Income Tax (Earnings and Pensions) Act 2003 section 649

Commonwealth government pensions

Section 649 provides an income tax exemption for certain pensions paid from UK-based funds established by Commonwealth governments in respect of government service.

• Pensions paid from a fund established in the UK by a Commonwealth government solely for service-related pensions are exempt from income tax, provided the foreign residence condition is met
• "Commonwealth government" covers the government of specified territories or countries, any part of them, or a joint government constituted for two or more of them, including shared service authorities
• Qualifying territories include countries listed in Schedule 3 to the British Nationality Act 1981 (excluding Australia, Canada, New Zealand, India, Sri Lanka and Cyprus), associated states, British overseas territories, protectorates, protected states and UK trust territories
• The exemption targets countries with a former colonial connection to the United Kingdom rather than all current Commonwealth member nations