Income Tax (Earnings and Pensions) Act 2003 section 567

Amount charged to tax

Section 567 explains how the amount of pension income charged to income tax for a tax year is calculated, using the concept of "net taxable pension income".

• Each pension, annuity or other item of pension income is assessed separately to arrive at its own net taxable pension income figure for the tax year.
• Net taxable pension income is calculated using the formula: taxable pension income minus allowable deductions (TPI − DPI).
• The taxable pension income figure for each type of pension income is determined under the specific rules in Chapters 3 to 15A of Part 9, and any exempt income must be excluded from that figure.
• Allowable deductions include relief under section 567A to prevent double taxation where Part 7A has applied to the source of the pension income, and a 10% deduction under section 617 for certain overseas government pensions paid in the UK.