EIM15015 - Employer-financed retirement benefits schemes: tax charges

Note: The guidance in this section (from EIM15015 to EIM15399) applies only to receipts from an employer-financed retirement benefits scheme and so applies only from 6 April 2006. If dealing with a receipt before that date proceed in accordance with the guidance for receipts from a non-approved retirement benefits scheme in the second section (from EIM15400 to EIM15499).

Sections 394(1) ITEPA 2003

A tax charge arises where there is a lump sum receipt from an employer-financed retirement benefits scheme (see definition in EIM15020) after 5 April 2006, provided that it is a “relevant benefit” (see EIM15021).

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 retirement benefits 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 EIM15126)