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In force since 2026-07-15, as the publisher states.
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Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.
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No deduction may be made under section 555 if the deductible payment is made in pursuance of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax.
Propose a change(1) This section applies if— (a) a deductible payment is made by the former employee (and not by the former employer on behalf of the former employee), but (b) the whole or a part of the cost of making the payment is borne— (i) by the former employer, or (ii) out of the proceeds of a contract of insurance. (2) No deduction of the amount of the cost borne as mentioned in subsection (1)(b) (the “relevant amount”) may be made under section 555. (3) But this is subject to subsection (4) if the whole or a part of the relevant amount is treated— (a) as a relevant retirement benefit of the former employee, or (b) as post-employment earnings of the former employee. (4) In such a case, a deduction of so much of the relevant amount as is treated in that way may be made under section 555.
Propose a change(1) For the purposes of this Part each of the following is a deductible payment— A. Payment in or towards the discharge of a liability related to the former employment. B. Payment of any costs or expenses incurred in connection with— (a) a claim that the former employee is subject to a liability related to the former employment, or (b) proceedings relating to or arising out of a claim that the former employee is subject to a liability related to the former employment. BA Payment of any costs or expenses not falling within paragraph B which are incurred in connection with the former employee giving evidence about matters related to the former employment in, or for the purposes of— (a) a proceeding or other process (whether or not involving the former employee), or (b) an investigation (whether or not likely to lead to any proceeding or other process involving the former employee). BB Payment of any costs or expenses not falling within paragraph B or BA which are incurred in connection with a proceeding or other process, or an investigation, in which— (a) acts of the former employee related to the former employment, or (b) any other matters related to the former employment, are being or are likely to be considered. C. Payment of a premium under a qualifying insurance contract, but only to the extent that the premium relates to— (a) provision in the contract for the former employee to be indemnified against a payment falling within paragraph A, or (b) provision in the contract for the payment of any costs or expenses falling within paragraph B , BA or BB . (2) But a payment which falls within paragraph A B, BA or BB is not a deductible payment if it would have been unlawful for the former employer to enter into a contract of insurance in respect of the liability, or costs or expenses, in question. (3) In this Part— (a) “premium”, in relation to a qualifying insurance contract, means an amount payable to the insurer under the contract, and (b) where a qualifying insurance contract relates to more than one person, employment or risk, the part of the premium to be treated as relating to each of them is to be determined by apportionment on a just and reasonable basis. (4) In this section and section 560— (a) “acts” includes failures to act and acts are “related to the former employment” if the former employee was acting— (i) in the employee's capacity as holder of the former employment, or (ii) in any other capacity in which the former employee was acting in the performance of the duties of that employment, (b) “giving evidence” includes making a formal or informal statement or answering questions, (c) “proceeding or other process” includes any civil, criminal or arbitration proceedings, any disciplinary or regulatory proceedings of any kind and any process operated for resolving disputes or adjudicating on complaints, and (d) references to a proceeding or other process or an investigation include a reference to a proceeding or other process or an investigation that is likely to take place.
Propose a changeFor the purposes of this Part each of the following kinds of liability is related to the former employment— A. Liability imposed upon the former employee because he did an act, or failed to do an act— (a) in his capacity as holder of the former employment, or (b) in any other capacity in which he acted in the performance of the duties of the former employment. B. Liability imposed upon the former employee in connection with any proceedings relating to, or arising from, a claim that he is subject to a liability because he did an act, or failed to do an act— (a) in his capacity as holder of the former employment, or (b) in any other capacity in which he acted in the performance of the duties of the former employment.
Propose a change(1) In section 558 “qualifying insurance contract” means a contract of insurance which meets conditions A, B, C and D. (2) Condition A is that, so far as the risks insured against are concerned, the contract only relates to one or more of the following— (a) the indemnification of a former employee against a liability related to the former employment, (b) the indemnification of a person against vicarious liability in respect of a liability related to another person’s employment, (c) the payment of costs or expenses incurred— (i) in connection with a claim that a person is subject to a liability to which the insurance relates, or (ii) in connection with any proceedings relating to or arising out of a claim that a person is subject to a liability to which the insurance relates, (ca) the payment of costs or expenses incurred in connection with a former employee giving evidence about matters related to the former employment in, or for the purposes of— (i) a proceeding or other process (whether or not involving the former employee), or (ii) an investigation (whether or not likely to lead to any proceeding or other process involving the former employee). (cb) the payment of any costs or expenses incurred in connection with a proceeding or other process, or an investigation, in which— (i) acts of a former employee related to the employment, or (ii) any other matters related to the former employment of a former employee, are being or are likely to be considered, (d) the indemnification of an employer against loss from a payment made by the employer to a former employee in respect of— (i) a liability related to the former employment, or (ii) any costs or expenses incurred as mentioned in paragraph (c) , (ca) or (cb) . (3) Condition B is that— (a) the period of insurance under the contract does not exceed 2 years or, if it does, it does so only because of one or more renewals, each for a period of 2 years or less, and (b) the insured is not required to renew the contract for any period. (4) Condition C is— (a) that the insured is not entitled under the contract to receive any payment or other benefit in addition to— (i) cover for the risks insured against, and (ii) any right to renew the contract, or (b) if the insured is so entitled, that the part of the premium reasonably attributable to the entitlement is not a significant part of the whole premium. (5) Condition D is that the contract is not connected with another contract.
