Part 9Pension income

F1CHAPTER 15ALump sums under registered pension schemes

Tax treatment of authorised lump sums

637DUncrystallised funds pension lump sums

(1)

Subject to subsection (2), where an uncrystallised funds pension lump sum is paid under a registered pension scheme—

(a)

no liability to income tax arises on 25% of the lump sum, and

(b)

section 579A (pensions) applies in relation to the remainder of the lump sum as it applies to any pension under a registered pension scheme.

(2)

If—

(a)

an uncrystallised funds pension lump sum is paid under a registered pension scheme, and

(b)

25% of the lump sum is an amount that exceeds the permitted maximum,

section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3)

In subsection (2) “the permitted maximum”, in relation to an uncrystallised funds pension lump sum paid to a member, means the lower of the following amounts—

(a)

so much of the member’s lump sum allowance as is available F2on the member becoming entitled to the lump sum (see section 637Q);

(b)

so much of the member’s lump sum and death benefit allowance as is available F3on the member becoming entitled to the lump sum (see section 637S).