Income Tax (Earnings and Pensions) Act 2003 section 583

Unauthorised payments

Section 583 deals with the tax treatment of unauthorised payments made by approved retirement benefits schemes, setting out when such payments are taxable as pension income.

• An unauthorised payment from an approved pension scheme — one not permitted by the scheme rules — is taxable as pension income of the member or beneficiary who receives it.
• The section only applies to schemes that held approved status at the time the unauthorised payment was made, and does not apply to payments already taxed as returns of surplus additional voluntary contributions.
• Pensions and annuities are excluded from this section to avoid overlap with other charging provisions, and safeguards prevent double taxation where payments such as repayments of employee contributions or commuted pensions are involved.
• The term "payment" is broadly defined and can include transfers of value and other benefits, not just cash payments.