Employment income: retirement lump sums: Section 637 ITEPA 2003
Section 637 ITEPA 2003
Certain retirement lump sums are not chargeable as employment income (see EIM00510). These are lump sums paid out of schemes:
- within Section 387(2) ITEPA 2003 (see EIM15030), or
- which are approved personal pension arrangements (see EIM01570) or retirement annuity contracts.
However this exemption does not apply if the payment is compensation for:
- loss of office or employment (see EIM12852), or
- loss of or diminution of earnings unless the payment is regarded as earned by past services or due to ill-health.
If the payment is not authorised by the rules of an approved scheme Section 583 ITEPA 2003 may tax it. Advise IR SPSS (Nottingham) before assessing such a payment.
The treatment of lump sums from non-approved schemes is dealt with at EIM15000 and termination payments generally at EIM13660.