Section 637C | Serious ill-health lump sums ^F1

(1)Subject to subsections (2) and (4), no liability to income tax arises on a serious ill-health lump sum paid under a registered pension scheme.^F1

(2)If—^F1

(a)a serious ill-health lump sum is paid under a registered pension scheme to a member who (at the time of the payment) is under 75, and^F1

(b)the lump sum exceeds the permitted maximum,^F1

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 a serious ill-health lump sum paid to a member, means so much of the member’s lump sum and death benefit allowance as is available on the member becoming entitled to the lump sum (see section 637S).^F1F2

(4)If a serious ill-health lump sum is paid under a registered pension scheme to a member who (at the time of the payment) is 75 or over, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme.^F1