Unauthorised payments

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Unauthorised payments
  • Unauthorised payment charge
  • Unauthorised payment surcharge
  • Amounts subsequently becoming liable to surcharge

Registered pension schemes are permitted by law to make certain payments to members, known as ‘authorised’ member payments.

FA 2004, s 164; PTM142000

Any payments to members other than those set out in the legislation are ‘unauthorised’.

FA 2004, s 160; PTM132000

Subject to conditions, the following payments are likely to be authorised payments:

  • all forms of pensions, including lump sum and income withdrawals permitted under the pensions freedom rules introduced from 6 April 2015 (see FA 2004, Sch 28)
  • pension commencement lump sums (a lump sum which a member becomes entitled to when a pension comes into payment)
  • serious ill-health lump sums (a lump sum paid by commuting the whole of a member’s pension because of serious ill-health)
  • short-service refund lump sums (a lump sum refunding a member’s contributions because the member has only a short period of service ― that is, less than two years for defined benefit schemes and 30 days for money purchase schemes)
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