SE15170 - Non-approved "retirement benefits schemes": ex-gratia (voluntary) payments

Statement of Practice 13/91

The application of Section 596A ICTA 1988 to ex-gratia or voluntary payments made on retirement or death is set out in Statement of Practice SP13/91. Such payments are within the scope of the Section whenever there is a “scheme” (see SE15028).

However, the Statement also introduced a new procedure under which certain payments could be given “approved” status on application to IR SPSS (Nottingham). Where approval is given, the payment is exempt from tax.

Under the procedure an employer may apply to IR SPSS (Nottingham) either before or after the payment is made. A payment will only be considered for approval by IR SPSS (Nottingham) where:

• no other lump sum benefit from an approved or statutory retirement benefits scheme (see SE15030) is payable in respect of the employment and
• normal requirements for Inland Revenue approval, as set out in Booklet IR12, are met (for example, the time limits for seeking approval apply).

If approval is granted by IR SPSS (Nottingham) the Inspector dealing with the employer's accounts will be notified by that office.

The Statement also grants approved status without an application to IR SPSS (Nottingham) in some circumstances: see SE15172.