Income Tax (Earnings and Pensions) Act 2003 section 307

Death or retirement benefit provision

Section 307 exempts employer contributions towards death or retirement benefits from the income tax charge that would otherwise apply under the benefits code.

• No income tax arises under the residual benefits charge when an employer makes provision for an employee's retirement or death benefits through a registered pension scheme or otherwise.
• Retirement or death benefits include pensions, annuities, lump sums, gratuities, or similar payments made to the employee, to another individual on their behalf, or to a charity upon retirement or death.
• The exemption does not apply where the provision is specifically to insure against the risk that an employer-financed retirement benefits scheme cannot pay benefits because the employer becomes insolvent.
• An employee typically nominates who should receive any death benefits, and the exemption covers payments to the employee's family, household members, or a charity.