If you have been UK resident within five complete tax years then UK Pension rules apply effectively preventing benefits before the age of 50 (55 from 6 April 2010).
Any benefits paid within five years of non UK residency and not in accordance with UK Pension rules will be an unauthorised payment. Tax charges that could apply include:
- Unauthorised payments charge
- Unauthorised payments surcharge
- Scheme sanction charge.
An unauthorised payment will be subject to a tax charge at the rate of 40%. The scheme member is liable for this.
The unauthorised payments surcharge must also be paid where the level of unauthorised payments made to or in respect of a member exceeds a certain limit in a year.
The limit is exceeded if all unauthorised payments made to or in respect of a member in a period of twelve months amount to 25% or more of the value of that member’s benefits under the scheme. The unauthorised payments surcharge is 15%. This is paid in addition to the unauthorised payments charge of 40%, so in some cases the member could face an effective tax charge of 55%.