Propose a change(1) An insurance contract is connected with another contract for the purposes of section 560 if conditions E and F are met— (a) at the time when both contracts are first in force, or (b) at any time after that time. (2) Condition E is that one of the contracts was entered into— (a) by reference to the other, or (b) with a view to enabling or facilitating entry into the other on particular terms. (3) Condition F is that the terms on which one of the contracts was entered into are significantly different from what they would have been if— (a) it had not been entered into in anticipation of the other being entered into, or (b) the other had not also been entered into. (4) If— (a) there is only one such significant difference in terms, and (b) the contracts meet conditions A, B and C specified in section 560, the difference may be disregarded in the following cases. (5) The first case is where the difference is a reduction in premiums under the contract that is reasonably attributable only to the contract— (a) containing a right to renew, or (b) being entered into by way of renewal. (6) The second case is where— (a) two or more contracts have been entered into as part of a single transaction, and (b) the difference is reductions in their premiums that are reasonably attributable only to the premium under each of them having been fixed by reference to the appropriate proportion of the combined premium. (7) In subsection (6) “the combined premium” means the amount that would have been the total premium under a single contract relating to all the risks covered by the contracts.
Propose a change(1) In this Part “former employee” means an individual who has ceased to hold an employment. (2) In this Part “employment” includes in particular— (a) any employment under a contract of service, (b) any employment under a contract of apprenticeship, and (c) any employment in the service of the Crown. “Employee” and “employer” have corresponding meanings.
Propose a changeIn this Part each of the following expressions, when used in relation to a former employee, has the meaning given— “former employment” means the employment which the former employee has ceased to hold; “former employer” means— the person under whom the former employee held the former employment, a person for the time being carrying on the whole or any part of the business or other undertaking for the purposes of which the former employee held the former employment, a person who is for the time being subject to any of the liabilities with respect to that business or other undertaking of the person mentioned in paragraph (a), and a person who is connected with a person falling within paragraph (a), (b) or (c); “post-employment earnings” means so much of any amount received after the former employee has ceased to hold the former employment as constitutes general earnings for the purposes of the employment income Parts; “relevant retirement benefit” means a benefit— which is received by the former employee under an employer-financed retirement benefits scheme, and which, under Chapter 2 of Part 6, counts as employment income of the former employee.
Propose a change(1) The provisions of this Part are expressed to apply to former employees but they apply equally to former office-holders. (2) In those provisions as they apply to a former office-holder— (a) references to holding a former employment are to holding the office; (b) “former employment” means the office held; (c) “former employer” means the person under whom the person held the office. (3) In this Part “office” includes in particular any position which has an existence independent of the person who holds it and may be filled by successive holders.
Propose a changeThe structure of this Part is as follows— Chapter 2— (a) imposes the charge to tax on pension income, and (b) provides for deductions to be made from the amount of income chargeable; Chapters 3 to 15 set out the types of income which are charged to tax under this Part and, for each type of income, identify— (a) the amount of income chargeable to tax for a tax year, and (b) the person liable to pay any tax charged; Chapter 15A— (a) provides for certain amounts paid under registered pension schemes in the form of lump sums to be subject to the charge to tax on pension income, and (b) deals with exemptions from the charge to tax (whether under this Part or any other provision) in relation to certain other amounts paid under registered pension schemes in the form of lump sums.
Propose a change(1) The charge to tax on pension income under this Part is a charge to tax on that income excluding any exempt income. (2) “Pension income” means the pensions, annuities and income of other types to which the provisions listed in subsection (4) apply. This definition applies for the purposes of the Tax Acts. (3) “Exempt income” means pension income on which no liability to income tax arises as a result of any provision of Chapters 15A to 18 of this Part. This definition applies for the purposes of this Part. (4) These are the provisions referred to in subsection (2)— Provision | Income | Chapter (of this Part) Section 569 | United Kingdom pensions | Chapter 3 Section 573 | Foreign pensions | Chapter 4 Section 577 | United Kingdom social security pensions | Chapter 5 Section 579A | Pensions under registered pension schemes | Chapter 5A Section 609 | Annuities for the benefit of dependants | Chapter 10 Section 610 | Annuities under sponsored superannuation schemes | Chapter 10 Section 611 | Annuities in recognition of another’s services | Chapter 10 Section 615 | Certain overseas government pensions paid in the United Kingdom | Chapter 11 Section 619 | The House of Commons Members' Fund | Chapter 12 . . . | . . . | . . . Section 629 | Pre-1973 pensions paid under OPA 1973 | Chapter 14 Section 633 | Voluntary annual payments | Chapter 15 Section 637B | Pensions treated as arising from payment of pension commencement excess lump sums under registered pension schemes | Chapter 15A Section 637G | Pensions treated as arising from payment of trivial commutation lump sums and winding-up lump sums under registered pension schemes | Chapter 15A Section 637N | Pensions treated as arising from payment of trivial commutation lump sum death benefits ... under registered pension schemes | Chapter 15A
Propose a change(1) The amount of pension income which is charged to tax under this Part for a particular tax year is as follows. (2) In relation to each pension, annuity or other item of pension income, the amount charged to tax is the “net taxable pension income” for the tax year. (3) The net taxable pension income for a pension, annuity or other item of pension income for a tax year is given by the formula— TPI - DPI where— TPI means the amount of taxable pension income for that pension, annuity or item of pension income for that year (see subsection (4)), and DPI means the total amount of any deductions allowed from the pension, annuity or item of pension income (see subsection (5)). (4) For the purposes of this Act— (a) the amount of taxable pension income for a pension, annuity or other item of pension income for a tax year is determined in accordance with Chapters 3 to 15A of this Part (which contain provisions relating to this amount for each type of pension income); and (b) in determining the amount of taxable pension income for a pension, annuity or other item of pension income, any exempt income is to be excluded. (5) The deductions allowed from a pension, annuity or other item of pension income are those under— section 567A (deduction to avoid double taxation where Part 7A has applied to the source of the pension income); section 567B (deduction where inheritance tax is paid in respect of pension death benefit); section 617 (10% deduction from an overseas government pension to which section 615 applies); Part 12 (payroll giving).
