Part 9Pension income

F1CHAPTER 15ALUMP SUMS UNDER REGISTERED PENSION SCHEMES

Annotations:
Amendments (Textual)
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)

C1C2C4C3636BTrivial commutation and winding-up lump sums

1

This section applies if—

a

a trivial commutation lump sum, or

b

a winding-up lump sum,

is paid to a member of a registered pension scheme under the pension scheme.

2

The member is to be treated as having taxable pension income for the tax year in which the payment is made equal to the amount of the lump sum.

3

But if, immediately before the lump sum is paid, the member F2has uncrystallised rights (within the meaning of section 212 of FA 2004) under any one or more arrangements under the pension scheme, the amount of the taxable pension income—

a

if all his rights under the pension scheme are uncrystallised rights, is 75% of the lump sum, and

b

otherwise, is reduced by 25% of the value of the uncrystallised rights calculated in accordance with that section.

4

In this section—

  • “trivial commutation lump sum”, and

  • “winding-up lump sum”,

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