Income Tax (Earnings and Pensions) Act 2003 section 408

Exception for contributions to registered pension schemes

Section 408 provides an exception from the tax charge on termination payments where the employer makes a pension contribution as part of a termination arrangement.

• Pension contributions linked to termination of employment are excluded from the termination payments tax charge
• The contribution must be made to a registered pension scheme or an employer-financed retirement benefit scheme
• The contribution must form part of an arrangement relating to the end of the person's employment
• The purpose of the contribution must be to provide retirement benefits for the individual under the scheme or approved personal pension arrangements