Income Tax (Earnings and Pensions) Act 2003 (c. 1)

(The document as of February, 2008)

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582 Person liable for tax

If section 580 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension or annuity.

Unauthorised payments

583 Unauthorised payments

(1) This section applies to a payment if conditions A, B and C are met.

(2) But this section does not apply to a payment to which section 623 applies.

(3) Condition A is that the payment--

(a) is made out of funds which are held for the purposes of an approved retirement benefits scheme ("the paying scheme"), but

(b) is not expressly authorised--

(i) by the rules of the paying scheme, or

(ii) by virtue of paragraph 33 of Schedule 6 to FA 1989.

(4) Condition B is that the payment is not made in the course of payment of a pension or annuity.

(5) Condition C is that the payment is made to or for the benefit of--

(a) an employee, or

(b) an ex-spouse of an employee.

(6) A payment to which this section applies is not to be charged to tax under--

(a) section 598 or 599 of ICTA, or

(b) the Regulations mentioned in paragraph 8 of Schedule 3 to FA 1971.

(7) In this section "payment" includes--

(a) a transfer of assets, and

(b) any other transfer of money's worth.

584 Taxable pension income

If section 583 applies, the taxable pension income for a tax year is the total amount or value of the payments made in that year.

585 Person liable for tax

If section 583 applies, the person liable for any tax charged under this Part is the person mentioned in condition C in section 583(5) to whom, or for whose benefit, the payment is made.

Interpretation etc.

586 Meaning of "retirement benefits scheme" etc.

(1) In this Chapter--

"retirement benefits scheme" has the meaning given in section 611 of ICTA;
"approved", in relation to such a scheme, means that the scheme is approved by the Board of Inland Revenue for the purposes of--
(a)
Chapter 2 of Part 2 of FA 1970, or
(b)
Chapter 1 of Part 14 of ICTA.

(2) Any reference in this Chapter to a pension or annuity paid under a retirement benefits scheme includes a reference to a pension or annuity paid under a contract which--

(a) is made for purposes of the scheme, and

(b) is made between--

(i) the administrator of the scheme,

(ii) the employer, or

(iii) the employee or an ex-spouse of the employee,

and a third party.

(3) In subsection (2) the reference to the employer is a reference to the person who is the employer in relation to the scheme.

(4) In subsection (2)(b)(i) "administrator of the scheme" is to be construed in accordance with section 611AA of ICTA.

(5) References in this Chapter to approved retirement benefits schemes are extended by section 587 (marine pilots' benefit fund).

587 Application to marine pilots' benefit fund

(1) In this Chapter the expression "approved retirement benefits scheme" includes a marine pilots' benefit fund which is approved by the Board of Inland Revenue under section 607 of ICTA for the purposes of Chapter 1 of Part 14 of ICTA.

(2) In any case where the paying scheme for the purposes of section 583(3) is a pilots' benefit fund, the references in section 583(5) to an employee are to be read as references to a member or former member of the fund.

(3) In this section "marine pilots' benefit fund" means--

(a) a fund established under section 15(1)(i) of the Pilotage Act 1983 (c. 21), or

(b) any scheme supplementing or replacing any such fund.

588 Meaning of "employee" and "ex-spouse"

(1) In this Chapter--

"employee"--
(a)
includes a person who is to be, or has been, an employee, and
(b)
in relation to a company, includes any officer or director of the company and any other person taking part in the management of the affairs of the company;
"ex-spouse" means a party to a marriage which has been dissolved or annulled and, in relation to any person, means the other party to a marriage with that person which has been dissolved or annulled.

(2) For the purposes of the definition of "employee" in subsection (1), "director", in relation to a company, includes--

(a) in the case of a company the affairs of which are managed by a board of directors or similar body, a member of that board or body,

(b) in the case of a company the affairs of which are managed by a single director or similar person, that person,

and includes a person who is to be or has been a director.

589 Regulations

The Board of Inland Revenue may make regulations generally for the purpose of carrying the preceding provisions of this Chapter into effect.

Chapter 7 Former approved superannuation funds

Annuities

590 Annuities

This section applies to--

(a) any annuity paid under a former approved superannuation fund, and

(b) any annuity acquired using funds held for the purposes of a former approved superannuation fund.

591 Taxable pension income

If section 590 applies, the taxable pension income for a tax year is the full amount of the annuity paid in that year.

592 Person liable for tax

If section 590 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the annuity.

Unauthorised payments

593 Unauthorised payments: application of section 583

(1) Section 583 applies to a payment if--

(a) the payment is made out of funds which are held for the purposes of a former approved superannuation fund ("the paying fund"), but

(b) it is not expressly authorised--

(i) by the rules of the paying fund, or

(ii) by virtue of paragraph 33 of Schedule 6 to FA 1989, and

(2) But section 583 does not apply to a payment to which section 623 applies.

