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PART 9 continued CHAPTER 9 continued
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).
If section 605 applies, the taxable pension income for a tax year is the full amount of the annuity arising in that year.
If section 605 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the annuity.
(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.
(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.
(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.
(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.
(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);
(c) section 585 (relief on delayed remittances).
(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.
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.
(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
(c) any territory under Her Majesty’s protection.
(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.
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.
A deduction of 10% is allowed from an amount of taxable pension income determined under section 616 (see section 567).
If section 615 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension.
This section applies to any periodical payment granted out of—
(a) the House of Commons Members' Fund,
(b) sums appropriated from that Fund, or
(c) income from sums appropriated from that 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).
If section 619 applies, the taxable pension income for a tax year is the total amount of the payments made in that year.
If section 619 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the payments.
(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.
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.
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.
(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.
(1) In section 624 “grossing up” by reference to the basic rate means calculating the amount (“the gross amount”) which after deduction of income tax at the basic rate would equal the amount to be grossed up (“the net amount”).
(2) The gross amount is the sum of the net amount and the tax deducted.
(1) In this Chapter—
“employee”—
includes a person who is to be, or has been, an employee, and
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;
“exempt approved scheme” has the meaning given in section 592(1) of ICTA;
“relevant statutory scheme” has the meaning given in section 611A(1) of ICTA.
(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,
(c) in the case of a company the affairs of which are managed by the members themselves, a member of that company,
and includes a person who is to be or has been a director.
(3) If section 623 applies to a payment made out of funds which are or have been held for the purposes of a relevant statutory scheme established under a public general Act, any reference in this Chapter to an employee includes references to a person who holds an office, to a person who is to hold an office and to a person who has ceased to hold an office.
This is without prejudice to subsection (1).
(4) For the purposes of subsection (3) “office” includes in particular any position which has an existence independent of the person who holds it and may be filled by successive holders.
(1) This section applies to a pension if—
(a) it is paid under section 1 of OPA 1973 (whether or not paid out of a fund established under a scheme made under that section),
(b) it is a pre-1973 pension, and
(c) it is paid to—
(i) the original pensioner, or
(ii) the widow or widower of the original pensioner.
(2) But this section does not apply to a part of a pension which is paid because the Pensions (Increase) Act 1971 (c. 56) applies to it (and accordingly section 569 applies to that part of the pension).
(3) Chapter 18 of this Part provides an exemption where a pension to which this section applies is paid to a person who is not resident in the United Kingdom (see sections 647 and 651).
(1) For the purposes of this Chapter a person is the “original pensioner” in relation to a pension if—
(a) the pension is payable by virtue of the person’s service, and
(b) the person retired from that service before 6th April 1973.
(2) For the purposes of this Chapter a pension is a “pre-1973 pension” if, immediately before 6th April 1973—
(a) the pension was payable to—
(i) the original pensioner, or
(ii) the widow or widower of the original pensioner, and
(b) that person was resident in the United Kingdom.
(1) If section 629 applies, the taxable pension income for a tax year is the amount on which tax would be chargeable if the pension were charged to tax under Case V of Schedule D for that year (see in particular the provisions of ICTA listed in subsection (2)).
(2) Those provisions of ICTA are sections 65 and 68 (calculation of the amount of the income on which tax is to be charged in the tax year).
If section 629 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension.
(1) This section applies to an annual payment which—
(a) is paid voluntarily, or
(b) is capable of being discontinued,
if conditions A and B are met.
(2) Condition A is that the payment is paid to—
(a) a former employee or a former office-holder,
(b) the widow or widower of a former employee or former office-holder, or
(c) any child, relative or dependant of a former employee or a former office-holder.
(3) Condition B is that the payment is paid by or on behalf of—
(a) the person—
(i) who employed the former employee, or
(ii) under whom the former office-holder held the office, or
(b) the successors of that person.
