The Treasury said that an unintended tax loophole in the pension scheme has been blocked on Wednesday. Officials said that an action was being taken to close the pension scheme, which transfers the pension overseas. The overseas pension scheme was used by abroad retired people to transfer money from UK Pension Schemes.

The loophole has been raised from a new double-tax treaty with Hong Kong, under which people in Britain were getting tax-free payments.

The Treasury said, “The measure will prevent individuals from taking advantage of a tax loophole that would have emerged today had the government not taken action”.

A new clause was designed to prevent the same income from being taxed twice, which came on effect on April 6. The pension will not be taxed twice in the recipient’s country, or where it arose in, but only it would be taxable in the country they arose in.

Now, the UK residents, who transfer their pensions to Hong Kong, will receive it without tax.

David Gauke, the Exchequer Secretary, said that the government has started a new plan for the avoidance of tax. He added that strict actions should be taken against those who take undue advantage of these tax loopholes.