PSI17.2.37 - Tax Treatment of Approved Schemes and Payments by Approved Schemes: Taxation of Payments to Scheme Members - Unauthorised Lump Sum Payments - Tax on Refunded Contributions

(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)

Although the purpose of section 598 tax is to recoup tax relief where its pension purpose is frustrated, there is no other link between the charge and the amount of any relief given. The liability to pay the tax is the administrator’s and not the employee’s but some scheme rules provide for the liability to be recovered out of the refund. The refund is not the employee’s income for tax purposes nor is any such recovery a deduction of personal income tax.

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