EIM74653 – Social security pension lump sum: applicable year of assessment

Applicable year of assessment

The person liable to a charge to income tax is the person entitled to the lump sum (see EIM74651). The charge is imposed on that person for the applicable year of assessment.

The applicable year of assessment is the tax year including the first day from which payment of the weekly state pension should begin in respect of a new claim or a recommenced claim. This applies regardless of when payment does in fact commence or when the lump sum is paid.

However, there is one exception to this.

On claiming the state pension lump sum, the person can elect to receive the lump sum payment in the tax year immediately following the tax year in which the claim for payment of the weekly state pension takes effect.

If a person elects to receive the lump sum in the later year, then that later year becomes the applicable year of assessment. In that case, the state pension lump sum is assessable for that later year.