Taxes Consolidation Act 1997 section 787R

Liability to tax and rate of tax on the chargeable excess

Section 787R sets out who is liable for the tax on a chargeable excess, the rate of the tax charge, and the rules for apportioning liability where a Pension Adjustment Order has been made.

• The chargeable excess is charged to income tax under Case IV of Schedule D at the higher rate for the year in which the benefit crystallisation event occurs, with no reliefs, deductions, or set-offs permitted against the charge.
• The pension scheme administrator and the individual are jointly and severally liable for the chargeable excess tax, regardless of residence status; where a Pension Adjustment Order has been made, the tax must be apportioned between the member and the non-member spouse or civil partner.
• Where a transfer amount has been applied to provide an independent benefit for the non-member, the administrator must certify and notify the non-member's share of the chargeable excess tax to the subsequent administrator or fund administrator within specified time limits.
• An administrator may request a written declaration from the individual about prior and future benefit crystallisation events and may withhold benefits if the declaration is not provided; all relevant declarations, certificates, and notifications must be retained for six years.