Income Tax (Earnings and Pensions) Act 2003

[F1 636A [F2 Exemptions and liabilities] for certain lump sums under registered pension schemes U.K.

(1) No liability to income tax arises on a lump sum paid under a registered pension scheme if the lump sum is—

(a) a pension commencement lump sum,

(b) a serious ill-health lump sum [F3 paid to a member who has not reached the age of 75],

(c) a refund of excess contributions lump sum, [F4 or]

[F5 (ca) a transitional 2013/14 lump sum,]F6 ...

F6 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F9 (1A) In the case of an uncrystallised funds pension lump sum paid under a registered pension scheme when the member has not reached the age of 75—

(a) no liability to income tax arises on 25% of the sum, and

(b) section 579A applies in relation to the other 75% of the sum as it applies to any pension under a registered pension scheme.

(1B) In the case of an uncrystallised funds pension lump sum paid under a registered pension scheme when the member has reached the age of 75—

(a) if the member's available lifetime allowance when the sum is paid is equal to or greater than the sum—

(i) no liability to income tax arises on 25% of the sum, and

(ii) section 579A applies in relation to the other 75% of the sum as it applies to any pension under a registered pension scheme, and

(b) if the member's available lifetime allowance when the sum is paid is less than the sum—

(i) no liability to income tax arises on the part of the sum that is equal to 25% of the member's available lifetime allowance when the sum is paid, and

(ii) section 579A applies in relation to the rest of the sum as it applies in relation to any pension under a registered pension scheme.

(1C) For the purposes of subsection (1B), the amount of the member's available lifetime allowance when the sum is paid is what it is for the purposes of Part 4 of FA 2004 (see section 219 of FA 2004), but adjusted in accordance with the rules in paragraphs (a) and (b) of paragraph 12(1A) of Schedule 29 to FA 2004.]

(2) But [F10 subsections (1) to (1B) do] not limit the operation of sections 214 to 226 of FA 2004 (lifetime allowance charge).

(3) A short service refund lump sum under a registered pension scheme is subject to income tax in accordance with section 205 of FA 2004 (charge to tax on scheme administrator in respect of such a lump sum) but not otherwise.

[F11 (3A) Section 579A applies in relation to a serious ill-health lump sum which is paid under a registered pension scheme to a member who has reached the age of 75 as it applies to any pension under a registered pension scheme.]

[F12 (4) If a lump sum under a registered pension scheme—

(a) is listed in section 636AA, and

(b) is paid to a non-qualifying person (see subsection (8)),

the sum is subject to income tax under section 206 of FA 2004 (charge to tax on scheme administrator in respect of certain lump sum death benefits) and not otherwise (but see section 206(8) of FA 2004).

(4ZA) If a lump sum under a registered pension scheme—

(a) is listed in section 636AA, and

(b) is paid to a qualifying person (see subsection (8)),

section 579A applies in relation to the sum as it applies to any pension under a registered pension scheme.]

[F13 (4A) In the case of a registered pension scheme which is a split scheme for the purposes of the Registered Pensions Schemes (Splitting of Schemes) Regulations 2006, subsections (3) and (4) shall have effect as if the references to the scheme administrator were to the sub-scheme administrator (within the meaning of those Regulations).]

(5) A lifetime allowance excess lump sum is chargeable to income tax in accordance with sections 214 to 226 of FA 2004 (lifetime allowance charge) but not otherwise.

(6) In this section—

• “lifetime allowance excess lump sum”,

• “pension commencement lump sum”,

• “refund of excess contributions lump sum”,

• “serious ill-health lump sum”, F14 ...

• [F15 “ uncrystallised funds pension lump sum ”],

• “short service refund lump sum”, [F16 and

• “ transitional 2013/14 lump sum”]

• have the same meaning as in section 166 of FA 2004 (see Part 1 of Schedule 29 to that Act).

(7) In this section—

• “annuity protection lump sum death benefit”,

• “defined benefits lump sum death benefit”,

• [F17 “drawdown pension fund lump sum death benefit”,]

• [F18 “ flexi-access drawdown fund lump sum death benefit ”,]

• “pension protection lump sum death benefit”, [F19 and]

• F20 ...

