Finance Act 2004

Charges on authorised paymentsU.K.

204Authorised pensions and lump sumsU.K.

(1)Schedule 31 contains provision about the taxation of pensions and lump sums which are authorised to be paid by this Part.

(2)Schedule 36 contains (in Part 4) transitional provision about the taxation of annuities under existing retirement annuity contracts and other relevant transitional provision.

Commencement Information

I1Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

205Short service refund lump sum chargeU.K.

(1)A charge to income tax, to be known as the short service refund lump sum charge, arises where a short service refund lump sum is paid by a registered pension scheme.

(2)The person liable to the short service refund lump sum charge is the scheme administrator.

(3)The scheme administrator is liable to the short service refund lump sum charge whether or not—

(a)the scheme administrator, and

(b)the person to whom the short service refund lump sum is paid,

are resident, ordinarily resident or domiciled in the United Kingdom.

(4)The rate of the charge is—

(a)20% in respect of so much of the lump sum as does not exceed £10,800, and

(b)40% in respect of so much (if any) of it as exceeds that limit.

(5)The Treasury may by order amend subsection (4) so as to—

(a)increase or decrease either or both of the rates for the time being specified in that subsection, or

(b)increase the limit for the time being specified in paragraph (a) of that subsection.

(6)Tax under this section is to be charged on the amount of the lump sum paid or, if the rules of the pension scheme permit the scheme administrator to deduct the tax before payment, on the amount of the lump sum before deduction of tax.

(7)A short service refund lump sum is not to be treated as income for any purpose of the Tax Acts.

Modifications etc. (not altering text)

C2S. 205 applied by 2003 c. 1, s. 636A(3) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I2Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

[F1205ASerious ill-health lump sum chargeU.K.

(1)A charge to income tax, to be known as the serious ill-health lump sum charge, arises where a serious ill-health lump sum is paid by a registered pension scheme to a member who has reached the age of 75.

(2)The person liable to the serious ill-health lump sum charge is the scheme administrator.

(3)The scheme administrator is liable to the serious ill-health lump sum charge whether or not—

(a)the scheme administrator, and

(b)the person to whom the serious ill-health lump sum is paid,

are resident, ordinarily resident or domiciled in the United Kingdom.

(4)The rate of the charge is 55% in respect of the lump sum.

(5)The Treasury may by order increase or decrease the rate for the time being specified in subsection (4).

(6)Tax under this section is to be charged on the amount of the lump sum paid or, if the rules of the pension scheme permit the scheme administrator to deduct the tax before payment, on the amount of the lump sum before deduction of tax.

(7)A serious ill-health lump sum paid to a member who has reached the age of 75 is not to be treated as income for any purpose of the Tax Acts.]

Textual Amendments

F1S. 205A inserted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 40

206Special lump sum death benefits chargeU.K.

(1)A charge to income tax, to be known as the special lump sum death benefits charge, arises where—

(a)a pension protection lump sum death benefit,

(b)an annuity protection lump sum death benefit, or

[F2(c)a drawdown pension fund lump sum death benefit,]

is paid by a registered pension scheme.

[F3(1A)The special lump sum death benefits charge also arises where—

(a)a defined benefits lump sum death benefit, or

(b)an uncrystallised funds lump sum death benefit,

is paid by a registered pension scheme in respect of a member who had reached the age of 75 at the date of the member's death.]

(2)The person liable to the special lump sum death benefits charge is the scheme administrator.

(3)The scheme administrator is liable to the special lump sum death benefits charge whether or not—

(a)the scheme administrator, and

(b)the person to whom the lump sum death benefit is paid,

are resident, ordinarily resident or domiciled in the United Kingdom.

(4)The rate of the charge is [F455%] in respect of the lump sum death benefit.

(5)The Treasury may by order increase or decrease the rate for the time being specified in subsection (4).

(6)Tax under this section is to be charged on the amount of the lump sum paid or, if the rules of the pension scheme permit the scheme administrator to deduct the tax before payment, on the amount of the lump sum before deduction of tax.

[F5(7)None of the following is to be treated as income for any purpose of the Tax Acts—

(a)any lump sum death benefit mentioned in subsection (1);

(b)a defined benefits lump sum death benefit or uncrystallised funds lump sum death benefit paid in respect of a member who had reached the age of 75 at the date of the member’s death.]

Textual Amendments

F2S. 206(1)(c) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 41(2)

F3S. 206(1A) inserted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 41(3)

F4Word in s. 206(4) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 41(4)

F5S. 206(7) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 41(5)

Modifications etc. (not altering text)

C4S. 206 applied by S.R. 1995/95, reg. 89A(10) (as inserted (N.I.) (with effect in accordance with reg. 1(2) of the amending Rule) by The Health and Personal Social Services (Superannuation Scheme, Injury Benefits and Additional Voluntary Contributions) (Amendment) Regulations (Northern Ireland) 2006 (S.R. 2006/410), regs. 1(2), 16)

Commencement Information

I3Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

207Authorised surplus payments chargeU.K.

(1)A charge to income tax, to be known as the authorised surplus payments charge, arises where an authorised surplus payment is made to a sponsoring employer by an occupational pension scheme that is a registered pension scheme.

(2)The person liable to the authorised surplus payments charge is the scheme administrator.

(3)The scheme administrator is liable to the authorised surplus payments charge whether or not—

(a)the scheme administrator, and

(b)the sponsoring employer,

are resident, ordinarily resident or domiciled in the United Kingdom.

(4)The rate of the charge is 35% in respect of the authorised surplus payment.

(5)The Treasury may by order increase or decrease the rate for the time being specified in subsection (4).

(6)Subsection (1) does not apply to any authorised surplus payment—

(a)to the extent that (if this section had not been enacted) the sponsoring employer would have been exempt, or entitled to claim exemption, from income tax or corporation tax in respect of it, or

(b)if the sponsoring employer is a charity.

(7)An authorised surplus payment in respect of which income tax is charged under this section is not to be treated as income for any purpose of the Tax Acts.

(8)Schedule 36 contains (in Part 4) transitional provisions about the authorised surplus payments charge.

Modifications etc. (not altering text)

Commencement Information

I4Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284