Legalize / United Kingdom / Public General Act

Finance Act 2004

Type Public General Act

Publication 2004-07-22

Last updated 2025-04-24

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(756A) (1) In this Chapter references to an offshore fund are to a collective investment scheme constituted by— (a) a company that is resident outside the United Kingdom, or (b) a unit trust scheme the trustees of which are not resident in the United Kingdom, or (c) arrangements not falling within paragraph (a) or (b) taking effect by virtue of the law of a territory outside the United Kingdom and which under that law create rights in the nature of co-ownership (without restricting that expression to its meaning in the law of any part of the United Kingdom). (2) Subsection (1) has effect subject to— - section 756B (treatment of umbrella funds), and - section 756C (treatment of funds comprising more than one class of interest). (3) In this section “collective investment scheme” has the meaning given by section 235 of the Financial Services and Markets Act 2000. (756B) (1) In this Chapter, an “umbrella fund” means an offshore fund— (a) which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are made to them; and (b) under which the participants are entitled to exchange rights in one pool for rights in another; and references in this Chapter to a part of an umbrella fund are to such of the arrangements as relate to a separate pool. (2) For the purposes of this Chapter (except subsection (1))— (a) each part of an umbrella fund shall be regarded as a separate offshore fund, and (b) the umbrella fund as a whole shall not be regarded as an offshore fund. (3) In this Chapter, in relation to a part of an umbrella fund— (a) a reference to the assets of an offshore fund is to such of the assets of the umbrella fund as under the arrangements form part of the separate pool to which that part of the umbrella fund relates; (b) a reference to the income of an offshore fund is to the income arising from those assets; (c) a reference to a person having an interest in an offshore fund is to a person for the time being having an interest in that separate pool; and (d) a reference to an offshore fund being a non-qualifying fund shall be read in relation to times before the coming into force of this section as a reference to the umbrella fund being a non-qualifying fund. (756C) (1) For the purposes of this Chapter where there is more than one class of interest in an offshore fund (the “main fund”)— (a) each class of interest shall be regarded as a separate offshore fund, and (b) the main fund shall not be regarded as an offshore fund. (2) In this section, references to a class of interest in an offshore fund do not include— (a) a part of an umbrella fund which is regarded as an offshore fund by virtue of section 756B, or (b) a class of interest in an offshore fund which by virtue of section 759(5), (6) or (8) is not a material interest in the fund. (3) In this Chapter, in relation to a class of interest in an offshore fund— (a) a reference to the assets of an offshore fund is to the assets of the main fund; (b) a reference to the income of an offshore fund is to such of the income of the main fund as is attributable to interests of that class under the arrangements constituting the main fund; (c) a reference to a person having an interest in an offshore fund is to a person for the time being having an interest of that class; and (d) a reference to an offshore fund being a non-qualifying fund shall be read in relation to times before the coming into force of this section as a reference to the main fund being a non-qualifying fund.

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In section 212 of the Taxation of Chargeable Gains Act 1992 (c. 12) (annual deemed disposal of holdings of unit trusts etc.) in subsection (6A)—

(a) in paragraph (a), for “paragraphs (a) to (c) of subsection (1) of section 759” substitute “ paragraphs (a) to (c) of subsection (1) of section 756A ”;

(b) in paragraph (b), for “that section” substitute “ section 759 of that Act ”.

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Investment conditions to be met by funds seeking certification as distributing fund

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Exchange of interests of different classes

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Correction of cross-reference

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Transitional provision

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(1) This paragraph applies for the purposes of determining whether an offshore fund that is—

(a) a part of an umbrella fund (which is treated as an offshore fund under section 756B of the Taxes Act 1988), or

(b) a class of interest in a part of an umbrella fund (which is treated as an offshore fund under section 756C of that Act),

may be certified as a distributing fund under Chapter 5 of Part 17 of that Act in respect of an account period ending on or after the day on which this Act is passed and on or before 31st December 2005.

(2) Where this paragraph applies—

(a) subsection (3) of section 760 of the Taxes Act 1988 shall not have effect, and

(b) the fund shall not be certified as a distributing fund in respect of a period if at any time in that period—

(i) more than 5 per cent by value of the assets of that offshore fund consists of interests in other offshore funds, and

(ii) more than 5 per cent by value of the assets of the umbrella fund consists of interests in other offshore funds.

(3) Where this paragraph applies, references to subsection (3) of section 760 of the Taxes Act 1988 shall have effect as references to sub-paragraph (2)(b) above.

(4) Words used in Chapter 5 of Part 17 of the Taxes Act 1988 have the same meaning in this paragraph as they have in that Chapter.

SCHEDULE 27

Part 1 — The new definition

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Part 2 — Minor and consequential amendments

The Taxes Act 1988

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Finance Act 2000 (c. 17)

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(1) Schedule 15 to the Finance Act 2000 (the corporate venturing scheme) is amended as set out in sub-paragraphs (2) to (4).

(2) In paragraph 23 (the trading activities requirement), in sub-paragraph (8)(a)(i) for “oil rigs” substitute “ offshore installations ”.

(3) In paragraph 28 (excluded activities: leasing of ships), in sub-paragraph (1) for “oil rigs” substitute “ offshore installations ”.

(4) In paragraph 28(6) omit the definition of “oil rig”.

(5) This paragraph has effect in relation to shares issued on or after 6th April 2004.

(6) Nothing in this paragraph affects the operation of Schedule 15 to the Finance Act 2000 in relation to shares issued before that date.

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(1) In Schedule 22 to the Finance Act 2000 (tonnage tax), in paragraph 20 (vessels excluded from being qualifying ships) omit sub-paragraph (5).

(2) This paragraph has effect for accounting periods ending on or after 1st April 2004.

Capital Allowances Act 2001 (c. 2)

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In section 94 of the Capital Allowances Act 2001 (expenditure on ships that is not long-life asset expenditure) omit subsections (2)(b) and (3).

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(1) Section 153 of the Capital Allowances Act 2001 (ships that are not qualifying ships) is amended as follows.

(2) For subsection (2) substitute—

(2) A ship is not a qualifying ship at any time when it is an offshore installation.

(3) Omit subsection (3).

