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

Part 9 U.K. Pension income

Modifications etc. (not altering text)

C1 Pt. 9: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)

C2 Pt. 9 excluded by 2004 c. 12, Sch. 36 para. 45A(1) (as inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 19)

C3 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))

C4 Pt. 9 modified (14.9.2023) by The Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) (No. 2) Regulations 2023 (S.I. 2023/912), regs. 1(2), 9(2), 11(2), 16(2) (with reg. 1(3))

C5 Pt. 9 modified (31.10.2023) by The Registered Pension Schemes (Authorised Member Payments) Regulations 2023 (S.I. 2023/1012), regs. 1, 4

[F1 CHAPTER 15A U.K. Lump sums under registered pension schemes

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)

Modifications etc. (not altering text)

C6 Pt. 9 Ch. 15A modified (with effect in accordance with reg. 1(3) of the amending S.I.) by S.I. 2006/569, reg. 5(1) (as substituted by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 10(2)(a))

C7 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2014 c. 26, Sch. 6 para. 1(2) (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 92(3), 124 (with Sch. 9 paras. 125-132))

C8 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2016 c. 24, Sch. 4 para. 1(2) (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 93(3)(a), 124 (with Sch. 9 paras. 125-132))

C9 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 6A (as inserted by Finance Act 2024 (c. 3), Sch. 9 paras. 67, 124 (with Sch. 9 paras. 125-132))

C10 Pt. 9 Ch. 15A applied (with modifications) (6.4.2024 for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 19(1A)(1B) (as inserted by Finance Act 2024 (c. 3), Sch. 9 paras. 76(3), 124 (with Sch. 9 paras. 125-132))

C11 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2016 c. 24, Sch. 4 para. 9(2) (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 93(4)(b), 124 (with Sch. 9 paras. 125-132))

C12 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2013 c. 29, Sch. 22 para. 1(2) (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 91(3), 124 (with Sch. 9 paras. 125-132))

C13 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 7 (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 68, 124 (with Sch. 9 paras. 125-132))

C14 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2011 c. 11, Sch. 18 para. 14(3) (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 90(4), 124 (with Sch. 9 paras. 125-132))

C15 Pt. 9 Ch. 15A excluded (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 34 para. 5ZA (as inserted by Finance Act 2024 (c. 3), Sch. 9 paras. 60(3), 124 (with Sch. 9 paras. 125-132))

C16 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by S.I. 2006/572, arts. 25CA-25CC (as inserted by Finance Act 2024 (c. 3), Sch. 9 paras. 95(5), 124 (with Sch. 9 paras. 125-132))

C17 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 18 (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 75, 124 (with Sch. 9 paras. 125-132))

C18 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 29A (as inserted by Finance Act 2024 (c. 3), Sch. 9 paras. 85, 124 (with Sch. 9 paras. 125-132))

C19 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by S.I. 2006/207, reg. 18 (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 62(8), 124 (with Sch. 9 paras. 125-132))

C20 Pt. 9 Ch. 15A modified (for the tax year 2024-25 and subsequent tax years) by 2004 c. 12, Sch. 36 para. 12(3A)-(3H) (as substituted by Finance Act 2024 (c. 3), Sch. 9 paras. 71(2), 124 (with Sch. 9 paras. 125-132))

Tax treatment of authorised lump sum death benefits U.K.

637H Defined benefits lump sum death benefits U.K.

(1) Subject to subsections (2) to (6), no liability to income tax arises on a defined benefits lump sum death benefit paid under a registered pension scheme.

(2) If—

(a) a defined benefits lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is paid before the end of the relevant two year period, and

(c) the lump sum exceeds the permitted maximum,

section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3) If—

(a) a defined benefits lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is not paid before the end of the relevant two year period, and

(c) the lump sum is paid to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(4) If—

(a) a defined benefits lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is not paid before the end of the relevant two year period, and

(c) the lump sum is paid to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(5) If a defined benefits lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(6) If a defined benefits lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(7) In this section—

• “non-qualifying person” has the same meaning as in section 206 of FA 2004;

• “the permitted maximum”, in relation to a defined benefits lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S);

• “qualifying person” means a person who is not a non-qualifying person;

• “the relevant two year period” means the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the member’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it.

637I Pension protection lump sum death benefits U.K.

(1) Subject to subsections (2), (3) and (4) no liability to income tax arises on a pension protection lump sum death benefit paid under a registered pension scheme.

(2) If—

(a) a pension protection lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, and

(b) the lump sum exceeds the permitted maximum,

section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3) If a pension protection lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(4) If a pension protection lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(5) In this section—

• “non-qualifying person” has the same meaning as in section 206 of FA 2004;

• “the permitted maximum”, in relation to a pension protection lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S);

• “qualifying person” means a person who is not a non-qualifying person.

