Income Tax (Earnings and Pensions) Act 2003 section 581

Taxable pension income

Section 581 establishes how taxable pension income is calculated and the basis on which it is assessed for tax purposes.

• Taxable pension income is the amount that feeds into the computation of net taxable pension income under section 567 of the Act.
• The charge to tax is based on the amount of pension income accruing in the tax year, not on when payments are actually received.
• Income is treated as accruing from day to day, regardless of the timing of actual pension payments.
• This accruals basis means the tax liability is spread evenly across the period to which the pension relates, rather than being linked to payment dates.