Propose a change(1) This section applies if— (a) for a tax year there is an amount (“amount TPI”) of taxable pension income for a pension, annuity or other item of pension income, (b) the pension, annuity or other item of pension income accrues or arises out of rights (“the relevant rights”) which represent, or have arisen or derived (directly or indirectly) from, a sum of money or asset which was the subject of a relevant step within the meaning of Part 7A, and (c) Chapter 2 of that Part applied by reason of the relevant step. (2) A deduction is allowed from amount TPI. (3) The amount of the deduction allowed is the amount (“amount EI”) which counted as employment income of A under Chapter 2 of Part 7A in relation to the relevant step (see section 554Z2(1)). (4) If amount EI exceeds amount TPI, the excess is to be carried forward to future tax years to be deducted under this section (when applicable) until all of amount EI has been deducted. (5) Subsection (6) applies if it is determined on a just and reasonable basis that the relevant rights represent, or have arisen or derived from, only part of the sum of money or asset which was the subject of the relevant step. (6) In subsection (3) the reference to the amount which counted as employment income is to be read as a reference to the corresponding proportion of that amount.
Propose a change(1) This section applies if— (a) there is an amount of taxable pension income (“amount TPI”) for a tax year for a pension, annuity or other item of pension income, (b) amount TPI reflects (to any extent) the payment to a person (“the beneficiary”) of a benefit under a pension scheme on the death of a member of the scheme (“the deceased”), (c) the benefit is not an excluded benefit, and (d) at any time (whether before or after the benefit is paid)— (i) the beneficiary pays an amount of inheritance tax that is attributable to the value of the deceased’s notional pension property, (ii) the deceased’s personal representatives pay an amount of inheritance tax that is so attributable and pass on the burden of that payment to the beneficiary, or (iii) the scheme administrator pays (under section 226B of IHTA 1984) an amount of inheritance tax that is so attributable, and the payment meets the condition in subsection (2). (2) A payment of an amount of inheritance tax meets the condition in this subsection if (and so far as)— (a) in consequence of the payment, the scheme administrator makes an adjustment (under section 226B(5) of IHTA 1984) as a result of which the beneficiary’s entitlement to a benefit other than that mentioned in subsection (1) (“the other benefit”) is reduced, and (b) disregarding that reduction, the other benefit would not give rise to taxable pension income for any tax year. (3) A deduction is allowed from amount TPI equal to the lesser of— (a) the amount of inheritance tax paid as mentioned in subsection (1)(d)(i) or (ii), less so much (if any) of that inheritance tax as has been deducted under this subsection in an earlier tax year, and (b) so much of amount TPI as reflects the payment to the beneficiary of the benefit mentioned in subsection (1). (4) Where the deceased was under 75 on death, and the benefit mentioned in subsection (1) is a relevant lump sum death benefit, a deduction is allowed from amount TPI equal to the lesser of— (a) the amount of inheritance tax paid as mentioned in subsection (1)(d)(iii) so far as it meets the condition in subsection (2), less so much (if any) of that inheritance tax as has been deducted under this subsection in an earlier tax year, and (b) so much of amount TPI as reflects the payment to the beneficiary of the benefit mentioned in subsection (1). (5) Where a deduction is allowed under both of subsections (3) and (4), the deduction under subsection (4) is to be made first. (6) For the purposes of subsection (1)(d) the deceased’s personal representatives “pass on the burden” of a payment of inheritance tax to the beneficiary if— (a) the personal representatives pay a sum to the beneficiary out of the deceased’s estate that has been reduced by the amount of inheritance tax, or (b) the beneficiary reimburses the personal representatives that amount. (7) In this section— “IHTA 1984” means the Inheritance Tax Act 1984; “inheritance tax” includes interest on inheritance tax; “excluded benefit” has the same meaning as in IHTA 1984; “notional pension property” has the same meaning as in IHTA 1984; “relevant lump sum death benefit” has the same meaning as in section 637S.
Propose a changeFor the provision identifying which person is liable for any tax charged under this Part on a pension, annuity or other item of pension income, see Chapters 3 to 15A.
Propose a change(1) This section applies to any pension paid by or on behalf of a person who is in the United Kingdom. (2) But this section does not apply to a pension if any provision of Chapters 5 to 14 of this Part applies to it. (3) For pensions paid by or on behalf of a person who is outside the United Kingdom, see Chapter 4 of this Part.
Propose a changeIn this Chapter “pension” includes a pension which is paid voluntarily or is capable of being discontinued.
Propose a changeIf section 569 applies, the taxable pension income for a tax year is the full amount of the pension accruing in that year irrespective of when any amount is actually paid.
Propose a changeIf section 569 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension.
Propose a change(1) This section applies if an individual is temporarily non-resident. (2) Any pension within subsection (3) is to be treated for the purposes of section 571 as if it accrued in the period of return. (3) A pension is within this subsection if— (a) section 569 applies to it, (b) it is in the form of a lump sum, (c) it accrued in the temporary period of non-residence, and (d) ignoring this section— (i) it is not chargeable to tax under this Chapter, but (ii) it would be so chargeable if the existence of any double taxation relief arrangements were disregarded. (4) Subsection (3)(d)(i) includes a case where the charge could be prevented by making a DTR claim, even if no claim is in fact made. (5) Nothing in any double taxation relief arrangements is to be read as preventing the individual from being chargeable to income tax in respect of any pension treated by virtue of this section as accruing in the period of return (or as preventing a charge to that tax from arising as a result). (6) Part 4 of Schedule 45 to FA 2013 (statutory residence test: anti-avoidance) explains— (a) when an individual is to be regarded as “temporarily non-resident”, and (b) what “the temporary period of non-residence” and “the period of return” mean. (7) In this section— “double taxation relief arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010; “DTR claim” means a claim for relief under section 6 of that Act.
