Income Tax (Earnings and Pensions) Act 2003 section 637Q

Availability of individual's lump sum allowance

Section 637Q explains how to determine how much of an individual's lump sum allowance remains available each time they become entitled to a pension commencement lump sum or an uncrystallised funds pension lump sum from 6 April 2024 onwards.

• The lump sum allowance is used up each time an individual takes a tax-free pension commencement lump sum or an uncrystallised funds pension lump sum (collectively called "relevant lump sums")
• If no relevant lump sum has previously been taken on or after 6 April 2024, the full lump sum allowance is available
• If relevant lump sums have been taken before, the available allowance is reduced by the total of the tax-exempt portions of all previous relevant lump sums taken on or after 6 April 2024
• Transitional rules in Schedule 9, paragraph 125 of Finance Act 2024 may further reduce the available allowance to reflect lump sums taken before 6 April 2024