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HMRC internal manual

Employment Income Manual

Pensions: deductions

Section 567(5) ITEPA 2003

Section 567(5) ITEPA 2003 authorises the only statutory deductions from pension income. These are:

  • the one-tenth deduction that is allowed in respect of certain overseas government pensions, or
  • payroll giving.

The one-tenth deduction against certain overseas government pensions

A special deduction of one-tenth of the amount of a pension from an overseas government is made in charging tax on it under Section 615 ITEPA 2003 by virtue of Section 617 ITEPA 2003. The deduction is only given against the pensions described in EIM74006.

Deduction for payroll giving’

By virtue of Part 12 ITEPA 2003, any sum withheld by a pension provider as a donation to charity under a payroll deduction scheme is allowable as a deduction.