Propose a change(1) This section applies to any pension paid by or on behalf of a person who is outside the United Kingdom to a person who is resident in the United Kingdom. (2) But this section does not apply to a pension if any provision of Chapters 5 to 14 of this Part applies to it. (2A) This section does not apply to pension within section 574(1)(ba) if— (a) the pension is paid in respect of a deceased member of a pension scheme who had not reached the age of 75 at the date of death, and (b) no pension payments to the person entitled to the pension were made before 6 April 2015 in respect of the deceased member out of any of the following— (i) the fund from which the pension is paid, and (ii) any fund represented (to any extent) by that fund. (2B) This section does not apply to pension within section 574(1)(bb) if the pension is paid in respect of a deceased individual who had not reached the age of 75 at the date of death. (2C) Subsection (2A) is subject to subsection (2D). (2D) This section does apply to pension within section 574(1)(ba) paid in respect of a deceased member of a pension scheme who had not reached the age of 75 at the date of death if the pension is paid in respect of sums or assets held for the purposes of the pension scheme under which the pension is paid (“the paying scheme”) that would, if the paying scheme were a registered pension scheme, be sums or assets— (a) representing unused uncrystallised funds (within the meaning of paragraph 27E(4) and (5) of Schedule 28 to FA 2004) in the deceased member's case, and (b) designated on or after 6 April 2015 as available for the payment of dependants' drawdown pension or nominees' drawdown pension, but (c) not so designated before the end of the period of two years beginning with the earlier of the day on which the scheme manager of the paying scheme first knew of the member's death and the day on which the scheme manager could first reasonably have been expected to have known of it. (2E) Chapter 17 of this Part provides exemptions for certain annuities (see sections 646D and 646E: certain beneficiaries' annuities purchased out of unused or drawdown funds). (2F) See also paragraph 45A of Schedule 36 to FA 2004 (exemption in certain cases for payments on or after 6 April 2015 to beneficiaries under joint-life or similar annuities purchased before 6 April 2006). (3) For pensions paid by or on behalf of a person who is in the United Kingdom, see Chapter 3 of this Part. (4) This section also applies to a pension paid by or on behalf of a person who is outside the United Kingdom to a person who is not resident in the United Kingdom if— (a) the pension is a relevant lump sum paid under a pension scheme to that person in respect of a member of the scheme, and (b) the member is, or immediately before the member's death was, resident in the United Kingdom.
Propose a change(1) For the purposes of this Chapter “pension” includes— (a) an annuity under, or purchased with sums or assets held for the purposes of, or representing acquired rights under, a relevant non-UK scheme or an overseas pension scheme, (aa) a relevant lump sum (see section 574A), (b) an amount paid under a relevant non-UK scheme or an overseas pension scheme which, if the scheme were a registered pension scheme, would be income withdrawal ... (within the meaning of paragraph 7 of Schedule 28 to FA 2004), (ba) an amount paid under a relevant non-UK scheme or an overseas pension scheme which, if the scheme were a registered pension scheme, would be dependants' income withdrawal or nominees' income withdrawal (within the meaning of paragraphs 21 and 27D of Schedule 28 to FA 2004), (bb) an amount paid under a relevant non-UK scheme or an overseas pension scheme which, if the scheme were a registered pension scheme, would be successors' income withdrawal (within the meaning of paragraph 27J of Schedule 28 to FA 2004), and (c) if conditions A and B are met, a pension which is paid voluntarily or is capable of being discontinued. (2) Condition A is that the pension is paid to— (a) a former employee or a former office-holder, (b) the widow or widower or surviving civil partner of a former employee or a former office-holder, or (c) any child, relative or dependant of a former employee or a former office-holder. (3) Condition B is that the pension is paid by or on behalf of— (a) the person— (i) who employed the former employee, or (ii) under whom the former office-holder held the office, or (b) the successors of that person. (4) In this section— “office” includes in particular any position which has an existence independent of the person who holds it and may be filled by successive holders; “overseas pension scheme” has the same meaning as in Part 4 of FA 2004 (see section 150(7) of that Act); “relevant non-UK scheme” is to be read in accordance with paragraph 1(5) of Schedule 34 to FA 2004.