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In Part 2 of Schedule 1 to the Capital Allowances Act 2001 (index of defined expressions) at the appropriate place insert—

offshore installation (except in Chapter 13 of Part 2)	section 837C of ICTA

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(1) Paragraphs 8 to 10 have effect—

(a) for income tax purposes, as respects allowances and charges falling to be made for chargeable periods ending on or after 6th April 2004;

(b) for corporation tax purposes, as respects allowances and charges falling to be made for chargeable periods ending on or after 1st April 2004.

(2) In this paragraph “chargeable period” has the meaning given by section 6 of the Capital Allowances Act 2001.

Income Tax (Earnings and Pensions) Act 2003 (c. 1)

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In section 40 of the Income Tax (Earnings and Pensions) Act 2003 (duties on board vessel or aircraft), in subsection (5) for paragraph (b) (meaning of ship) substitute—

(b) “ship” does not include an offshore installation;

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In section 305 of the Income Tax (Earnings and Pensions) Act 2003 (offshore oil and gas workers: mainland transfers), in subsection (6) omit the definition of “offshore installation”.

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For section 385 of the Income Tax (Earnings and Pensions) Act 2003 substitute—

(385) In this Chapter “ship” does not include an offshore installation.

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In Part 2 of Schedule 1 to the Income Tax (Earnings and Pensions) Act 2003 (index of defined expressions) at the appropriate place insert—

offshore installation	section 837C of ICTA

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Paragraphs 12 to 15 have effect for the year 2004-05 and subsequent years of assessment.

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(1) Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (enterprise management incentives) is amended as follows.

(2) In paragraph 18 (excluded activities: leasing of certain ships), in sub-paragraph (1) for “oil rigs” substitute “ offshore installations ”.

(3) In paragraph 18(2) for “oil rig” substitute “ offshore installation ”.

(4) In paragraph 18(8) omit the definition of “oil rig”.

(5) In paragraph 59 (index of defined expressions) at the appropriate place insert—

offshore installation	section 837C of ICTA

(6) This paragraph has effect in relation to a right to acquire shares in a company granted on or after 6th April 2004.

(7) Nothing in this paragraph affects the operation of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 in relation to a right to acquire shares in a company granted before that date.

SCHEDULE 28

Part 1 — Pension rules

Defined benefits and money purchase arrangements

Ill-health condition

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For the purposes of this Part the ill-health condition is met if—

(a) the scheme administrator has received evidence from a registered medical practitioner that the member is (and will continue to be) incapable of carrying on the member’s occupation because of physical or mental impairment, and

(b) the member has in fact ceased to carry on the member’s occupation.

Scheme pension

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(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) A pension payable to the member is a scheme pension for the purposes of this Part if—

(a) it is payable by the scheme administrator or by an insurance company selected by the scheme administrator, and

(b) it satisfies the condition in sub-paragraph (3).

(3) The condition is that (subject to sub-paragraph (4)—

(a) the pension is payable (at least annually) until the member’s death or until the later of the member’s death and the end of a term certain not exceeding ten years, and

(b) the rate of pension payable at any time during any relevant 12 month period is not less than the rate payable at the relevant time.

(3A) “The relevant time” is—

(a) in the case of the first relevant 12 month period, the day on which the member becomes entitled to the pension, and

(b) in the case of any other relevant 12 month period, immediately before the beginning of that period.

(4) None of the following prevent the pension satisfying the condition in sub-paragraph (3)—

(a) the reduction of the pension if the member became entitled to it by reason of the ill-health condition being met,

(b) a reduction in the rate of the pension which applies to all the scheme pensions being paid to or in respect of members of the pension scheme, ...

(d) the reduction of the pension in consequence of a pension sharing order or provision,

(e) forfeiture of entitlement to the pension in circumstances prescribed by regulations made by the Board of Inland Revenue,

(f) the reduction of the pension in consequence of an order of a court,

(g) if the pension is under a public service pension scheme, its reduction by abatement, or

(h) the reduction of the pension in any other circumstances prescribed by regulations made by the Board of Inland Revenue.

(4A) In sub-paragraph (4) references to the reduction of a pension include its ceasing to be payable (whether temporarily or permanently).

(4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) A pension is payable until the end of a term certain even if it may, after the death of the member during the term, end on the pensioner—

(a) marrying,

(aa) entering into a civil partnership,

(b) reaching the age of 18, or

(6A) The Board of Inland Revenue may by regulations provide that if—

(a) a scheme pension payable by an insurance company selected by the scheme administrator of a registered pension scheme (“the original scheme pension”) ceases to be payable, and

(b) in consequence of the transfer of sums or assets (or both) from the insurance company to another insurance company in connection with the original scheme pension ceasing to be payable, another scheme pension becomes payable by the other insurance company (“the new scheme pension”),

the new scheme pension is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original scheme pension.

(7) A relevant 12 month period is any 12 month period which—

(a) begins on or after the first anniversary of the day on which the member becomes entitled to the pension, and

(b) ends before the day on which the pension ceases to be payable.

(8) Regulations under sub-paragraph (4)(e) or (h) ... may include provision having effect in relation to times before they are made.

(9) Where, under a collective money purchase arrangement—

(a) a scheme pension has become payable to the member, and

(b) the member subsequently becomes entitled to income payable by virtue of section 36(7)(b) or 87(7)(b) of the Pension Schemes Act 2021 (periodic income paid while pursuing continuity option 1),

the income so payable is to be treated for the purposes of this Part as a continuation of the scheme pension.

(10) Where, under a collective money purchase arrangement—

(a) the member becomes entitled to income payable by virtue of section 36(7)(b) or 87(7)(b) of the Pension Schemes Act 2021 (periodic income paid while pursuing continuity option 1), and

(b) no scheme pension was previously payable to the member,

the income so payable is to be treated for the purposes of this Part as a scheme pension.

Money purchase arrangements

Lifetime annuity

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(1) For the purposes of this Part an annuity payable to the member is a lifetime annuity if—

(a) it is payable by an insurance company,

(b) the member had an opportunity to select the insurance company,

(ba) the member becomes entitled to it before 6 April 2015,

(c) it is payable until the member’s death or until the later of the member’s death and the end of a term certain not exceeding ten years, and

(d) its amount either cannot decrease or falls to be determined in any manner prescribed by regulations made by the Board of Inland Revenue.

