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bigduckontax, Accountant
Category: UK Tax
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I have moved back from Zurich, Switzerland, to UK in April

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Hello, I have moved back from Zurich, Switzerland, to UK in April 2016 as I was made redundant. Upon the end of my employment in Switzerland (my gardening leave ended in June 2016) I am entitled to transfer my Vested Benefits. I am in the process of setting up a Vested Benefit account with a Foundation in canton Schwyz. I am currently not employed/self employed in the UK. During my 4 years in Switzerland I was considered an ambulant worker (as I commuted every week from London) and taxed in Zurich (about 32% marginal) but I was also taxed in UK (offset versus Swiss tax) as ordinary resident (I am RND) as my centre of interest was considered to be in the UK. During this period my Swiss pension contributions were offset against my (carry over) allowance in UK until 2014/15 (when they exceeded them and I had to pay marginal taxes on the excess).
I would like to take the vested benefits as a lump sum into an investment account in the UK. Is this feasible? Will there be any additional UK taxes when this amount is transferred (after having paid the Swiss cantonal taxes)?
As self employed I should not be required to leave the mandatory portion (BVG) in Switzerland. This requires me to prove that I am not dependent on social security network - are you familiar with this and what form is required to prove this?
If I leave the amount invested in Switzerland and transfer this later in smaller amounts or as a lump sum what UK taxes would be due?
Thank you very much for your guidance.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

If you move these vested interests direct to an UK pension fund without passing through your hands the transaction will not attract UK taxation. Indeed it should not if you take it directly, but if it represents unpaid salary then it would indeed be subject to UK Income Tax (IT).

As you will not be living in Switzerland how can you be dependent on the Swiss Social Security network? The requirement appears ludicrous, but typically continental in approach. Just point this simple fact out to the Swiss authorities.

I do hope that you have found my reply of assistance.

bigduckontax and 2 other UK Tax Specialists are ready to help you

Thank you for your support.

Customer: replied 7 months ago.
Hello, can you kindly also look at the second part of the question: if the vested benefits are left in Switzerland and taken as a lumpsum or in regular payments into the auK, how will this be treated from a UK tax perspective?

You could try to avoid them being exposed to UK taxation on the grounds that they were earned whilst you were working in Switzerland and taxed there. I always encourage ex pats to get all sums owing to them paid before they quit their overseas locations.