Finance Act 2004

[F1 Pension commencement excess lump sum U.K.

Textual Amendments

F1 Sch. 29 para. 3C and cross-heading inserted ( for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 26(9), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4; and (18.11.2024 for the tax year 2024-25 and subsequent tax years) by S.I. 2024/1012, regs. 1(2)(3), 17)

3C (1) For the purposes of this Part a lump sum is a pension commencement excess lump sum if— U.K.

(a) the member becomes entitled to it in connection with becoming entitled to a relevant pension (or dies after becoming entitled to it but before becoming entitled to the relevant pension in connection with which it was anticipated that the member would become entitled to it);

(b) it is paid when none of the member’s lump sum allowance [F2 , or when none of the individual’s lump sum and death benefit allowance,] is available (see paragraph 12A);

(c) it is paid within the period beginning six months before, and ending one year after, the day on which the member becomes entitled to it;

(d) it does not reduce the rate of payment of any pension to which the member has become (actually) entitled, or extinguish the member’s entitlement to payment of any such pension;

(e) it is paid when the member has reached normal minimum pension age (or the ill-health condition is met); and

(f) it is not an excluded lump sum (see sub-paragraph (4)).

F3 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) A lump sum is an “excluded lump sum” if—

(a) it would, apart from this paragraph, be permitted to be paid under the lump sum rule in section 166, F5 ...

F5 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) In determining for the purposes of this paragraph—

(a) whether any of a member’s lump sum allowance [F6 or lump sum and death benefit allowance] is available on the payment of a lump sum, F7 ...

F7 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the member is treated as having already become entitled to any pension commencement lump sum that is paid to the member in connection with becoming entitled to the relevant pension.]

Textual Amendments

F2 Words in Sch. 29 para. 3C(1)(b) inserted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), regs. 1, 3(10)(a)

F3 Sch. 29 para. 3C(2) omitted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), regs. 1, 3(10)(b)

F4 Sch. 29 para. 3C(3) omitted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), regs.1, 3(10)(b)

F5 Sch. 29 para. 3C(4)(b) and preceding word omitted (24.5.2024) by virtue of Finance (No. 2) Act 2024 (c. 12), s. 24(7)

F6 Words in Sch. 29 para. 3C(5)(a) inserted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), regs. 1, 3(10)(c)(i)

F7 Sch. 29 para. 3C(5)(b) and word omitted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), regs. 1, 3(10)(c)(ii)