Tax payable on India provident fund contribution

Hello I am a non-domiciled UK tax resident on a work visa (Intra company transfer visa) sponsored by my company. My company makes the mandatory employers contribution to the Indian Provident Fund, which is taking place for the last 15 years of my employment (with the same company). I want to check whether this pension contribution by my employer is seen as income and hence needs to be grossed up and added to my taxable income in UK?

Hi,

No, this is not income and should not be claimed as a relief either as it is your employer who is paying this.

Thank you.

Hi, thank you for the response. Does this mean that when preparing a tax return, the contribution made by my employer should not be grossed up and added to my taxable income? My exact situation is that I am paying monthly taxes through PAYE which accounts for about 90% of taxes already paid for the year of 2022/23. My company is grossing up their contribution to the Indian Provident Fund and adding the same to my taxable income. Due to this the total taxes due have increased substantially, which results in the total taxes paid (through PAYE) to fall below 80%, leading to a requirement to deposit POA for next year (2023/24).

Hi,

No, you wont add this to your income as it would normally be a deduction from your pay already.

Thank you.

Hi,

We have been provided with an updated answer to the above questions:

Overseas pension schemes can take many forms and structures and we are unable to provide generic advice as to whether an employer contribution is taxable as employment income or not. 

Where an employer makes employer pension contributions there are a number of tax provisions that can apply to exempt those contributions being treated as employment income for the individual:

• S307 ITEPA 2003 - provision made by an employee's employer under a registered pension scheme or otherwise for a retirement or death benefit – EIM21800 - Benefits: pension provisions
• S308 ITEPA 2003 - contributions under a registered pension scheme – EIM01570 - Employment income: Registered pension schemes: employer's contributions
• S308A ITEPA 2003 - contributions under a qualifying overseas pension scheme where additional conditions are met – PTM111000 - International: tax relief on contributions to overseas pension schemes: contents

Employer contributions can also fall within Part 7a where there are third party arrangements – EIM45000 - Employment income provided through third parties: overview, general approach: contents

Thank you.


 

Please help us to understand if the Provident Fund is computed as a part of Salary Computation while processing for UK Work Permit. Please help us to understand the same.

Hi,

Sorry, we can only answer HMRC questions on this forum.

Please contact UK Visas and Immigration for advice.

Thank you.