[s214][s215] [s254][The Registered Pension Schemes
(Accounting and Assessment)Regulations 2005 (SI
2005/3454)][s636A(5), Chapter 15A, ITEPA 2003][Para 11, Sch
31]
Payment of a
lifetime allowance excess lump sum will give rise
to a
chargeable amount. It is this chargeable amount
which is subject to a
lifetime allowance charge (at the rate of 55%),
not the payment of the lump sum itself.
This lifetime allowance charge is a charge to income tax, and
liability for that charge falls ‘jointly and severally’
on the individual and
scheme administrator. The scheme administrator
must pay the charge due, and is likely to fund this by deducting
the charge due before making the payment and reducing the lifetime
allowance excess lump sum accordingly. The scheme administrator
must account for the charge direct with HMRC.
If the scheme administrator fails to pay the charge due
because, having made reasonable efforts to ascertain the extent of
any chargeable amount arising, they believed that either there was
no liability, or a lower liability than actually was the case, they
may be able to demonstrate that they acted in ‘good
faith’ and apply to HMRC to have their liability discharged.
If their application is successful the individual will become
solely liable for the charge due.
See
RPSM11105310 to
RPSM11105390 for a more detailed
explanation.
The actual payment of the lifetime allowance excess lump sum
attracts no additional income tax charge in the hands of the
recipient.
| Glossary ( RPSM20000000) |