(1A) For the purposes of this Part, but subject to any provision made under sub-paragraph (2C)(za), an annuity payable to the member is also a lifetime annuity if—

(a) it is payable by an insurance company,

(b) the member becomes entitled to it on or after 6 April 2015, and

(2) An annuity is payable until the end of a term certain even if it may, after the death of the member during the term, end on the annuitant—

(a) marrying,

(aa) entering into a civil partnership,

(b) reaching the age of 18, or

(2A) An annuity does not fail to satisfy sub-paragraph (1)(d) by reason of the operation of

(a) a pension sharing order or provision , or

(b) an order under section 377A of the Financial Services and Markets Act 2000 (court order writing down liabilities of insurer).

(2B) The Board of Inland Revenue may by regulations make provision in relation to cases in which a lifetime annuity payable by an insurance company (“the original lifetime annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another lifetime annuity (a “new lifetime annuity”) or a scheme pension, short-term annuity, dependants' scheme pension, dependants' annuity, nominees' annuity or dependants' short-term annuity by the other insurance company, or

(b) sums or assets are transferred to the relevant registered pension scheme.

(2C) The regulations may provide that—

(za) in a case where—

(i) a new annuity becomes payable,

(ii) the member becomes entitled to it on or after 6 April 2015,

(iii) it would be a lifetime annuity if any provision made under this paragraph were ignored,

(iv) the terms of the contract for it are such that there will or could be decreases in its amount other than allowed decreases (see sub-paragraph (2E)), and

(v) any other conditions prescribed by the regulations are met,

the new annuity is not a lifetime annuity for the purposes of this Part,

(a) in a case where a new lifetime annuity becomes payable, the new lifetime annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original lifetime annuity, and

(b) in a case other than one where a new lifetime annuity becomes payable, the relevant registered pension scheme is to be treated as making an unauthorised payment to the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.

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(2D) For the purposes of sub-paragraphs (2B) and (2C) a registered pension scheme is the relevant registered pension scheme if the original lifetime annuity was acquired using sums or assets held for the purposes of the pension scheme.

(2E) In sub-paragraph (2C)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(d); and any such regulations are to be treated as having effect for this purpose.

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(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unsecured pension and alternatively secured pension

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“Drawdown pension” means—

(a) a short-term annuity, or

(b) income withdrawal.

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Short-term annuity

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(1) For the purposes of this Part an annuity payable to the member is a short-term annuity if—

(a) it is purchased by the application of sums or assets representing the whole or any part of the member's drawdown pension fund in respect of an arrangement,

(b) it is payable by an insurance company,

(ca) the member becomes entitled to it before 6 April 2015,

(d) it is payable for a term which does not exceed five years ..., and

(e) its amount either cannot decrease or falls to be determined in any manner prescribed by regulations made by the Board of Inland Revenue.

(1ZA) For the purposes of this Part, but subject to any provision made under sub-paragraph (1C)(za), an annuity payable to the member is also a short-term annuity if—

(a) it is purchased by the application of sums or assets representing the whole or any part of the member's drawdown pension fund, or of the member's flexi-access drawdown fund, in respect of an arrangement,

(b) it is payable by an insurance company,

(d) it is payable for a term which does not exceed five years.

(1A) An annuity does not fail to satisfy sub-paragraph (1)(e) by reason of the operation of a pension sharing order or provision.

(1B) The Board of Inland Revenue may by regulations make provision in relation to cases in which a short-term annuity payable by an insurance company (“the original short-term annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another short-term annuity (a “new short-term annuity”) or a scheme pension, lifetime annuity, dependants' scheme pension, dependants' annuity, nominees' annuity or dependants' short-term annuity by the other insurance company, or

(b) sums or assets are transferred to the relevant registered pension scheme.

(1C) The regulations may provide that—

(za) in a case where—

(i) a new annuity becomes payable,

(ii) the member becomes entitled to it on or after 6 April 2015,

(iii) it would be a short-term annuity if any provision made under this paragraph were ignored,

(iv) the terms of the contract for it are such that there will or could be decreases in its amount other than allowed decreases (see sub-paragraph (1E)), and

(v) any other conditions prescribed by the regulations are met,

the new annuity is not a short-term annuity for the purposes of this Part,

(a) in a case where a new short-term annuity becomes payable, the new short-term annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original short-term annuity, and

(b) in a case other than one where a new short-term annuity becomes payable, the relevant registered pension scheme is to be treated as making an unauthorised payment to the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.

(1D) For the purposes of sub-paragraphs (1B) and (1C) a registered pension scheme is the relevant registered pension scheme if the original short-term annuity was acquired using sums or assets held for the purposes of the pension scheme.

(1E) In sub-paragraph (1C)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(e); and any such regulations are to be treated as having effect for this purpose.

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Income withdrawal

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Income withdrawal” means an amount (other than an annuity) which the member is entitled to be paid from the member's drawdown pension fund in respect of an arrangement or from the member's flexi-access drawdown fund in respect of an arrangement.

Member’s unsecured pension fund

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(1) For the purposes of this Part the member's drawdown pension fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement as are member-designated funds.

(1A) For the purposes of this Part sums or assets held for the purposes of an arrangement are member-designated funds if ...—

(a) they have, at any time before 6 April 2015, been designated under the arrangement as available for the payment of drawdown pension,

(aa) they have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of drawdown pension, and—

(i) sums or assets held for the purposes of the arrangement have, at any time before 6 April 2015, been designated under the arrangement as so available, and

(ii) section 165(3A) did not apply to the arrangement immediately before 6 April 2015, or

(b) they arise, or (directly or indirectly) derive, from member-designated funds under paragraph (a) or (aa) or from sums or assets which so arise or derive,

and have not been applied towards the provision of a scheme pension.

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(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) If any sums or assets representing the member's drawdown pension fund in respect of an arrangement under the pension scheme would (apart from this sub-paragraph) come to be taken to represent another unsecured pension fund of his under the pension scheme, or a dependant's drawdown pension fund of his under the pension scheme, they are to be treated as not doing so.

