The Government has announced it will close specialist pension schemes to new savings for people working overseas in today’s Autumn Statement.
So-called Section 615 schemes will close to new savig for those employed abroad from 6 April 2017.
The tax treatment of foreign pensions will be more closely aligned with the UK’s domestic pension tax regime by bringing foreign pensions and lump sums fully into tax for UK residents, to the same extent as domestic ones.
The tax treatment of funds transferred between registered pension schemes will also be aligned and the criteria for foreign schemes to qualify as overseas pension schemes for tax reasons will be updated.
Combined with other new measure targeted at offshore tax loopholes and reporting, the government intends to generate an extra £70m a year by the end of the parliament.
The other new measures include stopping UK investors in overseas schemes from deducting performance fees for tax purposes and new penalties for people who fail to correct past offshore tax errors with HM Revenue and Customs.
In other savings announcements, the Government reaffirmed its previous commitment to increase the tax-free ISA savings limit from £15,240 to £20,000 in April 2017.
Consultancy Capital Economics predicted ahead of this year’s Autumn Statement that raising the ISA limit could cost the government £100m.