(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
[PN17.7]
A lump sum benefit payable on retirement or otherwise under
an approved scheme is not chargeable to income tax under Schedule E
by virtue of section 189 ICTA 1988. The reference in section 189 to
“or otherwise” covers the position of members subject
to the pre-Finance Act 1989 basis for late retirement who defer
retirement beyond normal retirement date but take their lump sum
retirement benefit in advance of actual retirement (see
PSI9.2.9). Such lump sums are
also excluded from chargeability under section 148 ICTA 1988 by
virtue of sub-paragraph 4, Part I, Schedule 9 Finance Act 1998.
Section 189 ICTA 1988 also exempts from Schedule E any
authorised lump sum paid to an ex- spouse member (see
PSI24.2.4). Section 148 ICTA
does not apply to such lump sum benefits.
