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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Part 9 — Pension income
Chapter 17 — Exemptions: any taxpayer

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 642   Compensation for National-Socialist persecution

No liability to income tax arises on a pension or annuity which is payable

under any special provision for victims of National-Socialist persecution which

is made by the law of—

           (a)           the Federal Republic of Germany or any part of it, or

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           (b)           Austria.

 643   Malawi, Trinidad and Tobago and Zambia government pensions

     (1)    No liability to income tax arises on—

           (a)           a Malawi government pension,

           (b)           a Trinidad and Tobago government pension, or

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           (c)           a Zambia government pension,

            if conditions A, B and C are met.

     (2)    Condition A is that the pension is paid to—

           (a)           the original pensioner, or

           (b)           the widow or widower of the original pensioner.

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     (3)    Condition B is that the pension is now paid under section 1 of OPA 1973

(whether or not it is paid out of a fund established under a scheme made under

that section).

     (4)    Condition C is that, at the time the pension is paid, provision is made by double

taxation relief arrangements which would exempt the pension from income tax

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in the United Kingdom if the pension were still paid by the relevant

government (rather than under section 1 of OPA 1973).

     (5)    Subsection (1) does not apply to any part of a pension which is paid because

the Pensions (Increase) Act 1971 (c. 56) applies to it.

     (6)    In this section—

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                    “double taxation relief arrangements” means arrangements specified in

an Order in Council making any such provisions as are referred to in

section 788 of ICTA;

                    “Malawi government pension” means a pension payable by the

government of Malawi for services rendered—

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                  (a)                 to the government of Malawi, or

                  (b)                 to the government of the Federation of Rhodesia and

Nyasaland,

                         in the discharge of government functions;

                    “Trinidad and Tobago government pension” means a pension payable by

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the government of Trinidad and Tobago for services rendered to the

government of Trinidad and Tobago in the discharge of governmental

functions;

                    “Zambia government pension” means a pension payable by the

government of Zambia for services rendered—

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                  (a)                 to the government of Zambia,

                  (b)                 to the government of Northern Rhodesia, or

                  (c)                 to the government of the Federation of Rhodesia and

Nyasaland,

                         in the discharge of governmental functions.

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Income Tax (Earnings and Pensions) Bill
Part 9 — Pension income
Chapter 17 — Exemptions: any taxpayer

    302

 

     (7)    For the purposes of this section a person is the “original pensioner” in relation

to a pension if—

           (a)           the pension is payable by virtue of the person’s service, and

           (b)           the person retired from that service before 6th April 1973.

 644   Pensions payable where employment ceased due to disablement

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     (1)    No liability to income tax arises on the exempt amount of a disablement

pension.

     (2)    For the purposes of this section a pension is a “disablement pension” if—

           (a)           the pension is payable because a person has ceased to hold an

employment or office because of disablement, and

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           (b)           that disablement is attributable to—

                  (i)                 performance of the duties of the employment or office, or

                  (ii)                war injuries.

            But “disablement pension” does not include any pension to which section 580

or 590 applies.

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     (3)    The exempt amount of a disablement pension is determined in accordance

with the following steps.

            

            Step 1

            Determine what pension would have been payable if—

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           (a)           the person had ceased to hold the employment or office because of the

disablement mentioned in subsection (2)(a), but

           (b)           the disablement had not been attributable to—

                  (i)                 performance of the duties of the employment or office, or

                  (ii)                war injuries.

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            Step 2

            If no pension would have been payable, the exempt amount is the amount of

the disablement pension.

            If a pension of a smaller amount than the disablement pension would have

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been payable, the exempt amount is the amount by which the disablement

pension exceeds the smaller amount.

            In any other case, the exempt amount is nil.

     (4)    For the purposes of this section “office” includes in particular any position

which has an existence independent of the person who holds it and may be

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filled by successive holders.

 645   Social security pensions: increases in respect of children

     (1)    No liability to income tax arises on a part of a social security pension which is

attributable to an increase in respect of a child.

     (2)    In this section “social security pension” means—

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           (a)           any pension, benefit or allowance to which section 577 applies, and

           (b)           any pension, benefit or allowance which—

                  (i)                 is payable under the law of a country or territory outside the

United Kingdom, and

 

 

Income Tax (Earnings and Pensions) Bill
Part 9 — Pension income
Chapter 18 — Exemptions: Non-UK resident taxpayers

    303

 

                  (ii)                is substantially similar in character to a pension, benefit or

allowance to which section 577 applies.

