RPSM09102120 - Technical Pages:
Member benefits: An unsecured pension: Overview: Taxation
Taxation of an unsecured pension
| [Para 6, Sch 31][s579A to 579D, Chapter 5A ITEPA
2003] |
Any
unsecured pension paid is taxable as pension
income on the recipient through PAYE. This applies whether the
pension is paid direct from the scheme as income withdrawal, or
whether paid through a
short-term annuity contract.
The taxable pension income for a tax year is the full amount
of the pension that accrues in that year. Where the unsecured
pension is being provided through income withdrawal, this will be
the amount actually paid in that tax year. However, where being
provided through a short-term annuity contract, the taxable amount
is the amount payable under the terms of that contract for that
year, irrespective of when that amount is actually paid.
RPSM09102130 explains what happens
if the unsecured pension is more than the maximum authorised amount
in any
pension year.
Where the member dies, and payments continue under a
short-term annuity contract because of a guarantee, the recipient
of the continued payments is taxed in exactly the same way as
above.