Propose a change(1) A lump sum paid under a pension scheme to a member of the scheme, or to a person in respect of a member of the scheme, is “a relevant lump sum” for the purposes of this Chapter if— (a) the scheme is none of the following— (i) a registered pension scheme, (ii) a relevant non-UK scheme, and (iii) an employer-financed retirement benefits scheme established in the United Kingdom, and (b) the payment of the lump sum is not a relevant step by reason of which Chapter 2 of Part 7A applies. (2) A lump sum paid under a relevant non-UK scheme to a member of the scheme, or to a person in respect of a member of the scheme, is “a relevant lump sum” for the purposes of this Chapter if the effect of paragraphs 1 to 7 of Schedule 34 to FA 2004 is that the member payment provisions (see paragraph 1(4) of that Schedule) do not apply in relation to the payment of the lump sum. (2A) A lump sum is not “a relevant lump sum” by virtue of subsection (2) if it is within paragraph 5ZA(1)(a) or (b) of Schedule 34 to FA 2004 (which specify certain lump sums paid to or in respect of transfer members of relevant non-UK schemes). (3) If section 573 applies to a relevant lump sum then, for the purposes of section 575, the full amount of the pension income arising by reason of the payment of the lump sum is the amount of the lump sum, reduced as follows— Step 1 Deduct so much of the lump sum as is payable by reason of commutation of rights to receive pension income on which no liability to tax arises as a result of any provision of Chapter 17 of this Part. Step 2 Where the lump sum is paid under a pension scheme that was an employer-financed retirement benefits scheme immediately before 6 April 2017, deduct so much of the lump sum left after Step 1 as is deductible in accordance with subsection (6). Where the lump sum is paid otherwise than under such a scheme, deduct so much of the lump sum left after Step 1 as is paid in respect of the value immediately before 6 April 2017 of rights, accrued by then, specifically to receive benefits by way of lump sum payments. Step 3 If the lump sum is paid under an overseas pension scheme, deduct so much of the lump sum left after Step 2 as would, if the scheme were a registered pension scheme, not be liable to income tax under this Part. For the purposes of this Step— treat amounts not included in taxable pension income because of section 637G(2) as being not liable to tax; assume that all of the member’s lump sum allowance is available and all of the member’s lump sum and death benefit allowance is available. (4) The amount given by subsection (3) is treated for the purposes of section 575 as arising when the lump sum is paid. (5) The Commissioners may by regulations make provision (including provision amending this section) as to the assumptions to be made for the purposes of Step 3. (6) These rules apply for the purposes of the first sentence of Step 2— (a) “the post-Step 1 amount” means so much of the lump sum as is left after Step 1; (b) “the relevant amount” means so much of the post-Step 1 amount as is paid in respect of rights specifically to receive benefits by way of lump sum payments; (c) “reckonable service” means service in respect of which the rights to receive the relevant amount accrued (whether or not service in the same employment or with the same employer, and even if the rights originally accrued under a different employer-financed retirement benefits scheme established in or outside the United Kingdom); (d) “pre-6 April 2017 reckonable service” means reckonable service that is service before 6 April 2017; (e) “pre-6 April 2017 reckonable foreign service” means pre-6 April 2017 reckonable service that is foreign service; (f) the deductible amount is the value immediately before 6 April 2017 of the rights then accrued to payment of so much of the relevant amount as is paid in respect of pre-6 April 2017 reckonable service if— (i) at least 75% of pre-6 April 2017 reckonable service is made up of foreign service, or (ii) the period of pre-6 April 2017 reckonable service exceeds 10 years and the whole of the last 10 years of that period is made up of foreign service, or (iii) the period of pre-6 April 2017 reckonable service exceeds 20 years and at least 50% of that period, including any 10 of the last 20 years, is made up of foreign service; (g) otherwise, the deductible amount is the appropriate fraction of the value immediately before 6 April 2017 of the rights then accrued to payment of so much of the relevant amount as is paid in respect of pre-6 April 2017 reckonable service; (h) “the appropriate fraction” is given by— F R where— F is the period of pre-6 April 2017 reckonable foreign service, and R is the period of pre-6 April 2017 reckonable service. (7) In this section— “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 (see section 393A), “foreign service” has the meaning given by section 395C, “member”, in relation to a pension scheme, has the meaning given by section 151 of FA 2004, “overseas pension scheme” has the same meaning as in Part 4 of FA 2004 (see section 150(7) of that Act), “payment” includes a transfer of assets and any other transfer of money's worth, “pension scheme” has the meaning given by section 150(1) of FA 2004, and “relevant non-UK scheme” is to be read in accordance with paragraph 1(5) of Schedule 34 to FA 2004.
Propose a change(1) If section 573 applies, the taxable pension income for a tax year is the full amount of the pension income arising in the tax year, but subject to subsections (1A) ... and (3) and section 576A. (1A) If the person liable for the tax under this Part is an individual and the tax year is a split year as respects that individual, the taxable pension income for the tax year is the full amount of the pension income arising in the UK part of the year, subject to subsection (3) and section 576A. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) The full amount of the pension income arising in the tax year, or (as the case may be) the UK part of the tax year, is treated as relevant foreign income for the purposes of Chapters 2 and 3 of Part 8 of ITTOIA 2005 (relevant foreign income: remittance basis and deductions and reliefs). (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) See also Chapter 4 of that Part (unremittable income).
Propose a changeIf section 573 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension.
