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

Interpretation of Chapter

Section 637U provides the definitions and interpretive rules needed to apply the tax treatment of pension lump sums and lump sum death benefits under this Chapter, including how to handle transfers between pension schemes after 5 April 2024.

• For defined benefits arrangements, the maximum lump sum that "could have been paid" on 5 April 2024 is determined using the appropriate limit under paragraph 15(4) of Schedule 36 to FA 2004, and on the assumption that all preconditions for payment were met.
• Key terms used throughout the Chapter are defined here: "relevant lump sum death benefit" and "non-taxable amount" take their meanings from section 637S, while "the post-5th April 2024 period" runs from 6 April 2024 to the date the lump sum is actually paid.
• Where pension funds have been transferred between schemes after 5 April 2024 before a lump sum is paid, the maximum that "could have been paid" on 5 April 2024 under the paying arrangement is determined by reference to what could have been paid under the original (predecessor) arrangement, based on the transferred sums and assets.
• Any relevant benefit crystallisation event that occurred under a predecessor arrangement counts as if it occurred under the paying arrangement, to the extent it relates to the sums and assets used to provide the lump sum — and all references to lump sums in these rules include lump sum death benefits.