(3) In this section "payment" includes--

(a) a transfer of assets, and

(b) any other transfer of money's worth.

(4) If section 583 applies to a payment by virtue of this section, sections 584, 585 and 588 apply accordingly.

Interpretation

594 Meaning of "former approved superannuation fund"

(1) In this Chapter "former approved superannuation fund" means any fund which immediately before 6th April 1980 was an approved superannuation fund for the purposes of section 208 of ICTA 1970.

(2) But a fund is not a former approved superannuation fund if any of the following things has happened since 5th April 1980--

(a) the fund has been approved by the Board of Inland Revenue for the purposes of Chapter 2 of Part 2 of FA 1970,

(b) the fund has been approved by the Board for the purposes of Chapter 1 of Part 14 of ICTA, or

Chapter 8 Approved personal pension schemes

Annuities

595 Annuities

This section applies to any annuity acquired using funds held for the purposes of an approved personal pension scheme.

596 Taxable pension income

If section 595 applies, the taxable pension income for a tax year is the full amount of the annuity received in that year.

597 Person liable for tax

If section 595 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the annuity.

Income withdrawals

598 Income withdrawals

This section applies to any income withdrawal under approved personal pension arrangements.

599 Taxable pension income

If section 598 applies, the taxable pension income for a tax year is the total amount of the income withdrawals made in that year.

600 Person liable for tax

If section 598 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the income.

Unauthorised personal pension payments

601 Unauthorised personal pension payments

(1) This section applies to any unauthorised personal pension payment.

(2) In this section "personal pension payment" means a payment which--

(a) is made out of funds which are or have been held for the purposes of a personal pension scheme ("the paying scheme"), and

(b) is made to or for the benefit of an individual who has made personal pension arrangements in accordance with the paying scheme ("the individual's arrangements").

(3) For the purposes of this section a personal pension payment is unauthorised if any of conditions A, B and C are met.

(4) Condition A is that--

(a) the paying scheme and the individual's arrangements are both approved at the time the payment is made, but

(b) the payment is not expressly authorised by the rules of the paying scheme.

(5) Condition B is that--

(a) the paying scheme is not approved at the time the payment is made, and

(b) at the time the scheme was last approved, the payment would not have been expressly authorised under the scheme's rules.

(6) Condition C is that--

(a) the individual's arrangements are not approved at the time the payment is made, and

(b) at the time the arrangements were last approved, the payment would not have been expressly authorised under the arrangements.

(7) In this section "payment" includes--

(a) a transfer of assets, and

(b) any other transfer of money's worth.

602 Taxable pension income

If section 601 applies, the taxable pension income for a tax year is the total amount or value of the payments made in that year.

603 Person liable for tax

If section 601 applies, the person liable for any tax charged under this Part is the individual who made the arrangements mentioned in section 601(2)(b) to whom or for whose benefit the payment is made, whether or not the individual is the recipient of the payment.

Interpretation

604 Meaning of "personal pension scheme" and related expressions

In this Chapter the following expressions have the same meaning as in Chapter 4 of Part 14 of ICTA (see section 630(1) of ICTA)--

(a) "approved";

(b) "income withdrawal";

(d) "personal pension scheme".

Chapter 9 Retirement annuity contracts

605 Annuities

This section applies to any annuity paid under a retirement annuity contract.

606 Meaning of "retirement annuity contract"

In this Chapter "retirement annuity contract" means--

(a) an annuity contract or a trust scheme approved by the Board of Inland Revenue under section 620 of ICTA (qualifying premiums) or under section 621 of ICTA (other approved contracts), or

(b) a substituted contract within the meaning of section 622(3) of ICTA (substituted retirement annuity contracts).

607 Taxable pension income

If section 605 applies, the taxable pension income for a tax year is the full amount of the annuity arising in that year.

608 Person liable for tax

If section 605 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the annuity.

Chapter 10 Other employment-related annuities

609 Annuities for the benefit of dependants

(1) This section applies to any annuity which was granted for consideration consisting in whole or in part of sums which satisfied the conditions for relief under section 273 of ICTA (obligatory contributions to secure an annuity for the benefit of dependants).

(2) But this section applies to an annuity which arises from a source outside the United Kingdom only if it is paid to a person resident in the United Kingdom.

610 Annuities under sponsored superannuation schemes

(1) This section applies to--

(a) any annuity paid under a sponsored superannuation scheme, and

(b) any annuity acquired using funds held for the purposes of a sponsored superannuation scheme.

(2) But this section applies to an annuity which arises from a source outside the United Kingdom only if it is paid to a person resident in the United Kingdom.

(3) This section does not apply to an annuity to which any provision of Chapter 6, 7, 8 or 9 of this Part applies.

(4) In this section "sponsored superannuation scheme" has the meaning given by section 624(1) of ICTA.