(4) But this section applies to a payment which is paid by or on a behalf of a person who is outside the United Kingdom only if it is paid to a person resident in the United Kingdom.
(5) In 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.
(1) The taxable pension income for payments to which section 633 applies is determined in accordance with this section if the payments are made by or on behalf of a person who is in the United Kingdom.
(2) The taxable pension income for a tax year is the full amount of the payments accruing in that year irrespective of when any amount is actually paid.
(1) The taxable pension income for payments to which section 633 applies is determined in accordance with this section if the payments are made by or on behalf of a person who is outside the United Kingdom.
(2) The taxable pension income for a tax year is the amount on which tax would be chargeable if the pension 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);
(c) section 585 (relief on delayed remittances).
If section 633 applies, the person liable for any tax charged under this Part is the person receiving or entitled to the payment.
(1) No liability to income tax arises on a lump sum provided under—
(a) approved personal pension arrangements,
(b) a tax-exempt pension scheme, or
(c) a retirement annuity contract.
(2) But subsection (1)(b) applies to a lump sum paid in compensation for loss of office or employment, or for loss or diminution of earnings, only if—
(a) the payment is properly regarded as earned by past services, or
(b) the loss of office or employment, or the loss or diminution of earnings, is due to ill-health.
(3) Subsection (1)(b) does not apply to a lump sum to which section 583 (approved retirement benefits schemes: unauthorised payments) or section 623 (return of surplus AVCs) applies.
This includes cases where section 583 applies by virtue of section 593.
(4) Subsection (1)(c) applies to a lump sum only if it is provided in consequence of a right which meets the conditions in paragraphs (a) and (b) of section 620(3) of ICTA.
(5) In this section—
“approved personal pension arrangements” has the same meaning as in Chapter 4 of Part 14 of ICTA (see section 630(1) of ICTA);
“earnings” means earnings or amounts treated as earnings which constitute employment income (see section 7(2)(a) or (b));
“office” includes in particular any position which has an existence independent of the person who holds it and may be filled by successive holders;
“retirement annuity contract” has the same meaning as in Chapter 9 of this Part (see section 606).
(6) In this section “tax-exempt pension scheme” means—
(a) a retirement benefits scheme which is—
(i) an approved scheme,
(ii) a relevant statutory scheme, or
(iii) a scheme set up by a government outside the United Kingdom for the benefit, or primarily for the benefit, of its employees, or
(b) any such scheme or fund as was described in section 221(1) and (2) of ICTA 1970 (schemes to which payments could be made without charge to tax under section 220 of that Act).
(7) For the purposes of subsection (6)—
“relevant statutory scheme” has the meaning given in section 611A(1) of ICTA;
“retirement benefits scheme” has the meaning given in section 611 of ICTA;
“approved”, in relation to a retirement benefits scheme, means that the scheme is approved by the Board of Inland Revenue for the purposes of—
Chapter 2 of Part 2 of FA 1970, or
Chapter 1 of Part 14 of ICTA.
(1) No liability to income tax arises on a pension or annuity if it is paid to the holder of an award for bravery in respect of the award.
(2) In this section “award for bravery” means—
the Victoria Cross,
the George Cross,
the Albert Medal,
the Edward Medal,
the Military Cross,
the Distinguished Flying Cross,
the Distinguished Conduct Medal,
the Conspicuous Gallantry Medal,
the Distinguished Service Medal,
the Military Medal,
the Distinguished Flying Medal.
No liability to income tax arises on these pensions and allowances—
(a) a pension or allowance payable by or on behalf of the Department of Work and Pensions under so much of any Order in Council, Royal Warrant, order or scheme as relates to death due to—
(i) service in the armed forces of the Crown,
(ii) wartime service in the merchant navy, or
(iii) war injuries;
(b) a pension or allowance—
(i) payable by the Ministry of Defence in respect of death due to peacetime service in the armed forces of the Crown before 3rd September 1939, and
(ii) payable at rates, and subject to conditions, similar to those of a pension within paragraph (a);
(c) a pension or allowance—
(i) payable under the law of a country other than the United Kingdom, and
(ii) of a character substantially similar to a pension within paragraph (a) or (b).
