787AI Taxation of payments from the Automatic Enrolment Retirement Savings System

Summary

This section provides that subject to certain exceptions, payments from the Automatic Enrolment Retirement Savings System are taxed under Schedule E (PAYE).

Details

(1) The balance of any funds, after any lump sum is taken in accordance with section (3), that a participant withdraws, or is transferred to a personal representative by the National Automatic Enrolment Savings System Authority “NAERSA”, are regarded as emoluments paid that are subject to PAYE. Where NAERSA have not received a revenue payroll notification from Revenue, tax is required to be deducted at the higher rate of income tax.

(2) NAERSA is liable to account to the Collector-General for any PAYE which NAERSA is required to deduct and the individual beneficially entitled to the balance withdrawn, including any personal representatives, must allow such deduction. Where there are no funds or insufficient funds available to discharge the tax, the excess will be an amount due to NAERSA from the balance of the participant account or from the estate of the deceased individual.

Non application of PAYE

(3) PAYE is not to apply to an amount made available, by way of lump sum, made available when assets of the participant account are first made available to the participant, which does not exceed 25% of the fund.

(4) The circumstances in which NAERSA is treated as making assets available to a participant include;

• the making of assets available to the participant account, and
• any circumstances in which assets cease to be held by NAERSA on behalf of the participant.

Relevant Date: Finance Act 2024