611 Annuities in recognition of another's services

(1) This section applies to any annuity purchased by any person in recognition of another person's services in any office or employment.

(2) But this section applies to an annuity which arises from a source outside the United Kingdom only if it is paid to a person resident in the United Kingdom.

(3) This section does not apply to an annuity to which any provision of Chapter 6, 7, 8 or 9 of this Part applies.

(4) For the purposes of 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.

612 Taxable pension income: UK annuities

(1) The taxable pension income for an annuity to which section 609, 610 or 611 applies is determined in accordance with this section if the annuity arises from a source in the United Kingdom.

(2) The taxable pension income for a tax year is the full amount of the annuity arising in that year.

613 Taxable pension income: foreign annuities

(1) The taxable pension income for an annuity to which section 609, 610 or 611 applies is determined in accordance with this section if the annuity arises from a source outside the United Kingdom.

(2) The taxable pension income for a tax year is the amount on which tax would be chargeable if the annuity were charged to tax under Case V of Schedule D for that year (see in particular the provisions of ICTA listed in subsection (3)).

(3) Those provisions of ICTA are--

(a) sections 65 and 68 (calculation of the amount of the income on which tax is to be charged in the tax year);

(b) section 584 (relief for unremittable overseas income);

(4) In the application of sections 65(2) and 585(2) of ICTA in relation to the calculation of the taxable pension income for the purposes of this section, any reference to income arising from a pension is a reference to the annuity.

614 Person liable for tax

If section 609, 610 or 611 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the annuity.

Chapter 11 Certain overseas government pensions paid in the UK

615 Certain overseas government pensions paid in the United Kingdom

(1) This section applies to a pension if conditions A, B and C are met.

(2) Condition A is that the pension--

(a) is payable--

(i) to a person who has been employed in overseas government service, or

(ii) to the widow, widower, child, relative or dependant of a person who has been employed in overseas government service, and

(b) is payable in respect of that service.

(3) Condition B is that the pension--

(a) is payable in the United Kingdom, and

(b) is payable to a person who is resident in the United Kingdom.

(4) Condition C is that the pension is payable by or on behalf of the government of--

(a) a country which forms part of Her Majesty's dominions,

(b) any other country which is for the time being mentioned in Schedule 3 to the British Nationality Act 1981 (c. 61), or

(5) But condition C is not met if the pension is payable out of the public revenue of the United Kingdom or Northern Ireland.

(6) In condition A the references to a person being employed in overseas government service are to the person being employed outside the United Kingdom--

(a) in the service of the Crown, or

(b) in service under the government of a country or territory which falls within subsection (4).

(7) In this Chapter "pension" includes a pension which is paid voluntarily or is capable of being discontinued.

616 Taxable pension income

If section 615 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.

617 Deduction allowed from taxable pension income

A deduction of 10% is allowed from an amount of taxable pension income determined under section 616 (see section 567).

618 Person liable for tax

If section 615 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension.

Chapter 12 House of Commons Members' Fund

619 The House of Commons Members' Fund

This section applies to any periodical payment granted out of--

(a) the House of Commons Members' Fund,

(b) sums appropriated from that Fund, or

620 Meaning of "House of Commons Members' Fund"

In this Chapter "House of Commons Members' Fund" means the fund with that name established by section 1 of the House of Commons Members' Fund Act 1939 (c. 49).

621 Taxable pension income

If section 619 applies, the taxable pension income for a tax year is the total amount of the payments made in that year.

622 Person liable for tax

If section 619 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the payments.

Chapter 13 Return of surplus employee additional voluntary contributions

623 Return of surplus employee additional voluntary contributions

(1) This section applies to a payment if conditions A, B and C are met.

(2) Condition A is that the payment is made out of funds which are or have been held for the purposes of--

(a) a scheme which is or has been an exempt approved scheme, or

(b) a relevant statutory scheme established under a public general Act.

(3) Condition B is that the payment is made under a duty to return surplus funds.

(4) Condition C is that the payment is made to or for the benefit of an employee.

(5) A payment to which this section applies is not to be charged to tax under--

(a) section 598 or 599 of ICTA, or

(b) the Regulations mentioned in paragraph 8 of Schedule 3 to FA 1971.

(6) In this section "payment" includes--

(a) a transfer of assets, and

(b) any other transfer of money's worth.

624 Taxable pension income

If section 623 applies, the taxable pension income for a tax year is the amount equal to the total amount or value of the payments made in that year, grossed up by reference to the basic rate for that year.

625 Person liable for tax

If section 623 applies, the person liable for any tax charged under this Part is the employee mentioned in condition C in section 623(4) to whom or for whose benefit the payment is made.

626 Income tax treated as paid

(1) An employee who is liable for the tax charged on a payment to which section 623 applies is treated as having paid income tax at the basic rate on the amount chargeable.

(2) The income tax treated as paid under subsection (1) is not repayable.

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