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

(3) But if an amount falling within sub-paragraph (1) exceeds the permitted maximum, the excess is not an uncrystallised funds lump sum death benefit.

(4) The permitted maximum is the aggregate of—

(a) the amount of the sums, and

(b) the market value of the assets,

which constitute the relevant uncrystallised funds immediately before the payment is made.

Annuity protection lump sum death benefit

16

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

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

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

(c) it is paid in respect of a scheme pension or lifetime annuity to which the member was entitled at the date of the member’s death.

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

(3) The annuity protection limit is—

$$AC-AP-TPLS$where— AC is— where the lump sum is paid in respect of a scheme pension, the scheme pension purchase price, as determined under paragraph 2D(3) and (4);where the lump sum is paid in respect of a lifetime annuity, the annuity purchase price, as determined under paragraph 2B(3) and (4);AP is the amount of the pension paid in respect of the period between the member becoming entitled to the pension or annuity and the member’s death, andTPLS is the total amount of annuity protection lump sum death benefit previously paid in respect of the pension or annuity under this paragraph.$

Unsecured pension fund lump sum death benefit

17

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

(a) it is paid in respect of income withdrawal to which the member was entitled to be paid from the member's drawdown pension fund in respect of an arrangement at the date of the member's death, and

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

(2) A lump sum death benefit is also a drawdown pension fund lump sum death benefit if—

(a) it is paid on the death of a dependant of the member,

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

(c) it is paid in respect of dependants' income withdrawal to which the dependant was entitled at the date of the dependant’s death to be paid from the dependant's drawdown pension fund in respect of an arrangement relating to the member, and

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

(3) But if the amount of a lump sum falling within sub-paragraph (1) or (2) exceeds the permitted maximum, the excess is not a drawdown pension fund lump sum death benefit.

(4) The permitted maximum is the aggregate of—

(a) the amount of the sums, and

(b) the market value of the assets,

representing the member’s or dependant’s drawdown pension fund in respect of the arrangement immediately before the payment is made.

Charity lump sum death benefit

18

(1) A lump sum death benefit is a charity lump sum death benefit if—

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

(b) there are no dependants of the member,

(c) it is paid in respect of the member's drawdown pension fund in respect of an arrangement, or in respect of the member's flexi-access drawdown fund in respect of an arrangement, at the date of the member’s death, and

(d) it is paid to a charity nominated by the member ...

(1A) A lump sum death benefit is also a charity lump sum death benefit if—

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

(b) there are no dependants of the member,

(c) it is paid in respect of relevant uncrystallised funds in respect of a money purchase arrangement at the date of the member's death, and

(d) it is paid to a charity nominated by the member.

(1B) “Relevant uncrystallised funds” has the meaning given by paragraph 15(2).

(2) A lump sum death benefit is also a charity lump sum death benefit if—

(a) it is paid on the death of a dependant of the member,

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

(d) it is paid in respect of the dependant's drawdown pension fund, or the dependant's flexi-access drawdown fund, at the date of the dependant’s death in respect of an arrangement relating to the member, and

(e) it is paid to a charity nominated by the member or, if the member made no nomination, by the dependant ... .

(2A) A lump sum death benefit is also a charity lump sum death benefit if—

(a) it is paid on the death of an individual who is—

(i) a nominee of the member, or

(ii) a successor of the member,

(b) there are no dependants of the member,

(c) it is paid in respect of the individual's nominee's flexi-access drawdown fund or successor's flexi-access drawdown fund at the date of the individual's death in respect of an arrangement relating to the individual in the capacity of a nominee or successor of the member, and

(d) it is paid to a charity nominated by the member or, if the member made no nomination, by the individual.

(3) But if the amount of a lump sum falling within sub-paragraph (1), (2) or (2A) exceeds the permitted maximum, the amount of the excess is not a charity lump sum death benefit.

(4) The permitted maximum is the aggregate of—

(a) the amount of the sums, and

(b) the market value of the assets,

representing what is the member's or dependant's drawdown pension fund, or flexi-access drawdown fund, in respect of the arrangement, or the nominee's or successor's flexi-access drawdown fund in respect of the arrangement, immediately before the payment is made.

Transfer lump sum death benefit

19

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

Defined benefits and money purchase arrangements

Trivial commutation lump sum death benefit

20

(1) A lump sum death benefit is a trivial commutation lump sum death benefit if condition A or B is met.

(1A) Condition A is that the lump sum—

(a) is paid to a dependant entitled under the pension scheme to pension death benefit in respect of the member, and

(b) extinguishes the dependant's entitlement under the pension scheme to pension death benefit and lump sum death benefit in respect of the member.

(1B) Condition B is that—

(a) the lump sum is paid after the member's death to an individual entitled to be paid a pension under the scheme—

(i) which the member was entitled to be paid immediately before the member's death, and

(ii) which is payable to the individual under pension rule 2 (see section 165),

(b) if the pension is an annuity or scheme pension payable by an insurance company, the lump sum extinguishes all entitlements in respect of the member under the contract concerned, and

(c) if the pension is a scheme pension payable by the scheme administrator, the lump sum extinguishes all entitlements to receive a scheme pension in respect of the member from the scheme administrator under pension rule 2.

(2) But if the amount of a lump sum falling within sub-paragraph (1) exceeds £30,000, the excess is not a trivial commutation lump sum death benefit.

(3) 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.

Winding-up lump sum death benefit

21

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

Interpretation

Interpretation of Part 2

22

(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.

(2) Where by virtue of paragraph 14(2), 20(2) or 21(2) an excess is not an authorised lump sum death benefit of one description, that does not prevent the excess being an authorised lump sum death benefit of another description.

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

SCHEDULE 30

Definitions

Charge of adequate value

1

(1) A charge is of adequate value if it meets conditions A, B and C.

(2) Condition A is that, at the time the charge is given, the market value of the assets subject to the charge—

(a) in the case of the first charge to secure the loan, is at least equal to the amount owing (including interest), and

(b) in any other case, is at least equal to the lower of that amount and the market value of the assets subject to the previous charge.

(3) Condition B is that if, at any time after the charge is given, the market value of the assets charged is less than would be required under condition A if the charge were given at that time, the reduction in value is not attributable to any step taken by the pension scheme, the sponsoring employer or a person connected with the sponsoring employer.

(4) Condition C is that the charge takes priority over any other charge over the assets.

Loan repayment date

2

(1) “Loan repayment date” means the date by which the total amount owing (including interest) must be paid.

(2) A standard loan repayment date is a loan repayment date before the end of the period of five years beginning with the date on which the loan is made.

Loan year

3

(1) “Loan year” means—

(a) the period of 12 months beginning with the date on which the loan is made, and

(b) each succeeding period of 12 months.

