Section 637D — Income Tax (Earnings and Pensions) Act 2003: Uncrystallised funds pension lump sums

Uncrystallised funds pension lump sums 637D 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 on 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 on the member becoming entitled to the lump sum (see section 637S).