Part 2Income tax, corporation tax and capital gains tax
Chapter 1Personal taxation
Social security pension lump sums
7Charge to income tax on lump sum
1
A charge to income tax arises where a person becomes entitled to a social security pension lump sum.
2
For the purposes of the Tax Acts (including subsection (5)) a social security pension lump sum—
a
is to be treated as income, but
b
is not to be taken into account in determining the total income of any person.
3
The person liable to a charge under this section is the person (“P”) entitled to the lump sum, whether or not P is resident F7... or domiciled in the United Kingdom.
4
The charge is imposed on P for the applicable year of assessment (see subsection (6)).
5
A charge under this section F9for a person who is F15neither a Scottish taxpayer nor a Welsh taxpayer in the applicable year of assessment is a charge in respect of the amount of the lump sum at the following rate—
a
if P's F1Step 3 income for the applicable year of assessment is nil, 0%;
F3b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c
d
F85A
Where P is a Scottish taxpayer in the applicable year of assessment, a charge under this section is a charge in respect of the amount of the lump sum at the following rate—
a
if P’s Step 3 income for the applicable year of assessment is nil, 0%;
F13b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F165B
Where P is a Welsh taxpayer in the applicable year of assessment, a charge under this section is a charge in respect of the amount of the lump sum at the following rate—
a
if P’s step 3 income for the applicable year of assessment is nil, 0%;
b
if P’s step 3 income for that year of assessment is greater than nil but does not exceed the basic rate limit for that year, the Welsh basic rate for that year;
c
if P’s step 3 income for that year of assessment is greater than the basic rate limit but does not exceed the higher rate limit for that year, the Welsh higher rate for that year;
d
if P’s step 3 income for that year of assessment is greater than the higher rate limit for that year, the Welsh additional rate for that year.
6
Section 8 makes provision as to the meaning of “the applicable year of assessment” for the purposes of this section.
7
Section 9 contains further definitions and makes provision as to commencement.
8
Section 10 contains consequential amendments.
F29
For the purposes of this section P's “ Step 3 income ” means P's net income less allowances deducted at Step 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability).