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Legislation
Income Tax (Earnings and Pensions) Act 2003

Crossheading Tax treatment of authorised lump sums

  • Section 637A Pension commencement lump sums
  • Section 637B Pension commencement excess lump sums
  • Section 637C Serious ill-health lump sums
  • Section 637D Uncrystallised funds pension lump sums
  • Section 637E Short service refund lump sum
  • Section 637F Refund of excess contributions lump sums
  • Section 637G Trivial commutation lump sums and winding-up lump sums
  1. Tax treatment of authorised lump sums
  2. Uncrystallised funds pension lump sums

Section 637D | Uncrystallised funds pension lump sums F1

From legislation.gov.uk

(1)Subject to subsection (2), where an uncrystallised funds pension lump sum is paid under a registered pension scheme—F1

(a)no liability to income tax arises on 25% of the lump sum, andF1

(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.F1

(2)If—F1

(a)an uncrystallised funds pension lump sum is paid under a registered pension scheme, andF1

(b)25% of the lump sum is an amount that 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 an uncrystallised funds pension lump sum paid to a member, means the lower of the following amounts—F1

(a)so much of the member’s lump sum allowance as is available on the member becoming entitled to the lump sum (see section 637Q);F1F2

(b)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).F1F3

Notes

  1. F1

    Pt. 9 Ch. 15A substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 41, 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4; and (18.11.2024 for the tax year 2024-25 and subsequent tax years) by S.I. 2024/1012, regs. 1(2)(3), 17)

  2. F2

    Words in s. 637D(3)(a) substituted (for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 3(2)

  3. F3

    Words in s. 637D(3)(b) substituted (for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 3(2)

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