Income Tax (Earnings and Pensions) Act 2003 section 580

Pensions and annuities

Section 580 establishes the income tax treatment of pensions and annuities paid by approved retirement benefits schemes, covering both retirement payments and bought-out annuities.

• Pensions and annuities paid on retirement from an approved retirement benefits scheme are taxable as pension income, including income drawdowns
• Annuities purchased through the operation of an approved scheme are also taxable, such as deferred annuities, annuities arising on scheme wind-up, or annuities to discharge a pension sharing order
• The section does not apply where a member transfers benefits to an approved personal pension scheme and takes an annuity or income withdrawals from that scheme — those are taxed separately under the rules for approved personal pension schemes
• The section applies to all approved schemes without territorial restriction, including UK-approved schemes operated by or on behalf of a foreign employer