(2) But in the period of 12 months in which the loan repayment date falls, the loan year ends on the loan repayment date (and that loan year is the last loan year).

Required amount

4

“The required amount”, in relation to a period beginning with the date on which the loan is made and ending with the last day of a loan year, is—

Amount of unauthorised payment

Loan does not comply with section 179(1) when made

5

(1) If a loan does not comply with section 179 (1) (authorised employer loan) when it is made, there is an unauthorised payment of an amount equal to the largest of such of amounts 1, 2, A, B, and C as arise in relation to the loan.

(2) Paragraphs 12 to 16 explain amounts 1, 2, A, B and C.

Loan ceases to be secured by charge of adequate value

6

If at any time after a loan is made the loan ceases to be secured by a charge of adequate value, there is an unauthorised payment equal to amount 2 (see paragraph 13).

Further reduction in value of charge which is not of adequate value

7

(1) If at any time after a loan is made—

(a) the loan is secured by a charge which is not of adequate value, and

(b) an event mentioned in sub-paragraph (2) occurs,

there is an unauthorised payment.

(2) The events are—

(a) the loan ceasing to be secured by a charge,

(b) a charge being given which does not comply with conditions A or C,

(d) the charge ceasing to comply with condition C.

(3) The amount of the unauthorised payment is—

$$AAE-ABE$where—AAE is amount 2 (see paragraph 13) calculated after the event, andABE is amount 2 (see paragraph 13) calculated before the event.$

(4) Paragraph 1 defines conditions A, B and C.

Loan ceases to comply with repayment terms

8

(1) If at any time after a loan is made—

(a) there is an alteration in the repayment terms, and

(b) as a result the repayment terms cease to comply with one or more paragraphs of section 179(2) (authorised repayment terms),

there is an unauthorised payment of an amount equal to the larger of such of amounts A, B, and C (see paragraphs 14 to 16) as arise when that paragraph or those paragraphs are not complied with.

Increase in extent to which loan does not comply with repayment terms

9

(1) If at any time after a loan is made—

(a) there is an alteration in the repayment terms, and

(b) as a result the deterioration condition is met in relation to one or more paragraphs of section 179(2) (authorised repayment terms) which were not complied with before the alteration,

there is an unauthorised payment of an amount calculated in accordance with sub-paragraphs (3) and (4).

(2) The deterioration condition is met in relation to a paragraph if—

$AAA>ABA$

(3) For each paragraph in relation to which the deterioration condition is met, calculate—

$AAA-ABA$

(4) There is an unauthorised payment of an amount equal to the largest of the amounts calculated under sub-paragraph (3).

(5) In this paragraph—

AAA, in relation to a paragraph of section 179(2) which was not complied with before the alteration in the repayment terms, is the amount arising when that paragraph is not complied with, calculated after the alteration in the repayment terms, and

ABA, in relation to such a paragraph, is the amount arising when that paragraph is not complied with, calculated before the alteration in the repayment terms.

Prevention of double charging

10

(1) This paragraph applies if on any date there is an unauthorised payment under more than one of paragraphs 6 to 9.

(2) There is a single unauthorised payment.

(3) The amount of the unauthorised payment is an amount equal to the amount of the greater or greatest of the unauthorised payments under those paragraphs.

Total unauthorised payments not to exceed amount of loan

11

If the aggregate amount of the unauthorised payments in relation to a loan under paragraphs 5 to 10 exceeds the amount of the loan when it was made, the excess is to be treated as not being an unauthorised payment.

Amount 1

12

(1) Amount 1 arises if paragraph (a) of section 179 (1) (amount of loan must not exceed 50% of pension scheme assets) is not complied with.

(2) Amount 1 is—

Amount 2

13

(1) Amount 2 arises if paragraph (b) of section 179 (1) (loan must be secured by charge of adequate value) is not complied with.

(2) Amount 2 is—

$$AO-VA$where—AO is the amount owing (including interest) at the relevant time, andVA is the market value at that time of the assets charged but if the loan is not secured by a charge, or is secured by a charge which does not meet condition C (as defined in paragraph 1), is nil.$

Amount A

14

(1) Amount A arises if paragraph (a) of section 179(2) (interest rate to be not less than prescribed amount) is not complied with.

(2) Amount A is—

Amount B

15

(1) Amount B arises if paragraph (b) of section 179(2) (loan repayment date to be within five years unless postponed) is not complied with.

(2) Amount B is—

Amount C

16

(1) Amount C arises if paragraph (c) of section 179(2) (amount payable for a period to be not less than required amount) is not complied with and is calculated as follows.

(2) In relation to each period beginning with the date on which the loan is made and ending with the last day of a loan year, calculate—

$$RA-AP$where—RA is the required amount in relation to that period, andAP is the amount payable during that period.$

(3) If an amount calculated under sub-paragraph (2) is negative, treat that amount as nil.

(4) Amount C is the largest of the amounts calculated under sub-paragraph (2).

SCHEDULE 31

1

Part 9 of ITEPA 2003 (pension income) is amended as follows.

2

In section 565 (structure of Part 9), for “Chapters 16 to 18 deal with” substitute—

Chapter 15A makes provision about exemptions and charges in relation to lump sums under registered pension schemes; Chapters 17 and 18 deal with other

3

(1) Section 566(4) (nature of charge to tax on pension income) is amended as follows.

(2) For the entries relating to sections 580, 583, 590, 595, 598, 601 and 605 substitute—

Section 579A	Pensions under registered pension schemes	Chapter 5A

(3) Omit the entry relating to section 623.

(4) Insert at the end—

Section 636B	Pensions treated as arising from payment of trivial commutation lump sums and winding-up lump sums under registered pension schemes	Chapter 15A
Section 636C	Pensions treated as arising from payment of trivial commutation lump sum death benefits and winding-up lump sum death benefits under registered pension schemes	Chapter 15A

4

In section 567(4)(a) (amount charged to tax), for “15” substitute “ 15A ”.

5

In section 568 (person liable to tax), for “15” substitute “ 15A ”.

6

After Chapter 5 insert—

(579A) (1) This section applies to any pension under a registered pension scheme (but subject to subsection (2)). (2) This section does not apply to a pension under a registered pension scheme if and to the extent that, when it is paid, a liability to the unauthorised payments charge arises in respect of the amount of the payment (see section 208 of FA 2004). (579B) If section 579A applies, the taxable pension income for a tax year is the full amount of the pension under the registered pension scheme that accrues in that year irrespective of when any amount is actually paid. (579C) If section 579A applies, the person liable for any tax charged under this Part is the person receiving or entitled to the pension under the registered pension scheme. (579D) In this Chapter “pension under a registered pension scheme” includes— (a) an annuity under, or purchased with sums or assets held for the purposes of, or representing acquired rights under, a registered pension scheme, and (b) income withdrawal or dependants' income withdrawal under a registered pension scheme. In paragraph (b) “income withdrawal”and “dependants' income withdrawal”have the meaning given by paragraphs 7 and 21 of Schedule 28 to FA 2004.