Unsecured pension year and basis amount for unsecured pension year

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(1) “Drawdown pension year” means—

(a) the period of 12 months beginning with the day on which the member first becomes entitled to drawdown pension in respect of the arrangement, and

(b) each succeeding period of 12 months.

This is subject to paragraph 10B.

(2) The drawdown pension year in which the member dies is the last drawdown pension year and ends immediately before the member's death.

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(A1) This paragraph applies in relation to drawdown pension years beginning on or before the member's 75th birthday.

(1) Subject as follows, the period of three drawdown pension years beginning with the first drawdown pension year, and each succeeding period of three drawdown pension years, is a “reference period”.

(1ZA) But the reference period in which the member reaches the age of 75 ends with the drawdown pension year in which the member reaches that age.

(1A) Sub-paragraph (1B) applies if, at any time during a reference period (“the current reference period”), the member notifies the scheme administrator that the member wishes a new reference period to begin on the next day that is an anniversary of the reference date in relation to the current reference period.

(1B) The scheme administrator may determine—

(a) that the current reference period is to end immediately before that day (so that sub-paragraph (1) no longer applies), and

(b) that (subject to sub-paragraph (1ZA) and any further operation of this sub-paragraph) the period of three drawdown pension years beginning with that day, and each succeeding period of three drawdown pension years, is to be a reference period.

(1C) The first day of each reference period is, in relation to that period, “the reference date”.

(2) For the first drawdown pension year falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the member's drawdown pension fund on the nominated date (but subject to sub-paragraph (5)).

(3) “The nominated date”—

(a) in relation to the first reference period, is the reference date, and

(b) in relation to any subsequent reference period, is such day, within the period of 60 days ending with the reference date, as is nominated by the scheme administrator (or, if no day is nominated by the scheme administrator, is the reference date).

(4) For each other drawdown pension year falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the member's drawdown pension fund—

(a) if there has been no recent annuity purchase, recent additional fund designation or recent pension sharing event, on the nominated date, and

(b) otherwise, immediately after the last annuity purchase, additional fund designation or pension sharing event,

(but subject to sub-paragraph (5)).

(5) On the occasion of each additional fund designation during a drawdown pension year, the basis amount for that drawdown pension year is to be recalculated in accordance with sub-paragraph (6).

(6) The basis amount for the drawdown pension year is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the member's drawdown pension fund immediately after the additional fund designation.

(6A) But sub-paragraph (5) does not apply where the operation of that sub-paragraph in relation to an additional fund designation during a drawdown pension year would reduce the basis amount for that drawdown pension year.

(7) “Annuity purchase” means the purchase of a scheme pension or a lifetime annuity by the application of sums or assets representing the whole or part of the member's drawdown pension fund.

(8) “Additional fund designation” means the designation under the arrangement of further sums or assets held for the purposes of the arrangement as available for the payment of drawdown pension.

(8A) “Pension sharing event” means the coming into operation of a pension sharing order or provision relating to the sums and assets representing the member's drawdown pension fund.

(9) An annuity purchase, additional fund designation or pension sharing event is “recent” if it took place during the period—

(a) beginning with the reference date, and

(b) ending with the last day of the immediately preceding drawdown pension year.

(10) Paragraph 14 defines “relevant annuity”.

(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Member’s alternatively secured pension fund

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Alternatively secured pension year and basis amount for alternatively secured pension year

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Relevant annuity

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(1) A “relevant annuity”is an annuity of a description prescribed by regulations made by the Board of Inland Revenue.

(2) The annual amount of a relevant annuity is to be ascertained in accordance with regulations made by the Board of Inland Revenue.

(3) The regulations may in particular provide for the annual amount to be ascertained by reference to—

(a) comparative annuity tables published by the Financial Conduct Authority or the Prudential Regulation Authority, or

(b) material published by any other person.

Part 2 — Pension death benefit rules

Defined benefits and money purchase arrangements

Meaning of “dependant”

15

(1) A person who was married to , or a civil partner of, the member at the date of the member’s death is a dependant of the member.

(1A) If the rules of the pension scheme so provide, a person who was married to , or a civil partner of, the member when the member first became entitled to a pension under the pension scheme is a dependant of the member.

(2) A child of the member is a dependant of the member if the child—

(a) has not reached the age of 23, or

(b) has reached that age and, in the opinion of the scheme administrator, was at the date of the member’s death dependant on the member because of physical or mental impairment.

(2A) A child of the member is a dependant of the member if the child—

(a) has reached the age of 23, and

(b) is not within sub-paragraph (2)(b).

(2B) But this paragraph, so far as it has effect for the purpose of determining the meaning of “dependant”—

(a) in paragraphs 16 to 17 and 27A, and

(b) in paragraph 18 of Schedule 29,

has effect with the omission of sub-paragraph (2A).

(3) A person who was not married to , or a civil partner of, the member at the date of the member’s death and is not a child of the member is a dependant of the member if, in the opinion of the scheme administrator, at the date of the member’s death—

(a) the person was financially dependant on the member,

(b) the person’s financial relationship with the member was one of mutual dependence, or

Dependants' scheme pension

16

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) A pension payable to a dependant is a dependants' scheme pension for the purposes of this Part if—

(a) it is payable by the scheme administrator or by an insurance company selected by the scheme administrator, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2A) The Board of Inland Revenue may by regulations make provision in relation to cases in which a dependants' scheme pension payable to a dependant of a member of a registered pension scheme by an insurance company (“the original dependants' scheme pension”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another dependants' scheme pension (a “new dependants' scheme pension”) or a scheme pension, lifetime annuity, short-term annuity, dependants' annuity or dependants' short-term annuity by the other insurance company, or

(b) sums or assets are transferred to the relevant registered pension scheme.

(2B) The regulations may provide that—

(a) in a case where a new dependants' scheme pension becomes payable, the new dependants' scheme pension is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original dependants' scheme pension, and

(b) in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.

