Paragraph 28 Schedule 36 Finance Act 2004 Individuals are able to take a pension commencement lump sum (see PTM063200) when they take some or all of their pension benefits. Pension commencement lump sums (PCLS) are not subject to income tax. Primary protection requires uncrystallised lump sum rights at 5 April 2006 to be valued, and uses that figure to modify the individual’s authorised pension commencement lump sum permitted maximum. Effectively this means that the starting point for an indi

Part 9 Pension income Chapter 5A PENSIONS UNDER REGISTERED PENSION SCHEMES Taxable pension income 579B If section 579A applies, the taxable pension income for a tax year is the full amount of the pension under the registered pension scheme that accrues in that year irrespective of when any amount is actually paid This is subject to section 579CA.

Sections 579A-579C and 579D ITEPA 2003 Annuities under, or purchased with sums or assets held for the purposes of, a registered pension scheme are chargeable to Income Tax as pension income. The tax treatment of the annuity depends on whether it is payable in the member’s lifetime or because of the death of a pension scheme member or beneficiary. EIM75400 provides guidance on the definition of pensions paid from a registered pension scheme and the tax treatment of payments to members. EIM75600 p

Part 11 Chapter 1 defines PAYE income as consisting of: any PAYE employment income for the year any PAYE pension income for the year any PAYE social security income for the year. The meanings of PAYE employment income, PAYE pension income and PAYE social security income respectively are stated in Section 683 ITEPA 2003. Broadly these are amounts taxable as employment income, pension income and social security income respectively.

Paragraph 1, 2 and 3(3) to (5) Schedule 29 Finance Act 2004 Where the contract is purchased from uncrystallised funds, a lump sum paid in connection with the annuity purchase may be paid tax-free if it satisfies the requirements for a pension commencement lump sum. The legislation defines the circumstances where a tax-free lump sum may be paid, and the maximum amount. To be treated as a pension commencement lump sum, the lump sum payable under the scheme must be linked to the arising entitlement

Part 9 Pension income Chapter 5A PENSIONS UNDER REGISTERED PENSION SCHEMES Pensions 579A 1 This section applies to any pension under a registered pension scheme (but subject to subsection (2) and section 579CZA ). 2 This section does not apply to a pension under a registered pension scheme if and to the extent that, when it is paid, a liability to the unauthorised payments charge arises in respect of the amount of the payment (see section 208 of FA 2004). 3 Chapter 17 of this Part provides exemp

Regulations authorise certain small lump sums to be paid from a registered pension scheme without having to follow the more demanding conditions for what is formally termed a trivial commutation lump sum. Such one-off small lump sum payments are allowed as authorised member payments in relation to individual registered pension schemes, or related occupational pension schemes. The circumstances under which such one-off payments can qualify as authorised member payments are set out earlier on this

If a scheme is not a registered pension scheme it may be an employer-financed retirement benefit scheme (EFRBS). An EFRBS is a scheme that can pay certain retirement or death benefits for employees or former employees called ‘relevant benefits’. The establishment of an EFRBS should be reported to HMRC. There’s no tax relief for employee contributions to an EFRBS and such schemes do not get any of the explicit tax advantages that registered pension schemes get. For example, an EFRBS should pay ta

You should include any of the payments, pensions or annuities listed below as pension income for tax credits. These mirror the income tax provisions. Broadly, this includes all occupational and registered pension scheme pensions and the basic retirement pension and related payments, for example the earnings related addition under the State Earnings Related Pension Scheme (SERPS). Any annuity, pension or stipend payable by the Crown or out of the public revenue of the UK or of Northern Ireland by

Paragraph 11 schedule 31 Finance Act 2004 Paragraph 59 schedule 10 Finance Act 2005 Section 637G Income Tax (Earnings and Pensions) Act 2003 Payment of a winding-up lump sum does not reduce the member's lump sum allowance or lump sum and death benefit allowance. If the member has not previously drawn (or become entitled to) any other benefits under the registered pension scheme before the winding-up lump sum is paid, 75% of the lump sum paid is treated as taxable pension income of the member for

Sections 579A to 579C Income Tax (Earnings and Pensions) Act 2003 The person receiving the dependants’ scheme pension is liable for Income Tax on the amount they receive, as pension income. The payer of the pension will deduct tax in accordance with the PAYE regulations. The taxable pension income for a tax year is the full amount of the scheme pension under the registered pension scheme that accrues in that year, irrespective of when any amount is actually paid.