7

Omit Chapters 6, 7, 8 and 9 (pensions under approved schemes).

8

(1) Section 610 (annuities under sponsored superannuation schemes) is amended as follows.

(2) In subsection (1)—

(a) in paragraph (a), for “a sponsored superannuation scheme” substitute “ an occupational pension scheme that is not a registered pension scheme ”, and

(b) in paragraph (b), for “a sponsored superannuation scheme” substitute “ such an occupational pension scheme ”.

(3) In subsection (3), for “any provision of Chapter 6, 7, 8 or 9” substitute “ Chapter 5A ”.

(4) For subsection (4) substitute—

(4) In this section “occupational pension scheme” has the same meaning as in Part 4 of FA 2004 (see section 150(5) of that Act).

(5) In the heading, for “sponsored superannuation” substitute “ non-registered occupational pension ”.

9

In section 611(3) (annuities in recognition of another’s service), for “any provision of Chapter 6, 7, 8 or 9” substitute “ Chapter 5A ”.

10

Omit Chapter 13 (return of surplus additional voluntary contributions under exempt approved schemes and relevant statutory schemes).

11

After Chapter 15 insert—

(636A) (1) No liability to income tax arises on a lump sum paid under a registered pension scheme if the lump sum is— (a) a pension commencement lump sum, (b) a serious ill-health lump sum, (c) a refund of excess contributions lump sum, (d) a defined benefits lump sum death benefit, (e) an uncrystallised funds lump sum death benefit, or (f) a transfer lump sum death benefit. (2) But subsection (1) does not limit the operation of sections 214 to 226 of FA 2004 (lifetime allowance charge). (3) A short service refund lump sum under a registered pension scheme is subject to income tax in accordance with section 205 of FA 2004 (charge to tax on scheme administrator in respect of such a lump sum) but not otherwise. (4) A lump sum under a registered pension scheme which is— (a) a pension protection lump sum death benefit, (b) an annuity protection lump sum death benefit, or (c) an unsecured pension fund lump sum death benefit, is subject to income tax in accordance with section 206 of FA 2004 (charge to tax on scheme administrator in respect of such lump sum death benefits) but not otherwise. (4A) In the case of a registered pension scheme which is a split scheme for the purposes of the Registered Pensions Schemes (Splitting of Schemes) Regulations 2006, subsections (3) and (4) shall have effect as if the references to the scheme administrator were to the sub-scheme administrator (within the meaning of those Regulations). (5) A lifetime allowance excess lump sum is chargeable to income tax in accordance with sections 214 to 226 of FA 2004 (lifetime allowance charge) but not otherwise. (6) In this section— - “lifetime allowance excess lump sum”, - “pension commencement lump sum”, - “refund of excess contributions lump sum”, - “serious ill-health lump sum”, and - “short service refund lump sum”, - have the same meaning as in section 166 of FA 2004 (see Part 1 of Schedule 29 to that Act). (7) In this section— - “annuity protection lump sum death benefit”, - “defined benefits lump sum death benefit”, - “pension protection lump sum death benefit”, - “transfer lump sum death benefit”, - “uncrystallised funds lump sum death benefit”, and - “unsecured pension fund lump sum death benefit”, - have the same meaning as in section 168 of FA 2004 (see Part 2 of Schedule 29 to that Act). (636B) (1) This section applies if— (a) a trivial commutation lump sum, or (b) a winding-up lump sum, is paid to a member of a registered pension scheme under the pension scheme. (2) The member is to be treated as having taxable pension income for the tax year in which the payment is made equal to the amount of the lump sum. (3) But if, immediately before the lump sum is paid, the member has not become entitled to any benefits under the pension scheme, the amount of the taxable pension income is 75% of the amount of the lump sum. (4) In this section— - “trivial commutation lump sum”, and - “winding-up lump sum”, - have the same meaning as in section 166 of FA 2004 (see Part 1 of Schedule 29 to that Act). (636C) (1) This section applies if— (a) a trivial commutation lump sum death benefit, or (b) a winding-up lump sum death benefit, is paid to a person under a registered pension scheme. (2) The person is to be treated as having taxable pension income for the tax year in which the payment is made equal to the amount of the lump sum. (3) In this section— - “trivial commutation lump sum death benefit”, and - “winding-up lump sum death benefit”, - have the same meaning as in section 168 of FA 2004 (see Part 2 of Schedule 29 to that Act).

12

Omit Chapter 16 (lump sums).

13

In section 644(2) (pensions to which section 580 or 590 applies not a disablement pension), for “580 or 590” substitute “ 579A ”.

14

(1) Section 683 of ITEPA 2003 (PAYE income) is amended as follows.

(2) In subsection (3), for the entries relating to sections 581, 584, 591, 596, 599 and 602 substitute— “ section 579B (pension under registered pension scheme), ”.

(3) In that subsection, insert at the end— “ section 636B (pension treated as arising from payment of trivial commutation lump sum or winding-up lump sum), section 636C (pension treated as arising from payment of trivial commutation or winding-up lump sum death benefit). ”

(4) Omit subsection (4).

15

In Part 2 of Schedule 1 to ITEPA 2003 (index of defined expressions) insert at the appropriate place—

pension under a registered pension scheme (in Chapter 5A of Part 9)	section 579D

SCHEDULE 32

General: meaning of “the relevant pension schemes”

1

In this Schedule “the relevant pension schemes” means the registered pension schemes of which the individual is a member ....

Post-75 events not generally benefit crystallisation events

2

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

Benefit crystallisation events 1, 2 and 4: prevention of overlap

3

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

4

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

Benefit crystallisation events 1 and 5: hybrid arrangements

5

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

Benefit crystallisation events 2, 3 and 5: meaning of “RVF”

6

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

Benefit crystallisation events 2 and 4: early lifetime annuities

7

(1) This paragraph has effect if—

(a) the individual becomes entitled before reaching normal minimum pension age to the payment of a lifetime annuity purchased under a money purchase arrangement under any of the relevant pension schemes, and

(b) the ill-health condition is not satisfied immediately before the individual becomes so entitled.

(2) Benefit crystallisation event 2 applies as if—

(a) the lifetime annuity were a scheme pension under the pension scheme, and

(b) the individual becomes entitled to it only on reaching normal minimum pension age.

(3) Benefit crystallisation event 4 does not apply in relation to the lifetime annuity.

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

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

Benefit crystallisation event 2: early pensions

8

For the purposes of benefit crystallisation event 2 if—

(a) the individual becomes entitled to the pension before reaching normal minimum pension age, and

(b) the ill-health condition is not satisfied immediately before the individual becomes entitled to the pension,

the individual is to be treated as becoming entitled to it only on reaching normal minimum pension age.

