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Income Tax (Earnings and Pensions) Act 2003

[F1636BTrivial commutation and winding-up lump sumsU.K.

This section has no associated Explanatory Notes

(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 F3... 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 [F4any uncrystallised rights extinguished by the lump sum].]

(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).

[F5(5)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

F1Pt. 9 Ch. 15A inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36)

F2Words in s. 636B(3) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 59, 64(1)

F3Words in s. 636B(3) omitted (with effect in accordance with Sch. 5 para. 9 of the amending Act) by virtue of Finance Act 2016 (c. 24), Sch. 5 para. 8(2)(a)

F4Words in s. 636B(3)(b) substituted (with effect in accordance with Sch. 5 para. 9 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 8(2)(b)

F5S. 636B(5) inserted (with effect in accordance with Sch. 5 para. 9 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 8(3)

Modifications etc. (not altering text)

C2S. 636B applied (with modifications) (6.4.2006) by Finance Act 2004 (c. 12), Sch. 36 para. 35(4) (with s. 283(5), Sch. 36)

C3S. 636B applied (with modifications) by S.I. 2009/1171, reg. 3A(4)(5) (as inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 6, 15)

C4S. 636B applied (with modifications) by 2004 c. 12, Sch. 29 para. 11A(5)(6) (as inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 5(2), 15)