Propose a change(1) This section applies if a person is temporarily non-resident. (2) Any relevant withdrawals within subsection (3) are to be treated for the purposes of section 575 as if they arose in the period of return , but only if the total amount of— (a) the relevant withdrawals within subsection (3), and (b) the relevant withdrawals (as defined by section 579CA(4)) within section 579CA(3) for the same temporary period of non-residence, exceeds £100,000. (3) A relevant withdrawal is within this subsection if— (a) it is paid to the person in the temporary period of non-residence, and (b) ignoring this section, it is not chargeable to tax under this Part (or would not be if a DTR claim were made in respect of it). (4) A “relevant withdrawal” is an amount paid under a relevant non-UK scheme that— (a) is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be income withdrawal (within the meaning of paragraph 7 of Schedule 28 to FA 2004) paid to the person from the person's member's flexi-access drawdown fund in respect of the arrangement, (b) is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be dependants' income withdrawal (within the meaning of paragraph 21 of Schedule 28 to FA 2004) paid to the person from the person's dependant's flexi-access drawdown fund in respect of the arrangement, (c) is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be nominees' income withdrawal (within the meaning of paragraph 27D of Schedule 28 to FA 2004) paid to the person from the person's nominee's flexi-access drawdown fund in respect of the arrangement, (d) is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be successors' income withdrawal (within the meaning of paragraph 27J of Schedule 28 to FA 2004) paid to the person from the person's successor's flexi-access drawdown fund in respect of the arrangement, (e) is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a short-term annuity (within the meaning of paragraph 6 of Schedule 28 to FA 2004) purchased using sums or assets out of the person's member's flexi-access drawdown fund in respect of the arrangement, (f) is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a dependants' short-term annuity (within the meaning of paragraph 20 of Schedule 28 to FA 2004) purchased using sums or assets out of the person's dependant's flexi-access drawdown fund in respect of the arrangement, (g) is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a nominees' short-term annuity (within the meaning of paragraph 27C of Schedule 28 to FA 2004) purchased using sums or assets out of the person's nominee's flexi-access drawdown fund in respect of the arrangement, (h) is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a successors' short-term annuity (within the meaning of paragraph 27H of Schedule 28 to FA 2004) purchased using sums or assets out of the person's successor's flexi-access drawdown fund in respect of the arrangement, (i) is paid before 6 April 2015 to the person in respect of an arrangement relating to the person under the scheme which at the time of the payment was an arrangement to which section 165(3A) or 167(2A) of FA 2004 (flexible drawdown arrangements) applied and would, if the scheme had been a registered pension scheme, have been income withdrawal or dependants' income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to FA 2004), (j) is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme where— (i) the payment would, if the scheme were a registered pension scheme, be of a lifetime annuity or dependants' annuity within paragraph 3(1A) or 17(1ZA), as the case may be, of Schedule 28 to FA 2004, and (ii) the terms of the contract under which it is paid are such that there will or could be decreases in the amount of the annuity other than decreases which, if the scheme were a registered pension scheme, would be decreases from time to time allowed by regulations under paragraph 3(1)(d) or 17(1)(c), as the case may be, of Schedule 28 to FA 2004 (and any such regulations are to be treated as having effect for this purpose), or (k) is a payment to the person under a money purchase arrangement relating to the person under the scheme that, if the scheme were a registered pension scheme, would be a payment to the person of a scheme pension that the person would for the purposes of Part 4 of FA 2004 be treated as having become entitled to at a time on or after 6 April 2015 when fewer than 11 other individuals were entitled to present payment of a scheme pension under the scheme. (4A) For the purpose of determining whether the figure specified in subsection (2) is exceeded, any relevant withdrawal paid in a currency other than sterling is to be translated into sterling using the average exchange rate for the year ending with 31 March in the tax year in which the relevant withdrawal is paid. (5) If section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to the person for the year of return, any relevant withdrawal within subsection (3) that was remitted to the United Kingdom in the temporary period of non-residence is to be treated as remitted to the United Kingdom in the period of return. (6) This section does not apply to a relevant withdrawal if— (a) it is paid to or in respect of a relieved member of the scheme and is not referable to the member's UK tax-relieved fund under the scheme, or (b) it is paid to or in respect of a transfer member of the scheme and is not referable to the member's relevant transfer fund under the scheme. (7) Nothing in any double taxation relief arrangements is to be read as preventing the person from being chargeable to income tax in respect of any relevant withdrawal treated by virtue of this section as arising in the period of return (or as preventing a charge to that tax from arising as a result). (8) Part 4 of Schedule 45 to FA 2013 (statutory residence test: anti-avoidance) explains— (a) when a person is to be regarded as “temporarily non-resident”, and (b) what “the temporary period of non-residence” and “the period of return” mean. (9) In this section— “double taxation relief arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010; “DTR claim” means a claim for relief under section 6 of that Act; “member's flexi-access drawdown fund” and “dependant's flexi-access drawdown fund” have the same meaning as in Part 4 of FA 2004 (see paragraphs 8A and 22A of Schedule 28 to FA 2004); “remitted to the United Kingdom” has the same meaning as in Chapter A1 of Part 14 of ITA 2007; “scheme pension” means a scheme pension within the meaning of paragraph 2 of Schedule 28 to FA 2004 or a dependants' scheme pension within the meaning of paragraphs 16 to 16C of that Schedule; “the year of return” means the tax year that consists of or includes the period of return. (10) The following expressions have the meaning given in Schedule 34 to FA 2004— “relevant non-UK scheme” (see paragraph 1(5)); “relieved member” (see paragraph 1(7)); “transfer member” (see paragraph 1(8)); “member's UK tax-relieved fund” (see paragraph 3(2)); “member's relevant transfer fund” (see paragraph 4(2)).
Propose a change(1) This section applies to— the state pension, graduated retirement benefit, industrial death benefit, widowed mother’s allowance, widowed parent’s allowance, and widow’s pension. (1A) But this section does not apply to any social security pension lump sum (within the meaning of section 7 of F(No.2)A 2005). (2) In this section— “state pension” means any pension payable under— any provision of Part 1 of the Pensions Act 2014 or any corresponding provision under the law of Northern Ireland, section 44, 48A, 48AA, 48B, 48BB, 51 or 78 of SSCBA 1992, or section 44, 48A, 48B, 48BB, 51 or 78 of SSCB(NI)A 1992 or any provision under the law of Northern Ireland that corresponds to section 48AA of SSCBA 1992; “graduated retirement benefit” means any benefit payable under— section 36 or 37 of the National Insurance Act 1965 (c. 51), or section 35 or 36 of the National Insurance Act (Northern Ireland) 1966 (c. 6 (N.I.)); “industrial death benefit” means any benefit payable under— section 94 of, and Part 6 of Schedule 7 to, SSCBA 1992, or section 94 of, and Part 6 of Schedule 7 to, SSCB(NI)A 1992; “widowed mother’s allowance” means any allowance payable under— section 37 of SSCBA 1992, or section 37 of SSCB(NI)A 1992; “widowed parent’s allowance” means any allowance payable under— section 39A of SSCBA 1992, or section 39A of SSCB(NI)A 1992; “widow’s pension” means any pension payable under— section 38 of SSCBA 1992, or section 38 of SSCB(NI)A 1992. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) Chapter 17 of this Part provides a partial exemption for a pension to which this section applies in respect of any part of the pension which is attributable to an increase in respect of a child (see section 645).
