Tax on lump sum from pension fund

There is an extra statutory concession that provides an employee with relief from tax on a lump sum received from an overseas pension scheme to the extent that it relates to overseas service (broadly, to duties undertaken while the individual was not UK resident). In this case it is crucial to identify the length of the period of employment. For this purpose the Revenue treat successive employments with different members of the same group of companies as if they were a single continuing employment (where the payment takes account of that service). In order to qualify for the full exemption on the lump sum payment you would need to either have: 3/4 of the whole period of service as foreign service or 1/2 of the whole period of service (including 10 of the last 20 years) as foreign service. If neither of these was satisfied there is also a partial reduction available. The amount of the reduction is the amount charged to tax multiplied by the length of foreign service and divided by the length of total service.