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rakhi.v, Financial Advisor
Category: Tax
Satisfied Customers: 4546
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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I would like your opinion on a lump sum payment received

Customer Question

Hello I would like your opinion on a lump sum payment received from a FURBS (Funded Unapproved Retirement Benefits Scheme). The scheme was funded between 2001 and 2003 and all contributions were declared on the P11d and taxed accordingly. I believe that the lump sum received on maturity of the fund is therefore tax free, but I would like your confirmation of this and any reference to the relevant legislation. Thank you.
Submitted: 1 year ago.
Category: Tax
Expert:  rakhi.v replied 1 year ago.
Dear Friend,Hello and welcome. Thank you for providing an opportunity to assist you. YES -- In most cases, it will be tax free. The position depends on when contributions were made. Benefits paid on retirement in respect of a fund arising from contributions paid before 6 April 2006 can still normally be paid as a tax-free lump sum. This is provided that some company contributions were taxed on the employee as a benefit-in-kind at the time they were made. For funds arising from contributions made after that time, the company will receive tax relief on the funds and the member will have to pay income tax on those funds as and when they are paid out to the member: there is no tax-free lump sum relating to contributions paid under the new regime. At the moment, contributions to a FURBS are subject to income tax and NIC, but with CT relief available to the employer; income and gains are taxed at standard trust rates; benefits can be paid out as a tax-free lump sum without limit (providing the scheme's rules permit). I am sure this would help.You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.Warm Regards,