(1) This section applies if—
(a) an individual is entitled to both of the following—
(i) a pension or allowance mentioned in section 639 (“pension A”), and
(ii) any other pension or allowance (“pension B”), and
(b) the whole or a part of pension A is withheld because of the individual’s entitlement to pension B.
(2) In such a case, an amount of pension B equal to the withheld amount of pension A is treated for the purposes of section 639 as part of pension A.
(1) No liability to income tax arises on—
(a) a wounds pension granted to a member of the armed forces of the Crown;
(b) retired pay of a disabled officer granted on account of medical unfitness attributable to or aggravated by service in the armed forces of the Crown;
(c) a disablement or disability pension granted to a member of the armed forces of the Crown, other than a commissioned officer, on account of medical unfitness attributable to or aggravated by service in the armed forces of the Crown;
(d) a disablement pension granted to a person who has been employed in the nursing services of any of the armed forces of the Crown on account of medical unfitness attributable to or aggravated by service in the armed forces of the Crown;
(e) an injury or disablement pension payable under any scheme made under—
(i) the Injuries in War (Compensation) Act 1914 (c. 30), or
(ii) the Injuries in War (Compensation) Act 1914 (Session 2) (5 & 6 Geo. 5 c. 18);
(f) an injury or disablement pension payable under any War Risks Compensation Scheme for the Mercantile marine;
(g) a pension—
(i) granted to a person on account of disablement, and
(ii) payable under any scheme made under section 3, 4 or 5 of the Pensions (Navy, Army, Air Force and Mercantile Marine) Act 1939 (c. 83).
(2) But if the Secretary of State certifies that a pension or retired pay of a kind listed in subsection (1) is only partly attributable to disablement or disability, that subsection applies only to the part attributable to disablement or disability.
No liability to income tax arises on a pension or annuity which is payable under any special provision for victims of National-Socialist persecution which is made by the law of—
(a) the Federal Republic of Germany or any part of it, or
(b) Austria.
(1) No liability to income tax arises on—
(a) a Malawi government pension,
(b) a Trinidad and Tobago government pension, or
(c) a Zambia government pension,
if conditions A, B and C are met.
(2) Condition A is that the pension is paid to—
(a) the original pensioner, or
(b) the widow or widower of the original pensioner.
(3) Condition B is that the pension is now paid under section 1 of OPA 1973 (whether or not it is paid out of a fund established under a scheme made under that section).
(4) Condition C is that, at the time the pension is paid, provision is made by double taxation relief arrangements which would exempt the pension from income tax in the United Kingdom if the pension were still paid by the relevant government (rather than under section 1 of OPA 1973).
(5) Subsection (1) does not apply to any part of a pension which is paid because the Pensions (Increase) Act 1971 (c. 56) applies to it.
(6) In this section—
“double taxation relief arrangements” means arrangements specified in an Order in Council making any such provisions as are referred to in section 788 of ICTA;
“Malawi government pension” means a pension payable by the government of Malawi for services rendered—
to the government of Malawi, or
to the government of the Federation of Rhodesia and Nyasaland,
in the discharge of government functions;
“Trinidad and Tobago government pension” means a pension payable by the government of Trinidad and Tobago for services rendered to the government of Trinidad and Tobago in the discharge of governmental functions;
“Zambia government pension” means a pension payable by the government of Zambia for services rendered—
to the government of Zambia,
to the government of Northern Rhodesia, or
to the government of the Federation of Rhodesia and Nyasaland,
in the discharge of governmental functions.
(7) For the purposes of this section a person is the “original pensioner” in relation to a pension if—
(a) the pension is payable by virtue of the person’s service, and
(b) the person retired from that service before 6th April 1973.
Income Tax (Earnings and Pensions) Act 2003