Benefit crystallisation event 2: meaning of “P”

9

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

Benefit crystallisation event 3: excepted circumstances

10

(A1) For the purposes of benefit crystallisation event 3 “excepted circumstances” exist if condition A or B is met.

(1) Condition A is that—

(za) the entitlement to payment of a scheme pension at an increased annual rate is under an arrangement that is not a collective money purchase arrangement,

(a) ... at the time when the annual rate of the individual’s pension is increased there are at least 50 pensioner members of the pension scheme, and

(b) ... the individual is one of a class of at least 20 pensioner members of the pension scheme, and all the scheme pensions being paid under the pension scheme to pensioner members of that class are at that time increased at the same rate.

(2) A class may consist of all the pensioner members of the pension scheme.

(3) Sub-paragraph (4) applies where—

(a) the annual rate of the individual's pension is increased in excepted circumstances (“the excepted increase”),

(b) before the end of the period of 12 months beginning with the date of the excepted increase, the annual rate of the individual's pension is increased in circumstances which would (apart from that sub-paragraph) be excepted circumstances (“the subsequent increase”), and

(c) the class by virtue of which sub-paragraph (1)(b) is satisfied on the subsequent increase (“the new class”) is not the class by virtue of which it was satisfied on the excepted increase.

(4) If the purpose, or one of the main purposes, of the individual's being included in the new class is to increase the annual rate of the individual's pension without benefit crystallisation event 3 occurring, the subsequent increase is not in excepted circumstances.

(5) Condition B is that—

(a) the entitlement to payment of a scheme pension at an increased annual rate is under an arrangement that is a collective money purchase arrangement, and

(b) at the time when the annual rate of the individual's pension is increased, all the scheme pensions being paid under collective money purchase arrangements are increased at the same rate.

Benefit crystallisation event 3: permitted margin

11

(1) This paragraph applies for the purposes of benefit crystallisation event 3 if the individual became entitled to the pension on or after 6th April 2006.

(2) The permitted margin is the amount by which the annual amount of the pension at the rate at which it was payable on the day on which the individual became entitled to it would be greater if it had been increased by whichever of calculation A and calculation B gives the greater amount.

(3) Calculation A involves increasing that annual amount at the relevant annual percentage rate for the whole of the period—

(a) beginning with the month in which the individual became entitled to the pension, and

(b) ending with the month in which the individual becomes entitled to payment of the pension at the increased rate.

(4) The relevant annual percentage rate is—

(a) in a case where the pension is paid under a pension scheme, or an arrangement under a pension scheme, in relation to which the relevant valuation factor is a number greater than 20, the annual rate agreed by the Inland Revenue and the scheme administrator, and

(b) otherwise, 5% per annum.

(5) Calculation B involves increasing that annual amount by the relevant indexation percentage.

(6) If the retail prices index for the reference month is higher than it was for the base month, the relevant indexation percentage is the percentage increase in the retail prices index.

(7) If it is not, the relevant indexation percentage is 0%.

(7A) The scheme administrator may select as the reference month any month in the period of 12 months ending with the month in which the individual becomes entitled to payment of the pension at the increased rate.

(7B) The base month is the month which is the same number of months before the month in which the individual became entitled to the pension, as the reference month is before the month in which the individual becomes entitled to payment of the pension at the increased rate.

(8) If the pension is under a public service pension scheme, any abatement of the pension is to be left out of account in determining for the purposes of this paragraph the annual amount of the pension at the rate at which it was payable on the day on which the individual became entitled to it.

12

(1) This paragraph applies for the purposes of benefit crystallisation event 3 if the individual became entitled to the pension before 6th April 2006.

(2) The permitted margin is the greater of—

(a) what would be the permitted margin at that time if the individual had become entitled to the pension on or after that date (see paragraph 11), and

(b) the amount by which the annual amount of the pension at the rate at which it was payable on the day on which the individual became entitled to it would be greater if it had been increased for the whole of the period specified in sub-paragraph (3) of that paragraph at the rate of P% per annum.

(3) “P%” is the percentage by which, in accordance with the rules of the pension scheme immediately before 6th April 2006, the annual rate of the pension is to be increased each year.

(4) If the pension is under a public service pension scheme, any abatement of the pension is to be left out of account in determining for the purposes of this paragraph the annual amount of the pension at the rate at which it was payable on the day on which the individual became entitled to it.

Benefit crystallisation event 3: meaning of “XP”

13

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

Benefit crystallisation event 5: meaning of “DP” and “DSLS”

14

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

Benefit crystallisation event 6: meaning of “relevant lump sum”

15

For the purposes of benefit crystallisation event 6 a lump sum is a relevant lump sum if it is—

(a) a pension commencement lump sum,

(b) a serious ill-health lump sum,

(ba) an uncrystallised funds pension lump sum, or

Benefit crystallisation event 7: meaning of “relevant lump sum death benefit”

16

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

Benefit crystallisation event 8: prevention of overlap with other events

17

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

SCHEDULE 33

Relief for members' etc. contributions

1

(1) An individual who is a relevant migrant member of a qualifying overseas pension scheme is entitled to relief under section 188 (relief for contributions by or on behalf of members of registered pension schemes) in respect of relievable pension contributions paid during a tax year if the individual—

(a) has relevant UK earnings chargeable to income tax for that year,

(b) is resident in the United Kingdom when the contributions are paid, and

(2) Section 190 (annual limit for relief under section 188) applies in relation to the aggregate of the amount of relief to which an individual is entitled under section 188 by virtue of sub-paragraph (1) and any to which the individual is so entitled apart from that sub-paragraph.

(3) Relief to which an individual is entitled under section 188 by virtue of sub-paragraph (1) is to be given in accordance with section 194 (relief on making of claim) (so that nothing in sections 191 to 193 applies in relation to such relief).

(4) Section 195 (transfer of certain shares to be treated as payment of contribution) has effect as if the references to sections 188 to 194 included sections 188 to 190 and 194 as they apply by virtue of this paragraph.

(5) No deduction may be allowed under Chapter 2 of Part 5 of ITEPA 2003 in accordance with section 355 of that Act (deductions for corresponding payments by non-domiciled employees with foreign employers) in respect of contributions under a pension scheme (but subject to Part 4 of Schedule 36).

Relief for employers' contributions

2

(1) Subsections (2) to (5) of section 196 (relief for contributions by employer) apply in relation to relevant migrant member contributions paid by an employer as in relation to contributions paid by an employer under a registered pension scheme in respect of an individual.

(2) Section 200 (no other relief for employers in connection with contributions) applies as if the reference to contributions under a registered pension scheme included relevant migrant member contributions.

