Death in service payment - from HK employer

Dear Members

I am wondering if anyone of you have come across a situation where Hong Kong employee’s wife was paid this payment - does it belong to the deceased employee or the wife for income tax purposes? the deceased employee and his wife became UK residents in the last couple of years due to ongoing treatment with NHS.

HK employer has advised that this payment is not taxed in HK.

Many thanks
Sameera Nathoo

This could conceivably be taxable under ITEPA 2003 Pt 7A (disguised remuneration), ITEPA 2003 Pt 9 Ch.4 (foreign pensions, which now includes a relevant lump sum) or ITEPA 2003 Pt 6 Ch.2 (relevant benefits provided under an EFRBS). In each case, if a charge arises, it is a liability of the widow. However, if article 17 of the UK/Hong Kong double tax treaty applies, no UK tax liability will arise.

Matthew Harrison
Withers LLP

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Dear Matthew

Many thanks for the pointers.

Sameera Nathoo