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Part 9U.K.Pension income

Modifications etc. (not altering text)

C1Pt. 9: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)

C2Pt. 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)

[F1CHAPTER 15AU.K.Lump sums under registered pension schemes

Textual Amendments

F1Pt. 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)

C6Pt. 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))

C7Pt. 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))

C8Pt. 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))

C9Pt. 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))

C10Pt. 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))

C11Pt. 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))

C12Pt. 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))

C13Pt. 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))

C14Pt. 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))

C15Pt. 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))

C16Pt. 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))

C17Pt. 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))

C18Pt. 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))

C19Pt. 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))

C20Pt. 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 sumsU.K.

637APension commencement lump sumsU.K.

No liability to income tax arises on a pension commencement lump sum paid under a registered pension scheme.

637BPension commencement excess lump sumsU.K.

A person to whom a pension commencement excess lump sum 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.

637CSerious ill-health lump sumsU.K.

(1)Subject to subsections (2) and (4), no liability to income tax arises on a serious ill-health lump sum paid under a registered pension scheme.

(2)If—

(a)a serious ill-health lump sum is paid under a registered pension scheme to a member who (at the time of the payment) 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)In subsection (2) “the permitted maximum”, in relation to a serious ill-health lump sum paid to a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the member becomes entitled to the lump sum (see section 637S).

(4)If a serious ill-health lump sum is paid under a registered pension scheme to a member who (at the time of the payment) is 75 or over, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.

637DUncrystallised funds pension lump sumsU.K.

(1)Subject to subsection (2), where an uncrystallised funds pension lump sum is paid under a registered pension scheme—

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

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

(2)If—

(a)an uncrystallised funds pension lump sum is paid under a registered pension scheme, and

(b)25% of the lump sum is an amount that exceeds the permitted maximum,

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

(3)In subsection (2) “the permitted maximum”, in relation to an uncrystallised funds pension lump sum paid to a member, means the lower of the following amounts—

(a)so much of the member’s lump sum allowance as is available immediately before the member becomes entitled to the lump sum (see section 637Q);

(b)so much of the member’s lump sum and death benefit allowance as is available immediately before the member becomes entitled to the lump sum (see section 637S).

637EShort service refund lump sumU.K.

A short service refund lump paid 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.

637FRefund of excess contributions lump sumsU.K.

No liability to income tax arises on a refund of excess contributions lump sum paid under a registered pension scheme.

637GTrivial commutation lump sums and winding-up lump sumsU.K.

(1)Subject to subsection (2), a member of a registered pension scheme to whom—

(a)a trivial commutation lump sum, or

(b)a winding-up lump sum,

is paid under the 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.

(2)If, immediately before the lump sum is paid, the member has uncrystallised rights under any one or more arrangements under the pension scheme, the amount of the taxable pension income [F2—

(a)if all the member’s rights under the pension scheme are uncrystallised rights, is 75% of the lump sum, and

(b)otherwise,] is reduced by the tax-free element (if any).

(3)In subsection (2) “the tax-free element” means 25% of the value of any uncrystallised rights extinguished by the lump sum.

(4)In this section “uncrystallised rights” has the same meaning as in section 212 of FA 2004; and the value for the purposes of this section of any uncrystallised rights is to be calculated in accordance with that section.]

Textual Amendments