(3) “Relevant migrant member contributions” means contributions paid under a qualifying overseas pension scheme in respect of an individual who is a relevant migrant member of the pension scheme in relation to the contributions.

3

In ITEPA 2003, after section 308 insert—

(308A) (1) No liability to income tax arises in respect of earnings where an employer makes contributions under a qualifying overseas pension scheme in respect of an employee who is a relevant migrant member of the pension scheme. (2) In subsection (1)— - “qualifying overseas pension scheme”, and - “relevant migrant member”, - have the same meaning as in Schedule 33 to FA 2004 (overseas pension schemes: migrant member relief).

Meaning of “relevant migrant member”

4

(1) For the purposes of this Schedule an individual who is a member of an overseas pension scheme is a relevant migrant member of the pension scheme, in relation to any contributions, if the individual—

(a) was not resident in the United Kingdom when first a member of the pension scheme,

(b) was a member of the pension scheme at the beginning of the period of residence in the United Kingdom which includes the time when the contributions are paid,

(c) either was, immediately before the beginning of that period of residence, entitled to tax relief in respect of contributions paid under the pension scheme under the law of the country or territory in which the individual was then resident or meets such other condition as may be prescribed by regulations made by the Board of Inland Revenue, and

(d) has been notified by the scheme manager that information concerning events that are relevant benefit crystallisation events in relation to the individual and the pension scheme will be given to the Inland Revenue.

(2) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that, in circumstances prescribed by the regulations, paragraphs (a), (b) and (c) of sub-paragraph (1) have effect as if the references in those paragraphs to the pension scheme were to either the pension scheme or such other pension scheme as is prescribed by the regulations.

(3) Regulations under sub-paragraph (2) may include provision having effect in relation to times before they are made.

(4) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

Meaning of “qualifying” overseas pension scheme

5

(1) For the purposes of this Schedule an overseas pension scheme is a qualifying overseas pension scheme if—

(a) the scheme manager has given to the Inland Revenue notification that it is an overseas pension scheme and has provided any such evidence that it is an overseas pension scheme as the Inland Revenue may require,

(b) the scheme manager has undertaken to the Inland Revenue to inform the Inland Revenue if it ceases to be an overseas pension scheme,

(c) the scheme manager has undertaken to the Inland Revenue to comply with any prescribed benefit crystallisation information requirements imposed on the scheme manager, and

(d) the overseas pension scheme is not excluded from being a qualifying overseas pension scheme by sub-paragraph (3).

(2) In sub-paragraph (1)(c) “prescribed benefit crystallisation information requirements” means requirements imposed by or under regulations made by the Board of Inland Revenue to provide to the Inland Revenue any information relating to relevant events in relation to members of the pension scheme who have at any time been relevant migrant members of the pension scheme.

(2A) In sub-paragraph (2) “relevant events” means—

(a) relevant benefit crystallisation events, or

(b) occasions that are, or could (depending on their timing) be, occasions on which an individual first flexibly accesses pension rights for the purposes of sections 227B to 227F.

(3) An overseas pension scheme is excluded from being a qualifying overseas pension scheme if the Inland Revenue has decided that—

(a) there has been a failure to comply with any prescribed benefit crystallisation information requirements imposed on the scheme manager and the failure is significant, and

(b) by reason of the failure it is not appropriate that relief from tax should be given in respect of contributions under the pension scheme,

and has notified the person or persons appearing to be the scheme manager of that decision (but subject to sub-paragraph (5) and paragraph 6).

(4) A failure to comply with prescribed benefit crystallisation information requirements is significant if—

(a) the amount of information which has not been provided is substantial, or

(b) the failure to provide the information is likely to result in serious prejudice to the assessment or collection of tax.

(5) The Inland Revenue —

(a) may at any time after an overseas pension scheme becomes excluded from being a qualifying overseas pension scheme decide that the pension scheme is to cease to be so excluded, and

(b) must notify the scheme manager of the decision.

(6) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

6

(1) This paragraph applies where an overseas pension scheme is excluded from being a qualifying overseas pension scheme by a decision of the Inland Revenue under paragraph 5(3).

(2) The scheme manager may appeal against the decision.

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

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

(5) An appeal under this paragraph against a decision must be brought within the period of 30 days beginning with the day on which the notification of the decision was given.

(6) If an appeal under this paragraph is notified to the tribunal, the tribunal must consider whether the overseas pension scheme ought to have been excluded from being a qualifying overseas pension scheme.

(7) If the tribunal decides that the overseas pension scheme ought to have been excluded from being a qualifying overseas pension scheme, the tribunal must dismiss the appeal.

(8) If the tribunal decides that the overseas pension scheme ought not to have been excluded from being a qualifying overseas pension scheme, the pension scheme is to be treated as having remained a qualifying overseas pension scheme (but subject to any further appeal ...).

SCHEDULE 34

Member payment charges

1

(1) For the purposes of the member payment charges the member payment provisions apply in relation to payments made (or treated by this Part as made) to or in respect of—

(a) a relieved member of a relevant non-UK scheme, or

(b) a transfer member of such a scheme,

as in relation to payments made (or treated by this Part as made) to or in respect of a member of a registered pension scheme.

(2) Sub-paragraph (1) has effect subject to the provision made by and under paragraphs 2 to 7.

(3) “The member payment charges” are—

(a) the unauthorised payments charge (except as imposed by virtue of section 174A (taxable property held by investment-regulated pension schemes)),

(b) the unauthorised payments surcharge,

(ca) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) the special lump sum death benefits charge, and

(e) the charge to tax under Part 9 of ITEPA 2003 (pension income) on pension income to which—

(i) any provision of Chapter 15A of that Part of that Act (lump sums under registered pension schemes) applies, or

(ii) section 579A of that Act (pension income under registered pension schemes) applies by virtue of any provision of that Chapter.

(4) “The member payment provisions” are —

(a) the provisions of this Part (apart from the taxable property provisions) relating to payments made (or treated by this Part as made) to or in respect of a member of a registered pension scheme , and

(b) Chapter 15A of Part 9 of ITEPA 2003 (lump sums under registered pension schemes).

(5) A scheme is a relevant non-UK scheme if—

(a) relief from tax has been given in respect of contributions paid under the scheme by virtue of Schedule 33 (overseas pension schemes: migrant member relief),

(b) relief from tax has been so given at any time after 5th April 2006 under double tax arrangements,

(c) a member of the scheme has been, or members of the scheme have been, exempt from liability to tax by virtue of section 307 of ITEPA 2003 (exemption for provision made by employer for retirement or death benefit) in respect of provision made under the scheme at any time after 5th April 2006 when the scheme was an overseas pension scheme, or

(d) there has been a relevant transfer at any time after 5th April 2006 when the scheme was a qualifying recognised overseas pension scheme.