(2C) For the purposes of sub-paragraphs (2A) and (2B) a registered pension scheme is the relevant registered pension scheme if the original dependants' scheme pension was acquired using sums or assets held for the purposes of the pension scheme.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Money purchase arrangements

Dependants' annuity

17

(1) For the purposes of this Part an annuity payable to a dependant is a dependants' annuity if—

(za) either—

(i) it is purchased together with a lifetime annuity payable to the member and the member becomes entitled to that lifetime annuity before 6 April 2015, or

(ii) it is purchased after the member's death and the dependant becomes entitled to it before 6 April 2015,

(a) it is payable by an insurance company,

(b) the member or dependant had an opportunity to select the insurance company,

(c) its amount either cannot decrease or falls to be determined in any manner prescribed by regulations made by the Board of Inland Revenue,

(d) where the dependant is not the member’s child, it is payable until the dependant’s death or until the earlier of the dependant’s marrying, entering into a civil partnership or dying, and

(e) where the dependant is the member’s child, it is payable until the earlier of the dependant’s ceasing to be a dependant or dying, or until the earliest of the dependant’s marrying, entering into a civil partnership, ceasing to be a dependant or dying.

(1ZA) For the purposes of this Part, but subject to any provision made under sub-paragraph (4)(za), an annuity payable to a dependant is also a dependants' annuity if—

(a) either—

(i) it is purchased together with a lifetime annuity payable to the member and the member becomes entitled to that lifetime annuity on or after 6 April 2015, or

(ii) it is purchased after the member's death and the dependant becomes entitled to it on or after 6 April 2015,

(b) it is payable by an insurance company,

(c) where the dependant is not the member's child, it is payable until the dependant's death or until the earliest of the dependant's marrying, entering into a civil partnership or dying, and

(d) where the dependant is the member's child, it is payable until the earlier of the dependant's ceasing to be a dependant or dying, or until the earliest of the dependant's marrying, entering into a civil partnership, ceasing to be a dependant or dying.

(1A) For the purposes of sub-paragraphs (1)(za) and (1ZA)(a) a dependants' annuity is purchased together with a lifetime annuity if the dependant's annuity is related to the lifetime annuity.

(2) An annuity does not fail to satisfy sub-paragraph (1)(c) by reason of the operation of

(a) a pension sharing order or provision , or

(b) an order under section 377A of the Financial Services and Markets Act 2000 (court order writing down liabilities of insurer).

(3) The Board of Inland Revenue may by regulations make provision in relation to cases in which a dependants' annuity payable to a person (“the original dependants' annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another dependants' annuity (a “new dependants' annuity”) or a scheme pension, lifetime annuity, short-term annuity, dependants' scheme pension or dependants' short-term annuity by the other insurance company, or

(b) sums or assets are transferred to the relevant registered pension scheme.

(4) The regulations may provide that—

(za) in a case where—

(i) a new annuity becomes payable,

(ii) the dependant becomes entitled to it on or after 6 April 2015,

(iii) it would be a dependants' annuity if any provision made under this paragraph were ignored,

(iv) the terms of the contract for it are such that there will or could be decreases in its amount other than allowed decreases (see sub-paragraph (6)), and

(v) any other conditions prescribed by the regulations are met,

the new annuity is not a dependants' annuity for the purposes of this Part,

(a) in a case where a new dependants' annuity becomes payable, the new dependants' annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original dependants' annuity, and

(b) in a case other than one where a new dependants' annuity becomes payable, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.

(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) For the purposes of sub-paragraphs (3) and (4) a registered pension scheme is the relevant registered pension scheme if the original dependants' annuity was acquired using sums or assets held for the purposes of the pension scheme.

(6) In sub-paragraph (4)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(c); and any such regulations are to be treated as having effect for this purpose.

Dependants' unsecured pension and dependants' alternatively secured pension

18

“Dependants' drawdown pension” means—

(a) a dependants' short-term annuity, or

(b) dependants' income withdrawal.

19

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dependants' short-term annuity

20

(1) For the purposes of this Part an annuity payable to a dependant is a dependants' short-term annuity if—

(a) it is purchased by the application of sums or assets representing the whole or any part of the dependant's drawdown pension fund in respect of an arrangement,

(b) it is payable by an insurance company,

(ca) the dependant becomes entitled to it before 6 April 2015,

(d) it is payable for a term which does not exceed five years and ends before the dependant ... dies, and

(e) its amount either cannot decrease or falls to be determined in any manner prescribed by regulations made by the Board of Inland Revenue.

(1ZA) For the purposes of this Part, but subject to any provision made under sub-paragraph (1C)(za), an annuity payable to a dependant is also a dependants' short-term annuity if—

(a) it is purchased by the application of sums or assets representing the whole or any part of the dependant's drawdown pension fund, or of the dependant's flexi-access drawdown fund, in respect of an arrangement,

(b) it is payable by an insurance company,

(d) it is payable for a term which does not exceed five years and ends before the dependant dies.

(1A) An annuity does not fail to satisfy sub-paragraph (1)(e) by reason of the operation of a pension sharing order or provision.

(1B) The Board of Inland Revenue may by regulations make provision in relation to cases in which a dependants' short-term annuity payable to a person (“the original dependants' short-term annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another dependants' short-term annuity (a “new dependants' short-term annuity”) or a scheme pension, lifetime annuity, short-term annuity, dependants' scheme pension or dependants' annuity by the other insurance company, or

(b) sums or assets are transferred to the relevant registered pension scheme.

(1C) The regulations may provide that—

(za) in a case where—

(i) a new annuity becomes payable,

(ii) the dependant becomes entitled to it on or after 6 April 2015,

(iii) it would be a dependants' short-term annuity if any provision made under this paragraph were ignored,

(iv) the terms of the contract for it are such that there will or could be decreases in its amount other than allowed decreases (see sub-paragraph (1E)), and

(v) any other conditions prescribed by the regulations are met,

the new annuity is not a dependants' short-term annuity for the purposes of this Part,

(a) in a case where a new dependants' short-term annuity becomes payable, the new dependants' short-term annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original dependants' short-term annuity, and

(b) in a case other than one where a new dependants' short-term annuity becomes payable, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.

(1D) For the purposes of sub-paragraphs (1B) and (1C) a registered pension scheme is the relevant registered pension scheme if the original dependants' short-term annuity was acquired using sums or assets held for the purposes of the pension scheme.