Propose a changeIf section 577 applies, the taxable pension income for a tax year is the full amount of the pension, benefit or allowance accruing in that year irrespective of when any amount is actually paid.
Propose a changeIf section 577 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension, benefit or allowance.
Propose a change(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 exemptions for certain annuities (see sections 646B and 646C: certain beneficiaries' annuities purchased out of unused or drawdown funds).
Propose a changeIf 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.
Propose a changeIf section 579A applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension under the registered pension scheme.
Propose a change(1) Section 579A does not apply to dependants' income withdrawal or nominees' income withdrawal if it is paid— (a) in respect of a deceased member of a registered pension scheme who had not reached the age of 75 at the date of the member's death, and (b) to a person from the person's— (i) dependant's drawdown pension fund, (ii) dependant's flexi-access drawdown fund, or (iii) nominee's flexi-access drawdown fund, in respect of a money purchase arrangement under a registered pension scheme. (2) Section 579A does not apply to successors' income withdrawal if it is paid— (a) in respect of a deceased beneficiary of a deceased member of a registered pension scheme where the beneficiary had not reached the age of 75 at the date of the beneficiary's death, and (b) to a person from the person's successor's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme, and here “beneficiary” means dependant, nominee or successor. (3) Subsection (1) is subject to the following provisions of this section. (4) Section 579A does apply to dependants' income withdrawal paid on or after 6 April 2015 to a person from the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme (“the drawdown fund”) if before 6 April 2015— (a) any payment of dependants' income withdrawal was made from— (i) the drawdown fund, or (ii) any fund represented (to any extent) by the drawdown fund, or (b) any payment was made of a dependants' short-term annuity purchased using sums or assets out of— (i) the drawdown fund, or (ii) any fund represented (to any extent) by the drawdown fund. (5) Section 579A does apply to dependants' income withdrawal paid in respect of a deceased member of a registered pension scheme to a person from the person's dependant's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme (“the new fund”) if— (a) any of the sums or assets that make up the new fund— (i) became newly-designated dependant funds under paragraph 22A(2)(b) of Schedule 28 to FA 2004 or as a result of the operation of any of paragraphs 22B to 22D of that Schedule, or (ii) arise, or (directly or indirectly) derive, from any such newly-designated dependant funds or from sums or assets which so arise or derive, (b) before 6 April 2015— (i) any payment of dependants' income withdrawal in respect of the deceased member was made to the person from, or (ii) any payment in respect of the deceased member was made to the person of a dependants' short-term annuity purchased using sums or assets out of, the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme, and (c) any of the sums or assets that made up that fund at the time of that payment to any extent make up, or are represented by sums or assets that to any extent make up, the new fund. (6) Where relevant unused uncrystallised funds— (a) are designated on or after 6 April 2015 as available for the payment of dependants' drawdown pension or nominees' drawdown pension, and (b) as a result of the designation make up (to any extent) a person's dependant's flexi-access drawdown fund or nominee's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme, but (c) are not so designated before the end of the relevant two-year period, section 579A does apply to dependants' income withdrawal or nominees' income withdrawal paid to the person from the fund so far as it is paid in respect of sums or assets for the time being representing the whole or any part of those relevant unused uncrystallised funds. (7) In this section— “dependant”, “nominee” and “successor” have the meaning given (respectively) by paragraphs 15, 27A and 27F of Schedule 28 to FA 2004, “dependant's drawdown pension fund”, “dependant's flexi-access drawdown fund”, “nominee's flexi-access drawdown fund” and “successor's flexi-access drawdown fund” have the meaning given (respectively) by paragraphs 22, 22A, 27E and 27K of Schedule 28 to FA 2004, “money purchase arrangement” has the meaning given by section 152 of FA 2004, and “the relevant two-year period”, in relation to relevant unused uncrystallised funds held for the purposes of a money purchase arrangement relating to a deceased individual under a registered pension scheme, means the period of two years beginning with the earlier of the day on which the scheme administrator of the scheme first knew of the individual's death and the day on which the scheme administrator could first reasonably have been expected to have known of it. (8) For the purposes of this section, sums or assets held after the death of a member of a registered pension scheme for the purposes of a money purchase arrangement relating to the member under the scheme are “relevant unused uncrystallised funds” if— (a) they are unused uncrystallised funds, and (b) the member had not reached the age of 75 at the date of the member's death. (9) Paragraph 27E(4) and (5) of Schedule 28 to FA 2004 (meaning of “unused uncrystallised funds”) apply for the purposes of subsection (8)(a).