(6) “A relevant transfer” means a (direct or indirect) transfer of sums or assets held for the purposes of, or representing accrued rights under, an arrangement made under—

(a) a registered pension scheme, or

(b) another scheme which is a relevant non-UK scheme,

in relation to a member so as to become held for the purposes of, or to represent rights under, an arrangement under the scheme relating to the member; ....

(6A) There are three types of relevant transfer—

(a) an original relevant transfer,

(b) a subsequent relevant transfer, and

(6B) “An original relevant transfer” is—

(a) a relevant transfer within sub-paragraph (6)(a) made on or after 9 March 2017,

(b) a relevant transfer within sub-paragraph (6)(b), made on or after 9 March 2017, of the whole or part of the UK tax-relieved fund of a relieved member of a qualifying recognised overseas pension scheme, or

(c) a relevant transfer within sub-paragraph (6)(b), made on or after 6 April 2017, of the whole or part of the UK tax-relieved fund of a relieved member of a relevant non-UK scheme that is not a qualifying recognised overseas pension scheme.

(6C) The sums or assets transferred as a result of an original relevant transfer constitute a ring-fenced transfer fund, and the key date for that fund is the date of the transfer.

(6D) Where in the case of a ring-fenced transfer fund (“the source fund”) there is a relevant transfer of the whole or part of the fund—

(a) the sums or assets transferred as a result of the transfer constitute a ring-fenced transfer fund,

(b) that fund has the same key date as the source fund, and

(6E) Sub-paragraph (6D) applies whether the source fund is a ring-fenced transfer fund as a result of sub-paragraph (6C) or as a result of sub-paragraph (6D).

(6F) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that sums or assets identified in accordance with the regulations are not included in a ring-fenced transfer fund as a result of sub-paragraph (6C) or (6D)(a).

(7) A member of a relevant non-UK scheme is a relieved member of the scheme if—

(a) any of the contributions in respect of which relief has been given as mentioned in sub-paragraph (5)(a) or (b) were contributions paid by or on behalf of, or in respect of, the member, or

(b) the member is the member, or one of the members, who has been exempt from liability to tax as mentioned in sub-paragraph (5)(c).

(8) A member of a relevant non-UK scheme is a transfer member of the scheme if a relevant transfer related to the member.

2

(1) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a relieved member or transfer member of a relevant non-UK scheme so far as it is referable to 5-year rule funds unless the member—

(a) is resident in the United Kingdom when the payment is made (or treated as made), or

(b) although not resident in the United Kingdom at that time, has been resident in the United Kingdom earlier in the tax year in which the payment is made (or treated as made) or in any of the five tax years immediately preceding that tax year.

(2) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a relieved member of a relevant non-UK scheme so far as it is referable to 10-year rule funds unless the member—

(a) is resident in the United Kingdom when the payment is made (or treated as made), or

(b) although not resident in the United Kingdom at that time, has been resident in the United Kingdom earlier in the tax year in which the payment is made (or treated as made) or in any of the 10 tax years immediately preceding that year.

(3) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a transfer member of a relevant non-UK scheme, so far as it is referable to any particular ring-fenced transfer fund of the member's under the scheme which has a key date of 6 April 2017 or later, unless—

(a) the member is resident in the United Kingdom when the payment is made (or treated as made), or

(b) although the member is not resident in the United Kingdom at that time—

(i) the member has been resident in the United Kingdom earlier in the tax year containing that time, or

(ii) the member has been resident in the United Kingdom in any of the 10 tax years immediately preceding the tax year containing that time, or

(iii) that time is no later than the end of 5 years beginning with the key date for the particular fund.

(4) In this paragraph—

“5-year rule funds”, in relation to a payment to or in respect of a relieved member of a relevant non-UK scheme, means so much of the member's UK tax-relieved fund under the scheme as represents tax-relieved contributions, or tax-exempt provision, made under the scheme before 6 April 2017;

“5-year rule funds”, in relation to a payment to or in respect of a transfer member of a relevant non-UK scheme, means—the member's relevant transfer fund under the scheme, andany of the member's ring-fenced transfer funds under the scheme that has a key date earlier than 6 April 2017;

“10-year rule funds”, in relation to a payment to or in respect of a relieved member of a relevant non-UK scheme, means so much of the member's UK tax-relieved fund under the scheme as represents tax-relieved contributions, or tax-exempt provision, made under the scheme on or after 6 April 2017.

(5) See also—

paragraph 1(6C), (6D) and (6F) (meaning of “ring-fenced transfer fund”),

paragraph 3 (meaning of “UK tax-relieved fund”, “tax-relieved contributions” and “tax-exempt provision” etc), and

paragraph 4 (meaning of “relevant transfer fund” etc).

3

(1) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a relieved member of a relevant non-UK scheme unless the payment is referable to the member’s UK tax-relieved fund under the scheme.

(2) A member’s UK tax-relieved fund under a relevant non-UK scheme is so much of—

(a) the sums or assets held for the purposes of, or representing accrued rights under, the scheme as, in accordance with regulations made by the Board of Inland Revenue, represents

(b) any tax-relieved contributions made under the scheme by or on behalf of, or in respect of, the member and any tax-exempt provision made under the scheme in relation to the member.

(3) “Tax-relieved contributions” means contributions in respect of which relief from tax—

(a) has been given by virtue of Schedule 33 (overseas pension schemes: migrant member relief), or

(b) has been given at any time after 5th April 2006 under double tax arrangements.

(4) “Tax-exempt provision” means provision in respect of which exemption from tax has been given by virtue of section 307 of ITEPA 2003 (exemption for provision made by employer for retirement or death benefit) at any time after 5th April 2006 when the scheme was an overseas pension scheme.

(5) Regulations under sub-paragraph (2) may (in particular) provide that the sums or assets which represent any tax-relieved contributions or tax-exempt provision are to be determined otherwise than by reference to the actual amount of the contributions or the amount or value of the provision (for instance by reference to the increase in the value of the member’s rights under the scheme during a period for which relief or exemption in respect of such contributions or provision was given).

(5A) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that, in circumstances specified in the regulations, something specified in the regulations is to be treated as done by, to, in respect of or in the case of a relieved member of a relevant non-UK scheme.

(6) Regulations made by the Board of Inland Revenue may make provision for determining whether or not payments made (or treated as made) by , or other things done by or to or under or in respect of or in the case of, a relevant non-UK scheme are to be treated as referable to a member’s UK tax-relieved fund under the scheme (and so whether or not they reduce the fund).

(7) The provision which may be made under sub-paragraph (6) includes (in particular) provision in consequence of Part 7A of ITEPA 2003.

