Income Tax (Earnings and Pensions) Act 2003 section 554W

Exclusions: certain retirement benefits etc.

Section 554W excludes from the disguised remuneration rules certain lump sum payments from employer-financed retirement benefits schemes or certain superannuation funds, where those lump sums are paid out of rights that accrued before 6 April 2011.

• Lump sums paid entirely from pre-6 April 2011 rights under a relevant retirement scheme are excluded from the disguised remuneration charge in Chapter 2
• Where only part of the lump sum derives from pre-6 April 2011 rights, the payment is split into two notional steps and only the pre-April 2011 portion is excluded
• The apportionment between the two portions must be carried out on a just and reasonable basis
• Excluded lump sums remain taxable under the existing rules for employer-financed retirement benefits schemes or as pension income