Income Tax (Earnings and Pensions) Act 2003

[F1 Allowances U.K.

Textual Amendments

F1 Pt. 9 Ch. 15A substituted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 41, 124 (with Sch. 9 paras. 125-132)

637P Individual’s lump sum allowance U.K.

An individual’s “lump sum allowance” is £268,275.

637Q Availability of individual’s lump sum allowance U.K.

(1) This section is about the availability of an individual’s lump sum allowance on the occurrence of a relevant benefit crystallisation event (“the current event”).

(2) In this section—

(a) “relevant benefit crystallisation event”, in relation to an individual, means the individual becoming entitled to a relevant lump sum;

(b) “relevant lump sum” means—

(i) a pension commencement lump sum, or

(ii) an uncrystallised funds pension lump sum.

(3) If no relevant benefit crystallisation event has occurred in relation to the individual before the current event, the whole of the individual’s lump sum allowance is available.

(4) Otherwise, the amount of the individual’s lump sum allowance that is available is—

(a) so much of that allowance as is left after deducting the previously-used amount, or

(b) if none is left after deducting that amount, nil.

(5) For this purpose “the previously-used amount” is the aggregate of the non-taxable amounts in relation to each relevant benefit crystallisation event that has occurred in relation to the individual before the current event.

(6) In subsection (5) “non-taxable amount”, in relation to a relevant benefit crystallisation event, means so much (if any) of the relevant lump sum to which the event relates as is exempt from the charge to income tax by virtue of any provision of this Chapter.

(7) A reference in this section to a relevant benefit crystallisation event is to a relevant benefit crystallisation event occurring on or after 6 April 2024.

(8) For transitional provision under which the amount of an individual’s lump sum allowance available on the occurrence of a relevant benefit crystallisation event may be reduced as a result of events occurring before 6 April 2024, see paragraph 125 of Schedule 9 to FA 2024.

Modifications etc. (not altering text)

C1 S. 637Q applied (with modifications) (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 20(1A) (as inserted by Finance Act 2024 (c. 3), Sch. 9 paras. 77(3), 124 (with Sch. 9 paras. 125-132))

637R Individual’s lump sum and death benefit allowance U.K.

An individual’s “lump sum and death benefit allowance” is £1,073,100.

Modifications etc. (not altering text)

C2 S. 637R applied (with modifications) (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 19(2)(2A) (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 76(4), 124 (with Sch. 9 paras. 125-132))

637S Availability of individual’s lump sum and death benefit allowance U.K.

(1) This section is about the availability of an individual’s lump sum and death benefit allowance on the occurrence of a relevant benefit crystallisation event (“the current event”).

(2) In this section—

(a) “relevant benefit crystallisation event”, in relation to an individual, means—

(i) the individual becoming entitled to a relevant lump sum, or

(ii) a person being paid a relevant lump sum death benefit in respect of the individual;

(b) “relevant lump sum” means—

(i) a pension commencement lump sum,

(ii) a serious ill-health lump sum, or

(iii) an uncrystallised funds pension lump sum;

(c) “relevant lump sum death benefit” means any authorised lump sum death benefit other than—

(i) a charity lump sum death benefit, or

(ii) a trivial commutation lump sum death benefit.

(3) If no relevant benefit crystallisation event has occurred in relation to the individual before the current event, the whole of the individual’s lump sum and death benefit allowance is available.

(4) Otherwise, the amount of the individual’s lump sum and death benefit allowance that is available is—

(a) so much of that allowance as is left after deducting the previously-used amount, or

(b) if none is left after deducting that amount, nil.

(5) For this purpose “the previously-used amount” is the aggregate of the non-taxable amounts in relation to each relevant benefit crystallisation event that has occurred in relation to the individual before the current event.

(6) In subsection (5) “non-taxable amount”, in relation to a relevant benefit crystallisation event, means so much (if any) of the relevant lump sum, or relevant lump sum death benefit, to which the event relates as is exempt from the charge to income tax by virtue of any provision of this Chapter.

(7) Where more than one relevant benefit crystallisation event within subsection (2)(a)(i) occurs in relation to an individual on the same day, it is for the individual to decide the order in which they are to be treated as occurring for the purposes of this section.

(8) Where more than one relevant benefit crystallisation event within subsection (2)(a)(ii) occurs in relation to an individual, they are to be treated for the purposes of this section as occurring—

(a) immediately before the individual’s death,

(b) immediately after any pension commencement lump sum to which the individual becomes entitled immediately before death by virtue of section 166(2) of FA 2004 (lump sum rule), and

(c) in such order as may be decided by the individual’s personal representatives.

(9) A reference in this section to a relevant benefit crystallisation event is to a relevant benefit crystallisation event occurring on or after 6 April 2024.

(10) For transitional provision under which the amount of an individual’s lump sum and death benefit allowance available on the occurrence of a relevant benefit crystallisation event may be reduced as a result of events occurring before 6 April 2024, see paragraph 126 of Schedule 9 to FA 2024.

(11) For further transitional provision that may affect the operation of this section, see paragraph 20 of Schedule 36 to FA 2004 (pensions in payment before commencement of Part 4 of FA 2004).]

Modifications etc. (not altering text)

C3 S. 637S applied (with modifications) (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 20(2) (as amended by Finance Act 2024 (c. 3), Sch. 9 paras. 77(4)(a), 124 (with Sch. 9 paras. 125-132))