Income Tax (Earnings and Pensions) Act 2003 section 394A

Temporary non-residents

Section 394A ensures that lump sum benefits from employer-financed retirement benefits schemes (EFRBS) received during a temporary period of non-residence remain subject to UK income tax when the individual returns to the UK.

• Lump sum benefits from EFRBS received while temporarily non-resident are treated as received when the individual returns to the UK, bringing them back into the UK tax charge
• The section catches lump sums that escaped UK tax only because of the individual's non-resident status or the availability of double taxation relief, including cases where a relief claim could have been made but was not
• Double taxation relief arrangements cannot be used to prevent the UK income tax charge that arises when benefits are treated as received in the period of return
• The tax year used to determine relevant amounts under section 394(1A) remains the year the benefit was actually received, not the year of return