 646   Former miners etc: coal and allowances in lieu of coal

     (1)    No liability to income tax arises on—

           (a)           the provision of coal or smokeless fuel—

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                  (i)                 to a former colliery worker, or

                  (ii)                to the widow or widower of a former colliery worker, or

           (b)           any allowance paid to such a person in lieu of such provision,

            if the condition in subsection (2) is met.

     (2)    That condition is that the amount of coal or fuel provided or in respect of which

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the allowance is paid does not substantially exceed the amount reasonably

required for personal use.

     (3)    That condition is assumed to be met unless the contrary is shown.

     (4)    In this section “former colliery worker” means—

           (a)           any person who has ceased to be employed as a coal miner, or

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           (b)           any other person who has ceased to be employed at or about a colliery

otherwise than in clerical, administrative or technical work.

Chapter 18

Exemptions: Non-UK resident taxpayers

 647   Introduction and meaning of “foreign residence condition” etc.

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     (1)    The provisions of this Part provide that no liability to income tax arises on

certain kinds of pensions if the foreign residence condition is met.

     (2)    The foreign residence condition is met in relation to a pension if the pension is

payable to a person who is not resident in the United Kingdom.

     (3)    For the purposes of the foreign residence condition, a person is taken to be not

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resident in the United Kingdom only if—

           (a)           a person makes a claim to the Board of Inland Revenue that the person

is not resident, and

           (b)           the Board is satisfied that the person is not resident.

     (4)    In this Chapter “pension” includes—

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           (a)           a gratuity or any sum payable on or in respect of death,

           (b)           a return of contributions, and

           (c)           any interest or other addition included in a return of contributions.

 648   The Central African Pension Fund

     (1)    No liability to income tax arises on a pension which is paid from the Central

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African Pension Fund if the foreign residence condition is met.

     (2)    In this section “the Central African Pension Fund” means the fund established

under that name by section 24 of the Federation of Rhodesia and Nyasaland

(Dissolution) Order in Council 1963 (S.I. 1963/2085).

 

 

Income Tax (Earnings and Pensions) Bill
Part 9 — Pension income
Chapter 18 — Exemptions: Non-UK resident taxpayers

    304

 

 649   Commonwealth government pensions

     (1)    No liability to income tax arises on a pension paid out of a fund which is

established—

           (a)           in the United Kingdom,

           (b)           by a Commonwealth government,

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           (c)           for the sole purpose of providing pensions payable in respect of service

under that government,

            if the foreign residence condition is met.

     (2)    In this section “Commonwealth government” means—

           (a)           the government of a territory or country mentioned in subsection (3),

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           (b)           the government of any part of a territory or country mentioned in

subsection (3), or

           (c)           a government constituted for two or more of the territories or countries

mentioned in subsection (3).

     (3)    The territories and countries referred to in subsection (2) are—

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           (a)           a country mentioned in Schedule 3 to the British Nationality Act 1981

(c. 61) apart from Australia, Canada, New Zealand, India, Sri Lanka

and Cyprus,

           (b)           an associated state,

           (c)           a British overseas territory,

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           (d)           a protectorate,

           (e)           a protected state, and

           (f)           a United Kingdom trust territory.

     (4)    In subsection (2)(c) the reference to a government constituted for two or more

of the territories or countries mentioned in subsection (3) includes a reference

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to any authority established for the purpose of providing or administering

services which are common to, or relate to matters of common interest to, two

or more of those territories or countries.

     (5)    In subsection (3)(f) “United Kingdom trust territory” means a territory

administered by the government of the United Kingdom under the trusteeship

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system of the United Nations.

 650   Oversea Superannuation Scheme

     (1)    No liability to income tax arises on a pension which is paid under the Oversea

Superannuation Scheme (formerly known as the Colonial Superannuation

Scheme) if the foreign residence condition is met.

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     (2)    For the purposes of subsection (1) a pension is paid under the Oversea

Superannuation Scheme if—

           (a)           the pension is paid under the Scheme as it has effect (by reason of

section 2(4A) of OPA 1973) as a scheme under section 2 of OPA 1973, or

           (b)           the pension is paid under a scheme which—

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                  (i)                 the Secretary of State has made under section 2(1) of OPA 1973,

and

                  (ii)                corresponds to the Oversea Superannuation Scheme.

 

 

 
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Revised 17 February 2003