Propose a change(1) This section applies if a person is temporarily non-resident. (2) Any relevant withdrawals within subsection (3) are to be treated for the purposes of section 579B as if they accrued in the period of return , but only if the total amount of— (a) the relevant withdrawals within subsection (3), and (b) the relevant withdrawals (as defined by section 576A(4)) within section 576A(3) for the same temporary period of non-residence, exceeds £100,000 (3) A relevant withdrawal is within this subsection if— (a) it is paid to the person in the temporary period of non-residence, and (b) ignoring this section, it is not chargeable to tax under this Part (or would not be if a DTR claim were made in respect of it). (4) A “relevant withdrawal” is— (a) any income withdrawal paid to the person from a member's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme, (b) any dependants' income withdrawal paid to the person from a dependant's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme, (c) any nominees' income withdrawal paid to the person from a nominee's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme, (d) any successors' income withdrawal paid to the person from a successor's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme, (e) any payment to the person of a short-term annuity purchased using sums or assets out of a member's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme, (f) any payment to the person of a dependants' short-term annuity purchased using sums or assets out of a dependant's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme, (g) any payment to the person of a nominees' short-term annuity purchased using sums or assets out of a nominee's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme, (h) any payment to the person of a successors' short-term annuity purchased using sums or assets out of a successor's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme, (i) any uncrystallised funds pension lump sum paid to the person in respect of an arrangement relating to the person under a registered pension scheme, but only so far as section 579A applies in relation to the sum (see section 636A), (j) any income withdrawal, or dependants' income withdrawal, paid before 6 April 2015 to the person under a registered pension scheme in respect of an arrangement relating to the person under the scheme which at the time of the payment was an arrangement to which section 165(3A) or 167(2A) of FA 2004 applied (flexible drawdown arrangements), (k) any payment to the person of a lifetime annuity or dependants' annuity where— (i) the annuity is within paragraph 3(1A) or 17(1ZA), as the case may be, of Schedule 28 to FA 2004, (ii) the terms of the contract under which the annuity is paid are such that there will or could be decreases in the amount of the annuity other than decreases from time to time allowed by regulations under paragraph 3(1)(d) or 17(1)(c), as the case may be, of Schedule 28 to FA 2004 (and any such regulations are to be treated as having effect for this purpose), and (iii) the annuity is purchased using sums or assets held for the purposes of a registered pension scheme, ... (l) any payment to the person of a scheme pension, or dependants' scheme pension, under a money purchase arrangement under a registered pension scheme where— (i) the person first acquired an actual (rather than a prospective) right to receive the scheme pension on or after 6 April 2015, (ii) when the person first acquired that actual right, fewer than 11 other individuals were entitled to the present payment of a scheme pension, or dependants' scheme pension, under the registered pension scheme, and (iii) the scheme pension is not payable under an annuity contract treated under section 153(8) or (8A) of FA 2004 as having become a registered pension scheme, or (m) any payment to the person of a lump sum to which section 579A applies by virtue of section 636A(4ZA). (4A) For the purpose of determining whether the figure specified in subsection (2) is exceeded, any relevant withdrawal paid in a currency other than sterling is to be translated into sterling using the average exchange rate for the year ending with 31 March in the tax year in which the relevant withdrawal is paid. (5) Nothing in any double taxation relief arrangements is to be read as preventing the person from being chargeable to income tax in respect of any relevant withdrawal treated by virtue of this section as accruing in the period of return (or as preventing a charge to that tax from arising as a result). (6) Part 4 of Schedule 45 to FA 2013 (statutory residence test: anti-avoidance) explains— (a) when a person is to be regarded as “temporarily non-resident”, and (b) what “the temporary period of non-residence” and “the period of return” mean. (7) In this section— “double taxation relief arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010; “DTR claim” means a claim for relief under section 6 of that Act; “dependants' annuity”, “dependant's flexi-access drawdown fund”, “dependants' scheme pension”, “dependants' short-term annuity”, “lifetime annuity”, “member's flexi-access drawdown fund”, “money purchase arrangement”, “nominee's flexi-access drawdown fund”, “scheme pension”, “short-term annuity”, “successor's flexi-access drawdown fund” and “uncrystallised funds pension lump sum” have the same meaning as in Part 4 of FA 2004 (see section 152 of FA 2004 and paragraphs 2, 3, 6, 8A, 16 to 16C, 17, 20, 22A, 27E and 27K of Schedule 28, and paragraph 4A of Schedule 29, to FA 2004).
Propose a change(1) This section applies if— (a) an amount of inheritance tax that is attributable to the value of notional pension property of a deceased member of a registered pension scheme is paid, (b) some or all of the inheritance tax paid— (i) is repaid under section 241(1) of that Act to a person, other than a non-qualifying person, who is entitled to receive benefits under the scheme on the deceased’s death (a “beneficiary”), or (ii) is repaid under that section to the deceased’s personal representatives and passed on by the personal representatives to a beneficiary, (c) in a case in which the payment of inheritance tax mentioned in paragraph (a) was made by the beneficiary or by the deceased’s personal representatives, a deduction is allowed under section 567B in respect of the payment, and (d) the deceased was aged 75 or over at the date of their death. (2) The relevant amount is treated for the purposes of this Part as though it were a pension paid under the registered pension scheme (and is treated as accruing in the tax year in which it is paid). (3) In subsection (2) “the relevant amount” means— (a) in a case in which the payment of inheritance tax mentioned in subsection (1)(a) is made by the scheme administrator, the amount of the payment made to the beneficiary mentioned in subsection (1)(b)(i) or (ii); (b) in a case in which the payment of inheritance tax mentioned in subsection (1)(a) is made by a beneficiary or by the deceased’s personal representatives, the lesser of— (i) the amount of the payment made to the beneficiary mentioned in subsection (1)(b)(i) or (ii), and (ii) the deduction allowed under section 567B in respect of the payment of inheritance tax mentioned in subsection (1)(a). (4) In this section— “inheritance tax” includes interest on inheritance tax; “non-qualifying person” has the same meaning as in section 206 of FA 2004 (special lump sum death benefit charge).
Propose a changeIn this Chapter— “income withdrawal” has the meaning given by paragraph 7 of that Schedule; “nominees' income withdrawal" has the meaning given by paragraph 27D of that Schedule; “successors' income withdrawal" has the meaning given by paragraph 27J of Schedule 28 to FA 2004. “pension under a registered pension scheme” includes— an annuity under, or purchased with sums or assets held for the purposes of, or representing acquired rights under, a registered pension scheme, and income withdrawal or dependants' income withdrawal , or nominees' income withdrawal or successors' income withdrawal, under a registered pension scheme.
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