Revenue Note for Guidance

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Revenue Note for Guidance

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for any PAYE which NAERSA is required to deduct and the individual beneficially entitled to the balance withdrawn, including any personal representatives, must allow such deduction.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;

  • (4)(a) Where the payment of the balance of any funds referred to in subsection (1) is made following the death of the participant who became entitled to the funds prior to their death but had not yet withdrawn these funds, the amount of these funds shall be treated as the income of that participant for the year of assessment in which that participant died.
  • (4)(b) An exemption from income tax shall apply to a payment made of the balance of any funds following the death of the participant, and where a notification under section 82(1)(d) of the Act by the Authority, is made to a spouse, civil partner, child of the participant or any child of the participants civil partner or spouse.
  • (4)(c) The payment of the balance of any funds is made to a person who had attained the age of 21 years at the date of death of the participant beneficially entitled to the assets in the participant account, the Authority shall deduct income tax from the distribution under Case IV of Schedule D at a rate of 30 per cent.
  • (4)(d) Where the Authority deducts tax in accordance with the provisions of subsections (8) to (15) of section 790AA shall apply, with necessary modifications, as if any reference in those subsections to the administrator were a reference to the authority and any reference to an excess lump sum were a reference to the balance of any funds of a kind referred to in paragraph (c).

Relevant Date: Finance Act 2025