• “uncrystallised funds lump sum death benefit”, F21 ...

• F21 ...

• have the same meaning as in section 168 of FA 2004 (see Part 2 of Schedule 29 to that Act).

[F22 (8) For the purposes of this section—

(a) a person is a “non-qualifying person” in relation to payment of a lump sum if, for the purposes of section 206 of FA 2004, the person is a non-qualifying person in relation to payment of the sum, and

(b) a person is a “qualifying person” in relation to payment of a lump sum except where the person is a non-qualifying person in relation to payment of the sum.]]

Textual Amendments

F1 Pt. 9 Ch. 15A inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36)

F2 Words in s. 636A heading substituted (with effect in accordance with Sch. 5 para. 4 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 2(2)

F3 Words in s. 636A(1)(b) inserted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 42(2)(a)

F4 Word in s. 636A(1)(c) inserted (with effect in accordance with s. 22(12) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 22(3)(a)

F5 S. 636A(1)(ca) inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 5(3)(a), 15

F6 S. 636A(1)(d) and word omitted (with effect in accordance with s. 22(12) of the amending Act) by virtue of Finance (No. 2) Act 2015 (c. 33), s. 22(3)(b)

F7 S. 636A(1)(e) and word omitted (with application in accordance with Sch. 2 para. 20 of the amending Act) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 19(3)(a)(ii)

F8 S. 636A(1)(f) and word repealed (with effect in accordance with Sch. 19 para. 29(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 28(2)(b), Sch. 27 Pt. 3(1)

F9 S. 636A(1A)-(1C) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 62(2)

F10 Words in s. 636A(2) substituted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 62(3)

F11 S. 636A(3A) substituted (with effect in accordance with Sch. 5 para. 4 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 2(3)

F12 Ss. 636A(4)-(4ZA) substituted for s. 636A(4) (with effect in accordance with s. 22(12) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 22(2)

F13 S. 636A(4A) inserted by 2004 c. 12, Sch. 31 para. 11 (as amended (6.4.2006) by The Registered Pension Schemes (Splitting of Schemes) Regulations 2006 (S.I. 2006/569), regs. 1(1), 5(1)(2))

F14 Word in s. 636A(6) omitted (19.3.2014) by virtue of Finance Act 2014 (c. 26), Sch. 5 paras. 5(3)(b), 15

F15 Words in s. 636A(6) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 62(4)

F16 Words in s. 636A(6) inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 5(3)(b), 15

F17 Words in s. 636A(7) inserted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 42(5)(a)

F18 Words in s. 636A(7) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 31(b)

F19 Word in s. 636A(7) inserted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 42(5)(b)

F20 Words in s. 636A(7) repealed (with effect in accordance with Sch. 19 para. 29(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 28(3), Sch. 27 Pt. 3(1)

F21 Words in s. 636A(7) omitted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 42(5)(c)

F22 S. 636A(8) inserted (with effect in accordance with s. 22(12) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), s. 22(4)

Modifications etc. (not altering text)

C1 Pt. 9 modified (6.4.2023) by The Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) Regulations 2023 (S.I. 2023/113), regs. 1(2), 23(2), 24(2), 26(2), 28(2) (with reg. 1(3))

C2 S. 636A(1) modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 6, 7(1)(2)

C3 S. 636A(7) modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 6, 7(1)(3)

C4 S. 636A applied (19.3.2014) by S.I. 2009/1171, reg. 3A(2)(6) (as inserted by Finance Act 2014 (c. 26), Sch. 5 paras. 6, 15)

C5 S. 636A modified (6.4.2023 for the tax year 2023-24 and subsequent tax years) by S.I. 2006/572, art. 25C(3A) (as substituted by Finance (No. 2) Act 2023 (c. 30), s. 23(4)(8))

C6 S. 636A(1)(2) applied (1.5.2010) by The Financial Assistance Scheme (Tax) Regulations 2010 (S.I. 2010/1187), regs. 1(1), 4

C7 S. 636A(1B) modified (with effect in accordance with Sch. 1 para. 96(16)(a) of the amending Act) by S.I. 2006/207, reg. 18 (as inserted by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 96(15) (with Sch. 1 para. 96(16)(b)))