EIM15122 - Non-approved retirement benefits schemes: receipts excluded from charge: prior employer contributions

Sections 395(2) and (4) and 396 ITEPA 2003

Note: This guidance applies only to receipts from a non-approved retirement benefits scheme (see EIM15010) and so applies only before 6 April 2006. If dealing with a receipt on or after that date from an employer-financed scheme see EIM15121 for guidance

There is no charge under Section 394 ITEPA 2003 if the receipt is attributable to:

• prior employer contributions on which the employee has been taxed under Section 595(1) ICTA 1988 (seeSE15040) or Section 386 ITEPA 2003 (see EIM15040 and example EIM15428)

Notes

• Section 396(2) ITEPA 2003 places the onus on the person receiving a lump sum to show that the amount paid is attributable to contributions that have been taxed.
• FA 1994 introduced important exceptions to this rule to deter avoidance of tax, see EIM15060.
• Attributing lump sums from the scheme to contributions is a matter of fact. This should be done on any reasonable basis and excessive time should not be spent on this (see example EIM15428).