RPSM09104640 - Technical Pages: Member benefits: Lump sums: Serious ill-health lump sum: Taxation

If the lump sum was paid on or after 6 April 2011 you should first read RPSM09104660.

Taxation of a serious ill-health lump sum

There is no charge to income tax on payment of a serious ill-health lump sum paid to a member who has not reached the age of 75, either on the individual or the scheme administrator (unless the lifetime allowance is an issue - see RPSM09104630).

A serious ill-health lump sum paid on or after 6 April 2011 to a member who has reached the age of 75 is liable to the serious ill-health lump sum charge to income tax at the rate of 55%. The scheme administrator is the person liable for paying this charge so they will normally deduct the tax from the lump sum before payment.