Friday, 18 July 2014

UK International Pension Scheme


set up for overseas workers, in a range of scenarios

Popular name ‘Section 615’


  • UK approval of each scheme by HMRC

  • Benefits can be 100% cash

  • Residency, Domicile and Nationality are not relevant


First of all the Technical point;

An International Pension Scheme can be arranged pursuant to Section 615(6) of the Income and Corporation Taxes Act 1988. This has been accepted by HMRC and each Scheme is individually approved by them.


The idea here is based on the Income and Corporation Taxes Act (ICTA) 1988. In other words it’s tried and trusted. For this article I shall be referring to this scheme by its popular name ‘Section 615’.

There are a number of categories of people who I believe can benefit from Section 615.

  • Employees of UK companies whose duties are conducted wholly outside UK. So you could be resident in another country (such as Spain) but employed, or become employed, by a UK company
  • Employees of multi-national employers where an overseas parent company has a UK presence
  • Employees of UK companies, who are UK resident, but who undertake duties inside and outside the UK

Self Employed 
Whilst these categories relate to ‘employees’, there is no reason why a self employed person or a partnership could not establish a company in the UK for the purposes of becoming employees and benefiting from these schemes. For advice please email me.


The Benefits

For the employer

  • Contributions are allowable against corporation tax in the UK
  • There is no UK National Insurance to pay on the contribution
  • No minimum contribution
  • Employee benefit at reasonable cost.

For the employee

  • There is no tax liability on the contributions
  • Death benefits can be paid to nominated beneficiaries
  • Inheritance Tax efficient
  • All of the fund can be paid as cash on leaving the service of the company or deferred to normal retirement age
  • There is no local tax on these contributions as there is no income
  • Even though employed by a UK company there is no National Insurance cost
  • Member directives on investment are allowed

A wide range of permitted investments, which include;

  • Insurance policies
  • Cash and money funds
  • Equities
  • Fixed interest securities and gilts
  • Property or property shares


This is only an outline of Section 615 but each time I think about it, more groups of people seem to be potential beneficiaries of the Scheme. If you think you might benefit, or just want more information, please email me.

Many UK citizens working abroad can benefit from this arrangement, yet it is not widely offered or available.

Important point to note: Section 615 (6) of the Income & Corporations Tax 1988 is completely non-contentious. Each scheme will be individually approved by the UK tax authorities (HMRC)


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You can write to me with your personal experiences or to be put in touch with my recommended adviser by sending me an email

Any personal information that you give me will be treated with the utmost confidentiality and care. Your details will only be passed to a third party with your authority.


David Goodall
Financial Pages in Spain


If you make bank transfers, check out La Torre Fx – Foreign Exchange. This beats the banks and gives you the bonus!


Thursday, 17 July 2014

FATCA – An American nightmare?

Not a typical post from Financial Pages in Spain but it’s for English-speaking expats and there are lots of US citizens in Spain, as well as the UK and most of Europe!

What is FATCA?
A piece of US legislation called Foreign Account Tax Compliance Act which the Americans hope will crack down on tax avoidance, using offshore accounts, implemented throughout the world. It came into force on 1st July 2014.


How does it affect US expats?
US citizens abroad must report their overseas earnings and investment profits, annually to the Internal Revenue Service (IRS) which generates an annual tax bill. To be fair, many face only a small tax charge or even nil, but the cost of complying can be very high. However the cost of non-compliance will be even higher!

Most declarations do generate a large tax bill as most Americans living and working abroad earn large salaries and many have large investments.

Perhaps the most important factor, and the individuals who are affected will already know, is that the majority of Americans abroad make no declaration at all. FATCA is coming to get you.


How will FATCA work?
In preparation for FATCA, the US Government has signed, around the world a series of InterGovernmental Agreements (IGA’s) with the IRS which offered special arrangements, relaxed deadlines and simplified reporting. ALL European Governments have signed IGA’s with the US, including Switzerland who finally ‘surrendered’ to the pressure!

With immediate effect, all Foreign (looking from an American perspective) Financial Institutions (FFI’s) will need to disclose all US related information for both new and existing clients. Failure to report to the IRS will lead to a 30% withholding tax.


Who will be affected?
I have seen an estimate that, currently, around 7.3 million Americans live and work abroad, yet only 565,000 comply with IRS reporting requirements. The US Government and IRS are targeting those who don’t report and don’t pay US Taxes.

Many of those who don’t comply will be directly affected by the disclosure requirements placed upon FFI’s by the IGA’s!


Is there a cost effective solution?
You could renounce your American citizenship! That, of course, would be the ultimate and for the vast majority, an unacceptable step.

I am aware of one structure which has all the elements necessary to comply with FATCA, minimise tax charges and simplify IRS reporting requirements. This arrangement is not a one-size-fits-all plan and will not suit everyone but I have tried to simplify who might benefit.

  1. Do you earn $100,000 or more each year?

It sounds a high figure to Europeans (about €75,000) or British (circa £60,000) but if you are American working abroad it possibly includes you.

If you earn less than $100,000 you may seek exemption to the retrospective element of FATCA using a voluntary arrangement allowed by the IRS. This is called OVDP (Overseas Voluntary Disclosure Program) which allows amendment to previous returns without penalty.

  1. Do you have non-US investments?

Without correct advice there is potentially a ‘double-whammy’

·       Many FFI’s will stop taking investments from US citizens to avoid the disclosure requirements
·       If you haven’t reported investments in the past, your FFI will start reporting them now.

You can bring them together in one IRS compliant structure but only if your circumstances allow.

  1. Are you currently Non-Compliant with IRS tax reporting requirements?

This structure is probably the one you need as long as you fit
    1. and / or 2. above

Even if you currently are compliant the structure may be suitable as it is FATCA compliant.


Next Step
Please register your interest in the arrangement, without any obligation. Please email with an outline of your circumstances. It would also be helpful if you could give your contact number and a best time to call.


David Goodall
Financial Pages in Spain