Taxes Consolidation Act 1997 Schedule 3

Schedule 3 defines the "relevant capital sum" and the "standard capital superannuation benefit" (SCSB), which are used to calculate the tax-free portion of termination payments.

• The relevant capital sum is the total value of all tax-free lump sums received, receivable, or potentially receivable through commutation of pension rights, valued at the date of termination.
• The SCSB is calculated as one-fifteenth of average annual emoluments for the last three years of service, multiplied by complete years of service, less the relevant capital sum.
• The value of any option to commute a pension for a lump sum must be included in the relevant capital sum, whether or not the option is actually exercised.
• If the employee irrevocably surrenders a commutation option before the termination date under the pension scheme rules, the value of that option is excluded from the relevant capital sum.