C2C1C3C4C5Part 9Pension income
Pt. 9 excluded by 2004 c. 12, Sch. 36 para. 45A(1) (as inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 19)
Pt. 9 modified (6.4.2023) by The Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) Regulations 2023 (S.I. 2023/113), regs. 1(2), 23(2), 24(2), 26(2), 28(2) (with reg. 1(3))
Pt. 9 modified (14.9.2023) by The Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) (No. 2) Regulations 2023 (S.I. 2023/912), regs. 1(2), 9(2), 11(2), 16(2) (with reg. 1(3))
Pt. 9 modified (31.10.2023) by The Registered Pension Schemes (Authorised Member Payments) Regulations 2023 (S.I. 2023/1012), regs. 1, 4
Chapter 2Tax on pension income
566Nature of charge to tax on pension income and relevant definitions
1
The charge to tax on pension income under this Part is a charge to tax on that income excluding any exempt income.
2
“Pension income” means the pensions, annuities and income of other types to which the provisions listed in subsection (4) apply.
This definition applies for the purposes of the Tax Acts.
3
“Exempt income” means pension income on which no liability to income tax arises as a result of any provision of Chapters F815A to 18 of this Part.
This definition applies for the purposes of this Part.
4
These are the provisions referred to in subsection (2)—
Provision | Income | Chapter (of this Part) |
|---|---|---|
Section 569 | United Kingdom pensions | Chapter 3 |
Section 573 | Foreign pensions | Chapter 4 |
Section 577 | United Kingdom social security pensions | Chapter 5 |
F1Section 579A | Pensions under registered pension schemes | Chapter 5A |
Section 609 | Annuities for the benefit of dependants | Chapter 10 |
Section 610 | Annuities under sponsored superannuation schemes | Chapter 10 |
Section 611 | Annuities in recognition of another’s services | Chapter 10 |
Section 615 | Certain overseas government pensions paid in the United Kingdom | Chapter 11 |
Section 619 | The House of Commons Members' Fund | Chapter 12 |
F5. . . | F5. . . | F5. . . |
Section 629 | Pre-1973 pensions paid under OPA 1973 | Chapter 14 |
Section 633 | Voluntary annual payments | Chapter 15 |
F9Section 637B | Pensions treated as arising from payment of pension commencement excess lump sums under registered pension schemes | Chapter 15A |
Pensions treated as arising from payment of trivial commutation lump sums and winding-up lump sums under registered pension schemes | Chapter 15A | |
Section F11637N | Pensions treated as arising from payment of trivial commutation lump sum death benefits F12... under registered pension schemes | Chapter 15A |
567Amount charged to tax
1
The amount of pension income which is charged to tax under this Part for a particular tax year is as follows.
2
In relation to each pension, annuity or other item of pension income, the amount charged to tax is the “net taxable pension income” for the tax year.
3
The net taxable pension income for a pension, annuity or other item of pension income for a tax year is given by the formula—
where—
TPI means the amount of taxable pension income for that pension, annuity or item of pension income for that year (see subsection (4)), and
DPI means the total amount of any deductions allowed from the pension, annuity or item of pension income (see subsection (5)).
4
For the purposes of this Act—
a
the amount of taxable pension income for a pension, annuity or other item of pension income for a tax year is determined in accordance with Chapters 3 to F615A of this Part (which contain provisions relating to this amount for each type of pension income); and
b
in determining the amount of taxable pension income for a pension, annuity or other item of pension income, any exempt income is to be excluded.
5
The deductions allowed from a pension, annuity or other item of pension income are those under—
F7section 567A (deduction to avoid double taxation where Part 7A has applied to the source of the pension income);
section 617 (10% deduction from an overseas government pension to which section 615 applies);
Part 12 (payroll giving).
567AF3Cases in which Part 7A has applied to source of pension income
1
This section applies if—
a
for a tax year there is an amount (“amount TPI”) of taxable pension income for a pension, annuity or other item of pension income,
b
the pension, annuity or other item of pension income accrues or arises out of rights (“the relevant rights”) which represent, or have arisen or derived (directly or indirectly) from, a sum of money or asset which was the subject of a relevant step within the meaning of Part 7A, and
c
Chapter 2 of that Part applied by reason of the relevant step.
2
A deduction is allowed from amount TPI.
3
The amount of the deduction allowed is the amount (“amount EI”) which counted as employment income of A under Chapter 2 of Part 7A in relation to the relevant step (see section 554Z2(1)).
4
If amount EI exceeds amount TPI, the excess is to be carried forward to future tax years to be deducted under this section (when applicable) until all of amount EI has been deducted.
5
Subsection (6) applies if it is determined on a just and reasonable basis that the relevant rights represent, or have arisen or derived from, only part of the sum of money or asset which was the subject of the relevant step.
6
In subsection (3) the reference to the amount which counted as employment income is to be read as a reference to the corresponding proportion of that amount.
568Person liable for tax
For the provision identifying which person is liable for any tax charged under this Part on a pension, annuity or other item of pension income, see Chapters 3 to F215A.
Pt. 9: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)