 of ITEPA 2003 provides an exemption for employer pension contributions and this can include employer contributions to an overseas (non-UK) arrangement which is designed to provide a pension or similar benefit. The relief may be available for any employer contributions which provide any of the following benefits (subject to certain conditions):

• a pension or annuity;
• a lump sum;
• a gratuity; and
• any similar benefit.

However it is important to understand that s 307 doesn’t provide tax relief in all scenarios within this general area. Key conditions before s 307 relief applies to international arrangements include that the scheme should be recognised or approved by the relevant overseas state and benefits under the scheme are only available on ‘death or retirement’.

So what does this mean in practice?

First not all international arrangements satisfy these conditions. For example some (eg those in Australia and Switzerland) may...