- home
- Lump Sum Tax Advisory Services
Lump Sum Tax Advisory Services
You worked, built, sold, saved — and now there’s a one-time payout on the horizon. Maybe it’s a pension lump sum. Maybe it’s a settlement. A bonus. An exit. Whatever the source, it’s substantial, and it’s taxable. If you don’t take action, HMRC will. And what they do is collect more than they’re due.
Most people don’t realise this type of income is handled differently, and wrongly assume their usual accountant or payroll team has it handled. That’s how tens of thousands disappear in unnecessary taxes. The rules aren’t straightforward, timing is crucial, and once the payment lands, your choices narrow quickly.
We focus on one goal: making sure that doesn’t happen.
Our Services – Lump Sum Tax Advisory (8 Key Areas)
Our lump sum tax advisory service exists for a single reason: to stop you from giving away money you didn’t have to. We take complicated, one-off payouts—pensions, bonuses, settlements, asset sales—and apply the exact tax codes, reliefs, and planning techniques that lower your tax liability legally and efficiently. No guesswork, no generic methods—just accurate, technical action that safeguards your money.
Section 401 Lump Sum Distribution Planning
Whether it’s a severance package or early retirement deal, categorising your lump sum incorrectly can push you into a higher marginal rate. We check if your payout qualifies for split-year treatment, assess eligibility under ITEPA 2003, and determine the best timing for remittance-based or arising-based taxation methods. This stops you from falling into a 45% band without cause.
Form 4972 Alternatives and UK-Specific Reliefs
In the US, Form 4972 softens taxes on lump sums using a 10-year averaging model. We use a UK version — examining Section 9A TMA 1970 and s162 TCGA 1992 to offset lump sum income with capital losses or to postpone gains under deferral rules. If you’re a UK expat, we include non-dom status and available Double Tax Relief (DTR) in our evaluation.
Pension Lump Sum Analysis (25% Tax-Free? Not Always)
Many assume they’re automatically eligible for a 25% tax-free pension lump sum. They’re mistaken. We analyse scheme rules, GAD limits, and LTA protections (including FP2016 and IP2014) to determine the real tax-free portion. Then we map out the remainder’s liability using your complete financial profile.
Capital Gains Classification for Lump Sum Payments
If your lump sum is tied to shares, EMI options, or business assets, we assess BADR (formerly Entrepreneurs’ Relief) eligibility. If you’re aiming for a potential 10% CGT rate instead of 20%, we guide you in aligning the exit to qualify, ensuring share conditions, holding periods, and personal service company rules are satisfied.
Split-Year and Non-Resident Planning
If you’re relocating abroad, we apply Statutory Residence Tests (SRT) to time your lump sum around split-year treatment, which can drastically change your tax result. Using ESC D33 and treaty exemptions, we advise on the time window where HMRC has no claim on your payout.
Compensation and Settlement Tax Advice
Whether it’s a legal settlement, redundancy, or wrongful termination claim, we examine the taxability of every component. Under ITEPA 2003 s401-403, we identify the exempt £30,000, remove non-contractual components from PAYE, and reorganise the payout to reduce your exposure.
Bonus & Exit Payment Timing
Receiving a performance-based or discretionary bonus? We help shift recognition using accrual vs. cash accounting rules, moving the payment into a year with lower income. Combined with salary exchange methods, we reduce NI liabilities and smooth out tax exposure.
Inheritance Lump Sums and Trust Distributions
Expecting funds from a trust or estate? We evaluate whether the PET 7-year rule, NRB stacking, or grossing up under IHTA 1984 applies. Timing is vital here, and we make sure clients don’t make costly errors because they weren’t given the right advice on trust charges or periodic reviews.
Book a technical review today.
Why Work With Us
We operate within tax law daily, not just at year-end. This is our full-time focus.
We’ve worked with more than 130 lump sum clients in the past 18 months.
We know the reliefs others miss—and we apply them before your tax year wraps up.
We’ve saved or recovered over £4.1 million in avoidable lump sum taxes over the last two years.
No standardised templates. Every lump sum is unique. So is the method we use.
Want to stop guessing? Let’s book a call.
Frequently Asked Questions
The first £30,000 may be exempt under ITEPA 2003 s403. Any excess is subject to income tax, and possibly NIC Class 1A for the employer.
It’s possible under s162 TCGA 1992 (roll-over relief) or EIS/SEIS reinvestment, depending on timing and asset type.
No. Withdrawals must come from a registered scheme and fall within Lifetime Allowance limits. Other constraints apply under pre-A-Day protections.
Rarely. However, where restrictive covenants or PILON clauses exist, parts may be offset or delayed, though total capital reclassification is uncommon.
With split-year treatment or treaty residence, you may avoid UK tax on it entirely. This depends on SRT and DTR eligibility.
You must meet the 24-month holding requirement, 5% equity/voting rights (if needed), and remain employed. Grant and exit paperwork must be in order.
Yes, through s33 TMA amendments or overpayment relief—but time limits and strict conditions apply.
Don’t Just 'Hope' You’re Not Overpaying
Letting HMRC decide without checking is the quickest route to overpaying. And assuming your accountant will catch it later? That’s how people miss out—then learn they paid too much once it’s too late.
This is about timing, structure, and details your advisor probably isn’t using.
If you have a lump sum on the way, don’t hand over more than you need to just because someone else didn’t ask the right questions fast enough.
Book your consultation now — before time narrows your options.