(1E) In sub-paragraph (1C)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(e); and any such regulations are to be treated as having effect for this purpose.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dependants' income withdrawal

21

Dependants' income withdrawal” means an amount (other than an annuity) which the dependant is entitled to be paid from the dependant's drawdown pension fund in respect of an arrangement or from the dependant's flexi-access drawdown fund in respect of an arrangement.

Dependant’s unsecured pension fund

22

(1) For the purposes of this Part a dependant's drawdown pension fund in respect of an arrangement consists of such of the sums and assets held for the purposes of the arrangement—

(a) as are dependant-designated funds, and

(b) have not been applied towards the provision of a dependants' scheme pension.

(2) For the purposes of this Part sums or assets held for the purposes of an arrangement are dependant-designated funds if ...—

(a) they have, at any time before 6 April 2015, been designated under the arrangement as available for the payment of dependants' drawdown pension ...,

(aa) they have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of dependants' drawdown pension ..., and—

(i) sums or assets held for the purposes of the arrangement have, at any time before 6 April 2015, been designated under the arrangement as so available, and

(ii) section 167(2A) did not apply to the arrangement immediately before 6 April 2015, or

(b) they arise, or (directly or indirectly) derive, from dependant-designated funds under paragraph (a) or (aa) or from sums or assets which so arise or derive.

(3) If any sums or assets representing a person's dependant's drawdown pension fund in respect of an arrangement under the pension scheme would (apart from this sub-paragraph)—

(a) come to be taken to represent another dependant's drawdown pension fund of his under the pension scheme, or a drawdown pension fund of his under the pension scheme, or

(b) are applied towards the provision of a scheme pension or a lifetime annuity,

they are to be treated as not doing so.

Unsecured pension year and basis amount for unsecured pension year

23

(1) “Drawdown pension year” means—

(a) the period of 12 months beginning with the day on which the dependant first becomes entitled to dependants' drawdown pension in respect of the arrangement, and

(b) each succeeding period of 12 months.

This is subject to paragraph 24B.

(2) The drawdown pension year in which the dependant dies is the last drawdown pension year and ends immediately before the dependant's death.

24

(A1) This paragraph applies in relation to drawdown pension years beginning on or before the dependant's 75th birthday.

(1) Subject as follows, the period of three drawdown pension years beginning with the first drawdown pension year, and each succeeding period of three drawdown pension years, is a “reference period”.

(1ZA) But the reference period in which the dependant reaches the age of 75 ends with the drawdown pension year in which the dependant reaches that age.

(1A) Sub-paragraph (1B) applies if, at any time during a reference period (“the current reference period”), the dependant notifies the scheme administrator that the dependant wishes a new reference period to begin on the next day that is an anniversary of the reference date in relation to the current reference period.

(1B) The scheme administrator may determine—

(a) that the current reference period is to end immediately before that day (so that sub-paragraph (1) no longer applies), and

(b) that (subject to sub-paragraph (1ZA) and any further operation of this sub-paragraph) the period of three drawdown pension years beginning with that day, and each succeeding period of three drawdown pension years, is to be a reference period.

(1C) The first day of each reference period is, in relation to that period, “the reference date”.

(2) For the first drawdown pension year falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant's drawdown pension fund on the nominated date (but subject to sub-paragraph (5)).

(3) “The nominated date”—

(a) in relation to the first reference period, is the reference date, and

(b) in relation to any subsequent reference period, is such day, within the period of 60 days ending with the reference date, as is nominated by the scheme administrator (or if no day is nominated by the scheme administrator, is the reference date).

(4) For each other drawdown pension year falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant's drawdown pension fund—

(a) if there has been no recent annuity purchase, recent additional fund designation or recent pension sharing event, on the nominated date, and

(b) otherwise, immediately after the last annuity purchase, additional fund designation or pension sharing event,

(but subject to sub-paragraph (5)).

(5) On the occasion of each additional fund designation during a drawdown pension year, the basis amount for that drawdown pension year is to be recalculated in accordance with sub-paragraph (6).

(6) The basis amount for the drawdown pension year is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant's drawdown pension fund immediately after the additional fund designation.

(6A) But sub-paragraph (5) does not apply where the operation of that sub-paragraph in relation to an additional fund designation during a drawdown pension year would reduce the basis amount for that drawdown pension year.

(7) “Annuity purchase” means the purchase of a dependants' scheme pension or dependants' annuity by the application of sums or assets representing the whole or part of the dependant's drawdown pension fund.

(8) “Additional fund designation” means the designation under the arrangement of further sums or assets held for the purposes of the arrangement as available for the payment of dependants' drawdown pension to the dependant.

(8A) “Pension sharing event” means the coming into operation of a pension sharing order or provision relating to the sums and assets representing the dependant's drawdown pension fund.

(9) An annuity purchase, additional fund designation or pension sharing event is “recent” if it took place during the period—

(a) beginning with the reference date, and

(b) ending with the last day of the immediately preceding drawdown pension year.

(10) Paragraph 14 defines “relevant annuity”.

(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dependant’s alternatively secured pension fund

25

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Alternatively secured pension year and basis amount for alternatively secured pension year

26

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 29

Part 1 — Lump sum rule

Pension commencement lump sum

1

(1) For the purposes of this Part a lump sum is a pension commencement lump sum if—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(aa) the member becomes entitled to it in connection with becoming entitled to a relevant pension (or dies after becoming entitled to it but before becoming entitled to the relevant pension in connection with which it was anticipated that the member would become entitled to it),

(b) it is paid when all or part of the member’s lump sum allowance is available, and all or part or the member’s lump sum and death benefit allowance is available (see paragraph 12A),

(c) it is paid within the period beginning six months before, and ending one year after, the day on which the member becomes entitled to it , and

(d) it is paid when the member has reached normal minimum pension age (or the ill-health condition is satisfied),

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...

(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) But if a lump sum falling within sub-paragraph (1) exceeds the permitted maximum, the excess is not a pension commencement lump sum.

(3) A pension is a relevant pension if—

(a) it is income withdrawal, a lifetime annuity or a scheme pension, and

(b) the member becomes entitled to it ... under the pension scheme under which the member becomes entitled to the lump sum.

