I beg to move amendment No. 323, in
clause 178, page 152, line 47, at end insert—
'(2A) For the purposes of this section and section 179 relevant UK earnings are to be treated as not being chargeable to income tax if, in accordance with arrangements having effect by virtue of section 788 of ICTA (double taxation agreements), they are not taxable in the United Kingdom.'.
The clause gives two key definitions for the purposes of determining tax relief: relevant UK individual and relevant UK earnings. Relief is given on UK tax, and it is right that only UK individuals or those who have earnings chargeable to UK tax should benefit from it.
Tax relief will be available on a member's contributions to a registered pension scheme made by or on behalf of the member only if they are a relevant UK individual. An individual will be a relevant UK individual for a tax year if he or she meets any one of four criteria. The first two are that the individual must have relevant UK earnings chargeable to income tax or be resident in the UK at some time during the tax year. The third situation is the individual who is not resident in the current tax year but became a member of a registered pension scheme when they were resident and have been resident in the UK at some time in the previous five years. Finally, a person with general earnings from overseas Crown employment or the spouse of such an individual will be a relevant UK individual.
For the purposes of the provisions, relevant UK earnings mean employment income, income from a trade, profession or vocation, or certain other income that is treated as earned income.
The amendment inserts a clarification for the purposes of clauses 178 and 179 to ensure that if income chargeable to tax is not taxable by virtue of a claim under a double taxation agreement, that income is not treated as relevant UK earnings for the purpose of determining the maximum amount of relief to which an individual is entitled in respect of pension contributions. I believe that the provisions are fair as well as simple and therefore commend the amendment to the Committee.
May I just ask the Financial Secretary a relevant question? An individual who lives outside the UK does not pay any UK tax. Given that fact, I have never understood why UK pension schemes should not be open to people from all over the world. In the past, that has always been resisted, even though there was no loss of revenue. Will these provisions have that net effect?