RPSM04101050 - Technical Pages: Taxation: Authorised member payments: Other transitional issues

Other transitional issues

From 6 April 2006 all pension and annuity payments from all types of registered pension schemes, including existing pension schemes that automatically become registered pension schemes (see RPSM02100020) will be assessed on an accruals basis. As this will mean a change in the basis of assessment for some annuity payments the following transitional provisions are needed.

Pensions accrued but not taxed before 6 April 2006

A pension from a former approved superannuation fund or personal pension scheme that was

• accrued but not taxed before 6 April 2006 and
• paid after 6 April 2006

will be treated as if it accrued after 5 April 2006 when the annuity is paid/received. Tax should be deducted from the payment made after 5 April 2006. This ensures that such an annuity payment remains ordinarily assessable to income tax.

Pension taxed before 6 April 2006 but accrued after 5 April 2006

A pension from a former approved superannuation fund or personal pension scheme that was

• paid and taxed before 6 April 2006, but
• did not accrue until after 5 April 2006

is not taxable as pension income from 6 April 2006. This ensures that the annuity is not taxed twice.