Jurisdiction(s):
United Kingdom

FTT: SIPP drawdowns from transferred DB rights are Article 17 employment pensions under UK–Portugal DTT; Article 20 'subject to tax' requires actual taxation (Masters v HMRC)

Published on: 21 August 2025

Published by a LexisNexis Tax expert

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Masters v HMRC [2025] UKFTT 967 (TC)

Employed in the UK by Tesco, Mr Masters had joined Tesco PLC’s defined benefit Pension Scheme back in 1983. In April 2016, he arranged for the cash equivalent value of his defined benefit rights—just shy of £6m—to be transferred into a UK SIPP vehicle. He relocated to Portugal in March 2019 and, from the 2019–20 tax year onwards, was treated as non‑UK tax resident. While living in Portugal he was taxed under the Non‑Habitual Resident regime, benefitting from exemptions on foreign‑source income, which encompassed withdrawals of £3.5m from his SIPP. Nevertheless, those withdrawals were taxed at source in the UK, resulting in £1.5m of tax being paid. HMRC then operated a PAYE tax code on the SIPP pension; Mr Masters sought instead the issue of an NT (no tax) code. In July 2020, he filed his UK self‑assessment income tax return for 2019–20, claiming a repayment of the tax deducted from the SIPP withdrawals, on the footing that the income was not taxable in the...

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