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GLOSSARY

Relevant UK earnings definition

Published by a LexisNexis Pensions expert

What does Relevant UK earnings mean?

This means: (1) employment income; (2) income which is chargeable under Schedule D and is immediately derived from the carrying on or exercise of a trade, profession or vocation (whether individually or as a partner acting personally in a partnership); and (3) income to which section 529 of the Income and Corporation Taxes Act 1988 (ICTA 1988) (patent income of an individual in respect of inventions) applies.

Relevant UK earnings are to be treated as not being chargeable to income tax if, in accordance with arrangements having effect by virtue of ICTA 1988, s 788(double taxation agreements), they are not taxable in the UK.

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Retirement Annuity Contracts (RAC)—older types of personal pension schemes

Personal pension schemes—central role in private pensions sectorPersonal pension schemes, in their various forms, play a central and important role in the UK private pensions sector today. They were first introduced on 1 July 1988 and offer a considerable degree of flexibility in that they are available to:•employees (with employers being permitted to contribute and claim the tax relief without a tax penalty falling on the employee)•the self-employed (and even to non-workers to an extent)Retirement annuity Contracts—background and aimsHowever, personal pension schemes were preceded by another type of pension scheme—the Retirement Annuity Contract (RAC). Following the introduction of personal pension schemes on 1 July 1988, it is no longer possible to establish new RACs, but RACs established prior to that date can continue in operation and contributions can still be made to them.RACs were first introduced by the Finance Act 1956 as defined contribution arrangements for individual members. They were subsequently governed by section 226 of the Income and Corporation Taxes Act 1970, and were sometimes known as 'section 226...

Pensions and lifetime planning—Part 1

Membership of an occupational or personal pension scheme affords the opportunity to utilise the tax reliefs available during an individual’s working life to save for a pension on retirement. This Practice Note looks in broad terms at the main features where opportunities exist for pension scheme members to maximize the tax reliefs available to enhance their retirement benefits. These features include pensionable earnings, personal contributions and their impact on the annual allowance. The Practice Note also mentions, where appropriate, certain traps to avoid.It should be noted that previous commentaries on these topics would have included references to the lifetime allowance charge and the lifetime allowance; the lifetime allowance charge was abolished with effect on and from 6 April 2023 and the lifetime allowance itself was abolished with effect on and from 6 April 2024. Further information can be found at PTM164100 - Information and administration: overview of the information requirements in respect of the lifetime allowance.Pensionable earningsFor both employers and individuals to obtain tax relief on their contributions to...

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