Draft anti-avoidance legislation to provide that certain foreign pensions paid to UK residents may be taxed in the United Kingdom has been published.

The legislation is intended to provide, notwithstanding the terms of a double taxation arrangement with another territory, that payment of a pension or other similar remuneration may be taxed in the United Kingdom where:

• the payment arises in the other territory
• it is received by an individual resident of the United Kingdom;
• the pension savings in respect of which the pension or other similar remuneration is paid have been transferred to a pension scheme in the other territory; and
• the main purpose or one of the main purposes of any person concerned with the transfer of pension savings in respect of which the payment is made was to take advantage of the double taxation arrangement in respect of that payment by means of that transfer

In the event that tax is paid in the other jurisdiction, appropriate credit will be available against the UK tax chargeable.

The legislation will have effect in relation to payments of pensions or other similar remuneration made on or after 6 April 2011.

Comments are invited by 1 June on the draft legislation which can be accessed at:– http://www.hmrc.gov.uk/budget-updates/march2011/index.htm#24may