Taxes Consolidation Act 1997 section 787AI

Taxation of payments from automatic enrolment retirement savings system

Section 787AI sets out the income tax treatment of payments from the automatic enrolment retirement savings system, including withdrawals by participants during their lifetime and payments to personal representatives or beneficiaries after death.

• Withdrawals from a participant account (after any permitted lump sum) are treated as Schedule E emoluments subject to PAYE, with tax deducted at the higher rate unless the Authority has received a revenue payroll notification for the participant.
• A participant may take up to 25 per cent of the balance as a tax-free lump sum when the account is first made available, and payments to personal representatives before a death notification is given are also exempt from PAYE.
• Where a participant dies before withdrawing their balance, the funds are treated as income of the deceased for the year of death, but payments notified to a spouse, civil partner or child are exempt from income tax under Schedule E.
• Where the balance passes on death to a person aged 21 or over, the Authority deducts income tax at 30 per cent under Case IV of Schedule D, with no reliefs, deductions or aggregation with other income permitted.