(8) Where regulations under sub-paragraph (6) make provision for a payment or something else to be treated as referable to a member's UK tax-relieved fund under a scheme, regulations under that sub-paragraph may make provision for the payment or thing, or any part or aspect of the payment or thing, also to be treated as referable to a particular part of that fund.

4

(1) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a transfer member of a relevant non-UK scheme unless it is referable to the member’s relevant transfer fund , or ring-fenced transfer funds, under the scheme.

(2) A member’s relevant transfer fund under a relevant non-UK scheme is , subject to sub-paragraph (3A), so much of—

(a) the sums or assets held for the purposes of, or representing accrued rights under, the scheme as, in accordance with regulations made by the Board of Inland Revenue, represents

(b) relevant transferred sums or assets.

(3) “Relevant transferred sums or assets” means sums or assets held for the purposes of, or representing accrued rights under, an arrangement under—

(a) a registered pension scheme, or

(b) another scheme which is a relevant non-UK scheme,

which at any time after 5th April 2006 when the scheme was an overseas pension scheme have been transferred (directly or indirectly) so as to become held for the purposes of, or to represent rights under, an arrangement under the scheme relating to the member; ...

(3A) The member's relevant transfer fund under the scheme does not include sums or assets that are in any of the member's ring-fenced transfer funds under the scheme.

(4) Regulations made by the Board of Inland Revenue may make provision for determining whether payments or transfers made (or treated as made) by , or other things done by or to or under or in respect of or in the case of, a relevant non-UK scheme are to be treated as referable to a member’s relevant transfer fund under the scheme (and so whether or not they reduce the fund).

(5) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that, in circumstances specified in the regulations, something specified in the regulations is to be treated as done by, to, in respect of or in the case of a transfer member of a relevant non-UK scheme.

(6) Regulations made by the Commissioners for Her Majesty's Revenue and Customs may make provision for determining whether payments or transfers made (or treated as made) by, or other things done by or to or under or in respect of or in the case of, a relevant non-UK scheme are to be treated as referable to a member's ring-fenced transfer funds under the scheme (and so whether or not they reduce the funds or any of them).

(7) Where regulations under sub-paragraph (6) make provision for a payment or transfer or something else to be treated as referable to a member's ring-fenced transfer funds under a scheme, regulations under that sub-paragraph may make provision for the payment or transfer or other thing, or any part or aspect of the payment or transfer or thing, also to be treated as referable to a particular one of those funds.

5

Sections 205 to 206 (short service refund lump sum charge... and special lump sum death benefits charge) apply with respect to a lump sum or lump sum death benefit paid to or in respect of—

(a) a relieved member of a relevant non-UK scheme, or

(b) a transfer member of such a scheme,

so as to make the person to whom the lump sum or lump sum death benefit is paid (rather than the scheme administrator) liable to any charge imposed by either of those sections.

6

(1) The amount of any liability to tax imposed on any individual in relation to a payment by virtue of the operation of the member payment charges in consequence of paragraph 1, or by virtue of the operation of Chapter 4 of Part 9 of ITEPA 2003 in consequence of paragraph 5A, is to be reduced by the amount of any tax paid in respect of the payment under the law of any country or territory outside the United Kingdom.

(2) Where, after any tax which an individual is liable to pay in respect of a payment in consequence of paragraph 1 or 5A has been paid, tax is paid in respect of the payment under the law of any country or territory outside the United Kingdom, an appropriate adjustment is to be made in the individual’s liability to tax (by way of discharge or repayment of tax).

7

(1) The member payment provisions apply with respect to a payment made (or treated by this Part as made) to or in respect of—

(a) a relieved member of a relevant non-UK scheme, or

(b) a transfer member of such a scheme,

subject to any omissions, additions and other modifications contained in regulations made by the Board of Inland Revenue.

(2) Regulations under sub-paragraph (1) may—

(a) include provision having effect in relation to times before they are made,

(b) confer discretion on the Board of Inland Revenue or the Inland Revenue (subject to a right of appeal against any decision taken in exercise of the discretion),

(ba) contain transitional provisions and savings,

(c) make different provision in relation to payments treated (in accordance with regulations under paragraph 3(6) or 4(4)) as being referable to a member’s UK tax-relieved fund, or to a member’s relevant transfer fund or ring-fenced transfer funds, under a relevant non-UK scheme, and

(d) otherwise make different provision for different cases.

Annual allowance charge

8

(1) The provisions of this Part relating to the annual allowance charge (“the annual allowance provisions”) apply in relation to an individual who is a currently-relieved member of a currently-relieved non-UK pension scheme and its scheme manager as if the currently-relieved non-UK pension scheme were a registered pension scheme.

(2) Sub-paragraph (1) has effect subject to the provision made by and under paragraphs 9 to 12.

(3) A pension scheme is a currently-relieved non-UK pension scheme in relation to a tax year if—

(a) relief from tax is given in respect of contributions paid during the tax year under the pension scheme by virtue of Schedule 33 (overseas pension schemes: migrant member relief) or double tax arrangements, or

(b) a member of the pension scheme is, or members of the pension scheme are, exempt from liability to tax by virtue of section 307 of ITEPA 2003 (exemption for provision made by employer for retirement or death benefit) in respect of provision made under the pension scheme at any time during the tax year when the pension scheme is an overseas pension scheme.

(4) An individual is a currently-relieved member of a currently-relieved non-UK pension scheme in relation to a tax year if—

(a) any of the contributions in respect of which relief is given as mentioned in sub-paragraph (3)(a) are contributions paid by or on behalf of, or in respect of, the individual, or

(b) the individual is the member, or one of the members, who is exempt from liability to tax as mentioned in sub-paragraph (3)(b).

9

The annual allowance provisions apply by virtue of paragraph 8 in relation to an individual who is a currently-relieved member of a currently-relieved non-UK pension scheme as if references to the pension input period of an arrangement under the pension scheme that ends in a tax year were to the tax year.

10

(1) Sections 230 (1) and 234 (1) (cash balance and defined benefits arrangements) apply by virtue of paragraph 8 in relation to an individual who is a currently-relieved member of a currently-relieved non-UK pension scheme in relation to a tax year as if the increase in the value of the individual’s rights under an arrangement under the pension scheme relating to the individual during the tax year were the greater of—

(a) the appropriate fraction of what it otherwise would be, and

(b) the amount of any contributions paid under the arrangement during the tax year by or on behalf of the individual (otherwise than by an employer) in respect of which relief from tax is given by virtue of Schedule 33 (overseas pension schemes: migrant member relief) or double tax arrangements;

and section 237 (hybrid arrangements) applies accordingly.

