EIM15015 - Non-approved and employer-financed retirement benefits schemes: tax charges

Sections 386, 393 and 394(1) ITEPA 2003

A tax charge arises where there is a lump sum receipt:

• From a non-approved scheme (see definition in EIM15020) before 6 April 2006 or
• From an employer-financed scheme (see definition in EIM15020) after 5 April 2006 provided that it is a “relevant benefit” (see EIM15021)

and where an employer makes a contribution to a non-approved scheme before 6 April 2006 (see EIM15040).

The above guidance is subject to the following qualifications:

• Pension income is always charged under Part 9 ITEPA 2003 (see EIM74000 and subsequent guidance)
• If the total amount of the benefits received by an individual from an employer-financed scheme in a tax year is £100 or less, there is no charge (Section 394(1A) ITEPA 2003). If the total exceeds that sum, it is all charged (that is, not just the excess over £100)
• Some receipts are excluded from charge in whole or in part (see EIM15121)
• “transitional” rules may apply where there have been employer contributions to the scheme before 6 April 2006 (whether or not there are such contributions on or after that date): see EIM15121
• contributions by the employee may need to be taken into account (see EIM15123 and EIM15126 for non-approved and employee-financed schemes respectively)