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, ordinarily resident 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 is a charge in respect of the amount of the lump sum at the following rate—
a
if P’s total income for the applicable year of assessment is nil, 0%;
b
if P’s total income for that year of assessment is greater than nil but does not exceed the starting rate limit for that year, the starting rate for that year;
c
if P’s total income for that year of assessment exceeds the starting rate limit but does not exceed the basic rate limit for that year, the basic rate for that year;
d
if P’s total income for that year of assessment exceeds the basic rate limit for that year, the higher 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.