637J Uncrystallised funds lump sum death benefits U.K.

(1) Subject to subsections (2) to (6), no liability to income tax arises on an uncrystallised funds lump sum death benefit paid under a registered pension scheme.

(2) If—

(a) an uncrystallised funds lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is paid before the end of the relevant two year period, and

(c) the lump sum exceeds the permitted maximum,

section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3) If—

(a) an uncrystallised funds lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is not paid before the end of the relevant two year period, and

(c) the lump sum is paid to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(4) If—

(a) an uncrystallised funds lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is not paid before the end of the relevant two year period, and

(c) the lump sum is paid to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(5) If an uncrystallised funds lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(6) If an uncrystallised funds lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(7) In this section—

• “non-qualifying person” has the same meaning as in section 206 of FA 2004;

• “the permitted maximum”, in relation to an uncrystallised funds lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S);

• “qualifying person” means a person who is not a non-qualifying person;

• “the relevant two year period” means the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the member’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it.

637K Annuity protection lump sum death benefits U.K.

(1) Subject to subsections (2), (3) and (4), no liability to income tax arises on an annuity protection lump sum death benefit paid under a registered pension scheme.

(2) If—

(a) an annuity protection lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, and

(b) the lump sum exceeds the permitted maximum,

section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3) If an annuity protection lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(4) If an annuity protection lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(5) In this section—

• “non-qualifying person” has the same meaning as in section 206 of FA 2004;

• “the permitted maximum”, in relation to an annuity protection lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S);

• “qualifying person” means a person who is not a non-qualifying person.

637L Drawdown pension fund lump sum death benefits U.K.

(1) Subject to subsections (2) to (6), no liability to income tax arises on a drawdown pension lump sum death benefit paid under a registered pension scheme.

(2) If—

(a) a drawdown pension lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is paid before the end of the relevant two year period, and

(c) the lump sum exceeds the permitted maximum,

section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3) If—

(a) a drawdown pension lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is not paid before the end of the relevant two year period, and

(c) the lump sum is paid to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(4) If—

(a) a drawdown pension lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is not paid before the end of the relevant two year period, and

(c) the lump sum is paid to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(5) If a drawdown pension lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(6) If a drawdown pension lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(7) A reference in this section to a “member”, in relation to a drawdown pension lump sum death benefit under paragraph 17(2) of Schedule 29 to FA 2004 (lump sum payable on death of dependant of deceased member), is a reference to the dependant on whose death the lump sum is payable.

(8) In this section—

• “non-qualifying person” has the same meaning as in section 206 of FA 2004;

• “the permitted maximum”, in relation to a drawdown pension lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S);

• “qualifying person” means a person who is not a non-qualifying person;

• “the relevant two year period” means the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the member’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it.

637M Flexi-access drawdown lump sum death benefits U.K.

(1) Subject to subsections (2) to (6), no liability to income tax arises on a flexi-access drawdown lump sum death benefit paid under a registered pension scheme.

(2) If—

(a) a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is paid before the end of the relevant two year period, and

(c) the lump sum exceeds the permitted maximum,

section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3) If—

(a) a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is not paid before the end of the relevant two year period, and

(c) the lump sum is paid to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(4) If—

(a) a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75,

(b) the lump sum is not paid before the end of the relevant two year period, and

(c) the lump sum is paid to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(5) If a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a qualifying person,

section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

(6) If a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid—

(a) in respect of a member who, on death, is 75 or over, and

(b) to a non-qualifying person,

the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise.

(7) A reference in this section to a “member”—

(a) in relation to a flexi-access drawdown lump sum death benefit under paragraph 17A(2) of Schedule 29 to FA 2004 (lump sum payable on death of dependant of deceased member), is a reference to the dependant on whose death the lump sum is payable;

(b) in relation to a flexi-access drawdown lump sum death benefit under paragraph 17A(3) or (4) of Schedule 29 to FA 2004 (lump sum payable on death of nominee or successor of deceased member), is a reference to the nominee or successor on whose death the lump sum is payable.

(8) In this section—

• “non-qualifying person” has the same meaning as in section 206 of FA 2004;

• “the permitted maximum”, in relation to a flexi-access drawdown lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S);

• “qualifying person” means a person who is not a non-qualifying person;

• “the relevant two year period” means the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the member’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it.

637N Trivial commutation lump sum death benefits U.K.

A person to whom a trivial commutation lump sum death benefit is paid under a registered pension scheme is treated as having taxable pension income for the tax year in which the payment is made equal to the amount of the lump sum.]