(2) The appropriate fraction is—

$$TE + TSI EI$where—EI is the total amount of employment income of the individual from any relevant employment or employments for the tax year, excluding any such income which is exempt income (within the meaning of section 8 of ITEPA 2003),TE is so much of EI as constitutes taxable earnings from any such employment (within the meaning of section 10(2) of that Act), andTSI is so much of EI as constitutes taxable specific income from any such employment (within the meaning of section 10(3) to (5) of that Act).$

(3) An employment is a relevant employment if it is an employment with an employer who is a sponsoring employer in relation to the currently-relieved non-UK pension scheme.

11

(1) Section 233 (1) (other money purchase arrangements) applies by virtue of paragraph 8 in relation to an individual who is a currently-relieved member of a currently-relieved non-UK pension scheme in relation to a tax year as if—

(a) the reference in paragraph (a) to relievable pension contributions paid by or on behalf of the individual under an arrangement under the pension scheme relating to the individual were to those in respect of which relief from tax is given by virtue of Schedule 33 (overseas pension schemes: migrant member relief) or double tax arrangements, and

(b) the reference in paragraph (b) to contributions paid in respect of the individual under such an arrangement by an employer of the individual were to the appropriate fraction of contributions so paid;

and section 237 applies accordingly.

(2) The appropriate fraction is—

$$TE + TSI EI$where—EI is the total amount of employment income of the individual from any employment or employments with the employer for the tax year, excluding any such income which is exempt income (within the meaning of section 8 of ITEPA 2003),TE is so much of EI as constitutes taxable earnings from any such employment (within the meaning of section 10(2) of that Act), andTSI is so much of EI as constitutes taxable specific income from any such employment (within the meaning of section 10(3) to (5) of that Act).$

(3) Where a calculation under section 233(1) as applied by paragraph 8 is being carried out for the purposes of section 227F(3) in respect of a period that ends at the end of a tax year (see paragraph 9 and section 227F(1)), the appropriate fraction for the purposes of sub-paragraph (1)(b) is the appropriate fraction given by sub-paragraph (2) for that tax year (even where the period in respect of which the calculation is being carried out is part only of that tax year).

12

(1) The annual allowance provisions apply by virtue of paragraph 8 in relation to an individual who is a currently-relieved member of a currently-relieved non-UK pension scheme and its scheme manager subject to any omissions, additions and other modifications contained in regulations made by the Board of Inland Revenue.

(2) Regulations under sub-paragraph (1) may—

(a) include provision having effect in relation to times before they are made,

(b) confer discretion on the Board of Inland Revenue or the Inland Revenue (subject to a right of appeal against any decision taken in exercise of the discretion),

(ba) contain transitional provisions and savings, and

Lifetime allowance charge

13

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

14

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

15

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

16

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

17

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

18

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

19

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

Meaning of “double tax arrangements”

20

In this Schedule “double tax arrangements” means arrangements having effect under section 2(1) of the Taxation (International and Other Provisions) Act 2010 (relief by agreement with other territories).

SCHEDULE 35

Taxes Management Act 1970 (c. 9)

1

In section 9(1A) of the Taxes Management Act 1970 (tax not to be assessed by a self-assessment), for the words after “any tax” substitute

which— (a) is chargeable on the scheme administrator of a registered pension scheme under Part 4 of the Finance Act 2004, ... (ab) is chargeable on the sub-scheme administrator of a sub-scheme under Part 4 of the Finance Act 2004 as modified by the Registered Pensions (Splitting of Schemes) Regulations 2006, or (b) is chargeable on the person who is (or persons who are) the responsible person in relation to an employer-financed retirement benefits scheme under section 394(2) of ITEPA 2003.

Income and Corporation Taxes Act 1988 (c. 1)

2

The Income and Corporation Taxes Act 1988 (c. 1) is amended as follows.

3

In section 21A(2) (Schedule A: computation of amount chargeable), insert at the end—

sections 196 to 200 of the Finance Act 2004 (registered pension schemes); section 246 of that Act (employer-financed retirement benefits schemes).

4

In section 56(3)(b) (transfers in deposits and debts: exemption for pensions), for “592(2), 613, 614 (1) to (3) or 620(6)” substitute “ 613(4) or 614(2) or (3) or section 186 of the Finance Act 2004 ”.

5

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

6

In section 129B(2) (stock lending fees), for “sections 592(2), 608(2)(a), 613(4), 614(3), 620(6) and 643(2)” substitute “ sections 613(4) and 614(3) and section 186 of the Finance Act 2004 ”.

7

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

8

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

9

In section 266 (1) (life assurance premiums), for “sections 274 and 619(6) and Schedules 14 and 15,” substitute “ section 274 and Schedules 14 and 15 and sections 192 to 194 of the Finance Act 2004, ”.

10

(1) Section 266A (life assurance premiums paid by employer) is amended as follows.

(2) In subsection (1), for “a non-approved” substitute “ an employer-financed ”.

(3) For subsections (3) to (6) substitute—

(3) For the purposes of subsection (1)(a) benefits are provided in respect of an employee if they are provided for the employee’s spouse or civil partner, widow or widower or surviving civil partner, children, dependants or personal representatives. (4) If a sum within subsection (1) is paid with a view to the provision of benefits for or in respect of more than one employee of the employer, part of it is to be treated as paid for or in respect of each of them. (5) The amount treated as paid for or in respect of each employee is— $$A×BC$where—A is the sum paid,B is the amount which would have had to be paid to secure the benefits to be provided for or in respect of the employee in question, andC is the total amount which would have had to be paid to secure the benefits to be provided for or in respect of all the employees if separate payments had been made in the case of each of them.$ (6) This section does not apply if— (a) in the year of assessment in which the sum is paid the earnings from the employee’s employment are (or, if there are none, would be if there were any) earnings charged on remittance, or (b) the employee is not domiciled in the United Kingdom in the tax year in which the sum is paid and the conditions in subsection (7) are met. (7) Those conditions are— (a) that the employment is with a foreign employer, and (b) that, on a claim made by the employee, the Board are satisfied that the pension scheme corresponds to a registered pension scheme. (8) In subsection (6)(a) “earnings charged on remittance” means earnings which are taxable earnings under— (a) section 22 of ITEPA 2003 (chargeable overseas earnings for year when employee resident and ordinarily resident, but not domiciled, in UK), or (b) section 26 of that Act (foreign earnings for year when employee resident, but not ordinarily resident, in UK). (9) In this section— “employer-financed retirement benefits scheme”, and

“relevant benefits”, have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

In section 464(5) (policies and contracts to be disregarded in applying limits on benefits payable to member of friendly society), for paragraph (b) substitute—

(b) any policy of insurance or annuity contract by means of which the benefits to be provided under an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) are secured or any annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than such an occupational pension scheme;

22

(1) Section 466 (interpretation of Chapter 2 of Part 12) is amended as follows.

(2) In subsection (2), omit the definition of “pension business”.

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

23

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.