(3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Paragraph 2 defines the permitted maximum.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

In paragraph 1 “the permitted maximum”, in relation to a lump sum, means the lowest of the following amounts—

(a) the applicable amount in relation to the relevant pension (see paragraphs 2A to 2D);

(b) so much of the member’s lump sum allowance as is available on the member becoming entitled to the lump sum (see paragraph 12A);

(c) so much of the member’s lump sum and death benefit allowance as is available on the member becoming entitled to the lump sum (see paragraph 12A).

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Serious ill-health lump sum

4

(1) For the purposes of this Part a lump sum is a serious ill-health lump sum if—

(a) before it is paid the scheme administrator has received evidence from a registered medical practitioner that the member is expected to live for less than one year, and

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ca) either—

(i) it is paid in respect of an uncrystallised arrangement, and it extinguishes the member's entitlement to benefits under the arrangement, or

(ii) it is paid in respect of uncrystallised rights of the member under an arrangement other than an uncrystallised arrangement, and it extinguishes the member's uncrystallised rights under the arrangement.

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) An uncrystallised arrangement is an arrangement under which the member has not previously become entitled to any pension or lump sum.

(2A) In subsection (1)(ca)(ii) “uncrystallised rights”, in relation to the member, means rights of the member that are uncrystallised rights as defined by section 212(1) and (2).

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Short service refund lump sum

5

(1) For the purposes of this Part a lump sum is a short service refund lump sum if—

(a) the pension scheme is an occupational pension scheme,

(b) the member’s pensionable service was terminated before normal pension age but the member is not entitled to short service benefit by virtue of section 71 of the Pension Schemes Act 1993 (c. 48) (basic principle as to short service benefit),

(d) it extinguishes the member’s entitlement to benefits under the pension scheme (except to the extent that it is prohibited from being extinguished by the payment of a lump sum by reason of the operation of provision made by or under any enactment), and

(e) it is paid when the member has not reached the age of 75.

(2) But if a lump sum falling within sub-paragraph (1) exceeds an amount equal to the aggregate of the member’s contributions under the pension scheme, the excess is not a short service refund lump sum.

(2A) In sub-paragraph (2) the reference to the member's contributions includes—

(a) any amount paid under section 7 of the Social Security Act 1986 (incentive payments to schemes becoming contracted-out between 1986 and 1993),

(b) any amount paid by the Commissioners for Her Majesty's Revenue and Customs under section 42A(3) of the Pension Schemes Act 1993 or section 38A(3) of the Pension Schemes (Northern Ireland) Act 1993 (rebates), and

(c) any amount recovered by the member's employer under regulations falling within sub-paragraph (2B) in respect of minimum payments made to the scheme in relation to any period before 6 April 2012.

(2B) Those regulations are regulations which were made under—

(a) section 8(3) of the Pension Schemes Act 1993 (recovery of minimum payments), or

(b) section 4(3) of the Pension Schemes (Northern Ireland) Act 1993 (corresponding provision for Northern Ireland).

(3) “Pensionable service”, “normal pension age” and “short service benefit” have the same meaning as in the Pension Schemes Act 1993 (see section 181 (1) of that Act).

Refund of excess contributions lump sum

6

(1) A lump sum is a refund of excess contributions lump sum if—

(a) it is paid in respect of a tax year in which the excess contributions condition is met in respect of the member, and

(b) it is paid before the end of the period of six years beginning with the last day of the tax year in respect of which it is paid.

(2) But if a lump sum falling within sub-paragraph (1) exceeds the member’s available excess contributions allowance for the tax year in respect of which it is paid, the excess is not a refund of excess contributions lump sum.

(3) The excess contributions condition is met in respect of a member and a tax year if the amount of relievable pension contributions (see section 188(2) and (3)) paid in respect of the member in the tax year exceeds the maximum amount of relief to which the member is entitled for the tax year under section 190 (annual limit for relief).

(4) If no refund of excess contributions lump sum has been paid to the member in respect of a tax year (by any registered pension scheme), the available excess contributions allowance for that tax year is (subject to sub-paragraph (7))—

$RPC-MAR$

(5) If one or more refund of excess contributions lump sums have been paid to the member in respect of a tax year, the available excess contributions allowance for that tax year is (subject to sub-paragraph (7))—

$RPC-MAR-ALS$

or, if the amount resulting from that calculation is negative, is nil.

(6) In this paragraph—

RPC is the amount of the relievable pension contributions paid in respect of the member in the tax year,

MAR is the maximum amount of relief to which the member is entitled for the tax year under section 190, and

ALS is the aggregate of the refund of excess contributions lump sums previously paid to the member in respect of the tax year.

(7) If any relief given in accordance with section 192(1) in relation to any contribution included in RPC is in excess of the maximum amount of relief to which the member is entitled under section 190, RPC is to be taken to be reduced by the amount of that excess.

Trivial commutation lump sum

7

(1) For the purposes of this Part a lump sum is a trivial commutation lump sum if—

(a) it is paid when no trivial commutation lump sum has previously been paid to the member (by any registered pension scheme) or, if such a lump sum has previously been paid, before the end of the commutation period,

(aa) it is paid in respect of a defined benefits arrangement, or in respect of a collective money purchase arrangement, or in respect of a scheme pension payable by the scheme administrator to which the member has become entitled under a money purchase arrangement that is not a collective money purchase arrangement (an “in-payment money-purchase in-house scheme pension”), or in respect of any combination of such arrangements and scheme pensions,

(b) on the nominated date, the value of the member’s pension rights does not exceed the commutation limit,

(d) it extinguishes any entitlement to defined benefits , and any entitlement to collective money purchase benefits, , and any entitlement to payments of in-payment money-purchase in-house scheme pensions, that the member has under the pension scheme, and

(e) it is paid when the member has reached normal minimum pension age (or the ill-health condition is met) ....

(2) The commutation period is the period beginning with the day on which a trivial commutation lump sum is first paid to the member and ending 12 months after that day.

(3) The nominated date is the day within the period of three months ending with the first day of the commutation period nominated by the member (or, if no date is nominated, is the first day of the commutation period).

(4) The commutation limit is £30,000.

(4A) The Treasury may by order substitute for the amount for the time being specified in sub-paragraph (4) such larger amount as is specified in the order.

