TAXATION OF SOCPF BENEFITS
In December 2016, the UK Government published draft legislation affecting how benefits paid from overseas pension schemes, such as the SOCPF, will be taxed from 6th April 2017.
On the basis there are no changes to the draft legislation the following changes will apply to your SOCPF pension if you are a UK tax resident:
- Pension income: Currently only 90% of pension income paid from the SOCPF is subject to tax. With effect from 6thApril 2017, 100% of pension income, irrespective of when it was accrued, will be subject to tax. This aligns with the tax treatment of pension income paid from the SCPF.
- Lump sum: On retirement, members can choose to exchange 25% of the value of their pension income for a cash lump sum. Currently this lump sum may be paid tax-free, which aligns with the SCPF. With effect from 6th April 2017 this lump sum may be fully subject to tax, although there is some uncertainty as to whether only lump sums in respect of benefits accrued after 6th April 2017 will be subject to tax.
More detail will be provided to you by email as it becomes available. You can find full details of the draft legislation on the Gov.uk website.