Income Tax (Earnings and Pensions) Act 2003 (c. 1)

Part 9 Pension income

Chapter 13 Return of surplus employee additional voluntary contributions

623 Return of surplus employee additional voluntary contributions

(1) This section applies to a payment if conditions A, B and C are met.

(2) Condition A is that the payment is made out of funds which are or have been held for the purposes of—

(a) a scheme which is or has been an exempt approved scheme, or

(b) a relevant statutory scheme established under a public general Act.

(3) Condition B is that the payment is made under a duty to return surplus funds.

(4) Condition C is that the payment is made to or for the benefit of an employee.

(5) A payment to which this section applies is not to be charged to tax under—

(a) section 598 or 599 of ICTA, or

(b) the Regulations mentioned in paragraph 8 of Schedule 3 to FA 1971.

(6) In this section “payment” includes—

(a) a transfer of assets, and

(b) any other transfer of money’s worth.

624 Taxable pension income

If section 623 applies, the taxable pension income for a tax year is the amount equal to the total amount or value of the payments made in that year, grossed up by reference to the basic rate for that year.

625 Person liable for tax

If section 623 applies, the person liable for any tax charged under this Part is the employee mentioned in condition C in section 623(4) to whom or for whose benefit the payment is made.

626 Income tax treated as paid

(1) An employee who is liable for the tax charged on a payment to which section 623 applies is treated as having paid income tax at the basic rate on the amount chargeable.

(2) The income tax treated as paid under subsection (1) is not repayable.

627 Meaning of “grossing up”

(1) In section 624 “grossing up” by reference to the basic rate means calculating the amount (“the gross amount”) which after deduction of income tax at the basic rate would equal the amount to be grossed up (“the net amount”).

(2) The gross amount is the sum of the net amount and the tax deducted.

628 Interpretation

(1) In this Chapter—

• “employee”—

  (a)

  includes a person who is to be, or has been, an employee, and

  (b)

  in relation to a company, includes any officer or director of the company and any other person taking part in the management of the affairs of the company;

• “exempt approved scheme” has the meaning given in section 592(1) of ICTA;

• “relevant statutory scheme” has the meaning given in section 611A(1) of ICTA.

(2) For the purposes of the definition of “employee” in subsection (1), “director”, in relation to a company, includes—

(a) in the case of a company the affairs of which are managed by a board of directors or similar body, a member of that board or body,

(b) in the case of a company the affairs of which are managed by a single director or similar person, that person,

(c) in the case of a company the affairs of which are managed by the members themselves, a member of that company,

and includes a person who is to be or has been a director.

(3) If section 623 applies to a payment made out of funds which are or have been held for the purposes of a relevant statutory scheme established under a public general Act, any reference in this Chapter to an employee includes references to a person who holds an office, to a person who is to hold an office and to a person who has ceased to hold an office.

This is without prejudice to subsection (1).

(4) For the purposes of subsection (3) “office” includes in particular any position which has an existence independent of the person who holds it and may be filled by successive holders.