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HMRC internal manual

Employment Income Manual

Employment income provided through third parties: exclusions: Summary of structure of guidance on retirement benefits etc

There are a number of exclusions which prevent a relevant step giving rise to Part 7A income.

The next sequence of pages tells you about the exclusions which are specific to pension arrangements.

EIM45605 is about Section 554E. If a pension arrangement comes within Section 554E, no relevant step taken under it will give rise to Part 7A income. For example, registered pension schemes come within this exclusion.

EIM45610 is about Section 554S. Under Section 554S, a relevant step within Section 554C or 554D does not give rise to Part 7A income if the step is the provision of pension income which is chargeable to income tax under Part 9 ITEPA 2003 or is exempt income (within the meaning of that Part).

EIM45615 is about Section 554T. Section 554T prevents relevant steps from giving rise to Part 7A income if they are taken in respect of sums of money or assets derived from A’s pension contributions.

EIM45620 is about Section 554U. Section 554U will prevent Part 7A income arising to the extent that the relevant step is in respect of sums of money and assets derived from ‘taxed’ contributions to an EFRBS paid before 6April 2006.

EIM45625 onwards are about Section 554V. In summary, Section 554V shelters the capital cost of annuities from Part 7A ITEPA 2003 to the extent that they are bought out of pre-6 April 2011 annuity rights.

EIM45635 onwards are about Section 554W. In summary, Section 554W shelters from Part 7A ITEPA 2003 certain lump sums paid from certain pension schemes where the lump sums are paid out of rights accruing before 6 April 2011.

EIM45645 onwards are about Section 554X. Section 554X will prevent most transfers of sums and assets from giving rise to Part 7A income to the extent that they derive from employer contributions paid before 6 April 2006 to schemes that HMRC accepted as corresponding to approved pension schemes.

EIM45655 is about regulation 3 of the ‘Excluded Relevant Steps Regulations 2011’. Regulation 3 prevents Part 7A income arising to the extent that the sum or asset involved in a relevant step is sourced from certain funds in particular non-UK pension schemes.

EIM45660 is about regulation 4 of the ‘Excluded Relevant Steps Regulations 2011’. Regulation 4 prevents Part 7A income arising to the extent that the sum or asset involved in the step is sourced from an unauthorised payment under a registered pension scheme.