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HMRC internal manual

Employment Income Manual

Employer-financed retirement benefits schemes: receipts excluded from charge: prior employer contributions made only before 6 April 2006

Paragraphs 53 and 54(1)-(2)(a) Schedule 36 FA 2004

[Notice: the guidance on this page should be read with the notice at the top of EIM15015]

A lump sum received after 5 April 2006 that is otherwise chargeable under Section 394 ITEPA 2003 (see EIM15010) is not chargeable if the employer has made no contributions to the scheme after 5 April 2006 provided that the employee has been taxed on employer contributions made before 6 April 2006 under Section 595 ICTA 1988 or Section 386 ITEPA 2003 (see SE15040 and EIM15412 respectively) and


  • All of the income and gains of the scheme (whether as a non-approved scheme before 6 April 2006 or as an employer-financed scheme after on or after that date) have been within the charge to UK tax and
  • The lump sum is provided to the employee, a relative (see below) of the employee, the personal representatives of the employee, an ex-spouse of the employee, (from 5 December 2005) a former civil partner of the employee (see below) or any other individual designated by the employee


  • The scheme was entered into before 1 December 1993 and has not been varied since then (see EIM15416 for the meaning of “varied”)

“Relative” means wife, husband or civil partner, widow, widower or surviving civil partner, child or dependant

‘Former civil partner’ means a member of a civil partnership that has been dissolved or annulled


  • If the employer made contributions only before 6 April 2006 and any of the conditions above are not met see EIM15129
  • If the employer made contributions to the scheme after 5 April 2006 as well as on or before that date, see EIM15128.