(5) The value of the member’s pension rights on the nominated date is the aggregate of—

(a) the value of the member’s relevant crystallised pension rights on that date (calculated in accordance with paragraph 8), and

(b) the value of the member’s uncrystallised rights on that date (calculated in accordance with paragraph 9).

8

(1) The value of the member’s relevant crystallised pension rights on the nominated date is the aggregate of—

(a) the value of the member’s relevant crystallised pension rights on 5th April 2006, calculated in accordance with paragraph 10 of Schedule 36 (as if the member were the individual mentioned there), and

(b) if, at any time in the period beginning with 6th April 2006 and ending with the nominated date, the member has become entitled under a registered pension scheme to income withdrawal, a lifetime annuity or a scheme pension, the relevant capital amount, and

(c) if, at any time in the period beginning with 6th April 2006 and ending with the nominated date, the member has been paid a lump sum under a registered pension scheme, the amount of the lump sum.

(2) In sub-paragraph (1)(b) “the relevant capital amount” means—

(a) in relation to income withdrawal, the scheme pension capital value, as determined under paragraph 2A(3) and (4);

(b) in relation to a lifetime annuity, the annuity purchase price, as determined under paragraph 2B(3) and (4);

(c) in relation to a scheme pension under a defined benefits arrangement or a collective money purchase arrangement, the amount given by the formula—

$B×C$

where B and C have the same meaning as they have for the purposes of paragraph 2C(2);

(d) in relation to a scheme pension under a money purchase arrangement that is not a collective money purchase arrangement, the scheme pension purchase price, as determined under paragraph 2D(3) and (4).

9

(1) The value of the member’s uncrystallised rights on the nominated date is the aggregate value of the member’s uncrystallised rights on that date under each arrangement relating to the member under a registered pension scheme.

(2) The value on the nominated date of the member’s uncrystallised rights under such an arrangement is to be calculated in accordance with section 212 (valuation of uncrystallised rights for purposes of section 210).

Winding-up lump sum

10

(1) For the purposes of this Part a lump sum is a winding-up lump sum if—

(a) the pension scheme is an occupational pension scheme,

(b) the pension scheme is being wound-up,

(c) any person by whom the member is employed at the time when the lump sum is paid, and who has made contributions under the pension scheme in respect of the member within the period of five years ending with the day on which it is paid, meets the conditions in sub-paragraph (3),

(d) it is paid when all or part of the member’s lump sum allowance is available (see paragraph 12A), and

(e) it extinguishes the member’s entitlement to benefits under the pension scheme, ...

(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) But if a lump sum falling within sub-paragraph (1) exceeds £18,000, the excess is not a winding-up lump sum.

(2A) The Treasury may by order substitute for the amount for the time being specified in sub-paragraph (2) such larger amount as is specified in the order.

(3) The conditions referred to in paragraph (c) of sub-paragraph (1) are that the person mentioned in that paragraph—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) is not making contributions under any other registered pension scheme in respect of the member, and

(c) undertakes to the Inland Revenue not to make such contributions during the period of one year beginning with the day on which the lump sum is paid.

Lifetime allowance excess lump sum

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Part 1

12

(1) Expressions used in this Part of this Schedule and in Schedule 28 have the same meaning in this Part of this Schedule as in Schedule 28.

(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Where by virtue of paragraph 1(2), 3C(2), 5(2), 6(2) or 10(2) an excess is not an authorised lump sum of one description, that does not prevent the excess being an authorised lump sum of another description.

(6) “Authorised lump sum” means a lump sum authorised to be paid by the lump sum rule.

Part 2 — Lump sum death benefit rule

Defined benefits arrangements

Defined benefits lump sum death benefit

13

(1) For the purposes of this Part a lump sum death benefit is a defined benefits lump sum death benefit if—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) it is paid in respect of a defined benefits arrangement,

(d) it is not a pension protection lump sum death benefit, or trivial commutation lump sum death benefit ....

...

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pension protection lump sum death benefit

14

(1) For the purposes of this Part a lump sum death benefit is a pension protection lump sum death benefit if—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) it is paid in respect of a defined benefits arrangement,

(d) the member has specified that it is to be treated as a pension protection lump sum death benefit (instead of a defined benefits lump sum death benefit).

(2) But if the amount of a lump sum falling within sub-paragraph (1) exceeds the pension protection limit, the excess is not a pension protection lump sum death benefit.

(3) The pension protection limit is—

$$AC-AP-TPLS$where— B and C have the same meaning as they have for the purposes of paragraph 2C(2); AP is the amount of the pension paid in respect of the period between the member becoming entitled to the pension and the member’s death, andTPLS is the total amount of pension protection lump sum death benefit previously paid in respect of the pension under this paragraph.$

Money purchase arrangements

Uncrystallised funds lump sum death benefit

15

(1) For the purposes of this Part a lump sum death benefit is an uncrystallised funds lump sum death benefit if—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) it is paid in respect of a money purchase arrangement,

(d) it is paid in respect of relevant uncrystallised funds, and

(e) it is not a charity lump sum death benefit.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) “Relevant uncrystallised funds” means such of the sums and assets held for the purposes of the arrangement at the member’s death as—

(a) had not been applied for purchasing a scheme pension, a lifetime annuity, a nominees' annuity, a dependants' scheme pension or a dependants' annuity, and

(b) had not been designated under the arrangement as available for the payment of drawdown pension.

(2A) Where—

(a) the arrangement is a cash balance arrangement,

(b) under the arrangement, a dependant of the member is entitled to be paid after the member's death an amount by way of a lump sum,

(c) the dependant's entitlement to a lump sum of that amount under the arrangement comes into being at a time no later than the member's death,

(d) such of the sums and assets held for the purposes of the arrangement immediately after the member's death as are held for the purpose of meeting the liability to pay the lump sum are insufficient for that purpose (including where that is because none are held for that purpose), and

(e) a person who was an employer in relation to the member pays a contribution to the scheme—

(i) for or towards making good that insufficiency, and

(ii) of no more than is needed for making good the insufficiency,

the sums and assets held for the purposes of the arrangement that represent the contribution are to be treated as “relevant uncrystallised funds” for the purposes of this paragraph.

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