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

(1) This section applies in relation to an employer’s expenses of providing benefits to or in respect of present or former employees under an employer-financed retirement benefits scheme in a case where—

(a) the expenses do not consist of the making of contributions under the scheme, but

(b) in accordance with generally accepted accounting practice they are shown in the employer’s accounts.

(2) Unless the benefits are ones in respect of which a person is, on receipt, chargeable to income tax, the expenses—

(a) are not deductible in computing the amount of the profits of the employer for the purposes of Part 2 of ITTOIA 2005 or Part 3 of CTA 2009 (trading income),

(b) are not expenses of management of the employer for the purposes of Chapter 2 of Part 16 of CTA 2009 (expenses of management: companies with investment business), and

(c) are not to count as ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012.

(3) But where the benefits are ones in respect of which a person is, on receipt, chargeable to income tax—

(a) if the expenses are allowed to be deducted in computing the amount of the profits of the employer to be charged under Part 2 of ITTOIA 2005 or Part 3 of CTA 2009 (trading income), they are deductible in computing the amount of the profits for the period of account in which they are paid, and

(b) for the purposes of the operation in relation to the employer of section 76 of FA 2012 or Chapter 2 of Part 16 of CTA 2009, the expenses are referable to the accounting period in which they are paid.

(4) In this section “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see section 393A of that Act).

Abolition of income tax charge in respect of employer payments

247

In Part 6 of ITEPA 2003, omit Chapter 1 (payments by employer for the provision of benefits for an employee under certain schemes to count as employment income of employee).

Employer’s cost of insuring against non-payment of benefit

248

(1) Section 307 of ITEPA 2003 (no liability to income tax in respect of chargeable benefit on provision made by employer for a retirement or death benefit) is amended as follows.

(2) After subsection (1) insert—

(1A) Subsection (1) does not apply to provision made for insuring against the risk that a retirement or death benefit under an employer-financed retirement benefits scheme cannot be paid or given because of the employer’s insolvency. (1B) In subsection (1A) “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 (see section 393A).

(3) In subsection (2), for “subsection (1)” substitute “this section”.

Taxation of non-pension benefits

249

(1) Chapter 2 of Part 6 of ITEPA 2003 (taxation of non-pension benefits from certain pension schemes) is amended as follows.

(2) In the heading of the Chapter, for “non-approved pension” substitute “employer-financed retirement benefits”.

(3) For section 393 substitute—

(393) (1) This Chapter applies to relevant benefits provided under an employer-financed retirement benefits scheme. (2) Section 393A defines “employer-financed retirement benefits scheme” and section 393B defines “relevant benefits”. (393A) (1) In this Chapter “employer-financed retirement benefits scheme” means a scheme for the provision of benefits consisting of or including relevant benefits to or in respect of employees or former employees of an employer. (2) But neither— (a) a registered pension scheme, nor (b) a section 615(3) scheme, is an employer-financed retirement benefits scheme. (3) “Section 615(3) scheme” means a superannuation fund to which section 615(3) of ICTA applies. (4) “Scheme” includes a deed, agreement, series of agreements, or other arrangements. (393B) (1) In this Chapter “relevant benefits” means any lump sum, gratuity or other benefit (including a non-cash benefit) provided (or to be provided)— (a) on or in anticipation of the retirement of an employee or former employee, (b) on the death of an employee or former employee, (c) after the retirement or death of an employee or former employee in connection with past service, (d) on or in anticipation of, or in connection with, any change in the nature of service of an employee, or (e) to any person by virtue of a pension sharing order or provision relating to an employee or former employee. (2) But— (a) benefits charged to tax under Part 9 (pension income), (b) benefits chargeable to tax by virtue of Schedule 34 to FA 2004 (which applies certain charges under Part 4 of that Act in relation to non-UK schemes), and (c) excluded benefits, are not relevant benefits. (3) The following are “excluded benefits”— (a) benefits in respect of ill-health or disablement of an employee during service, (b) benefits in respect of the death by accident of an employee during service, (c) benefits under a relevant life policy, and (d) benefits of any description prescribed by regulations made by the Board of Inland Revenue. (4) In subsection (3)(c) “relevant life policy” means— (a) an excepted group life policy as defined in section 480 of ITTOIA 2005, (b) a policy of life insurance the terms of which provide for the payment of benefits on the death of a single individual and with respect to which— (i) condition A in section 481 of that Act would be met if paragraph (a) in that condition referred to the death, in any circumstances or except in specified circumstances, of that individual (rather than the death in any circumstances of each of the individuals insured under the policy) and if the condition did not include paragraph (b), and (ii) conditions C and D in that section and conditions A and C in section 482 of that Act are met, or (c) a policy of life insurance that would be within paragraph (a) or (b) but for the fact that it provides for a benefit which is an excluded benefit under or by virtue of paragraph (a), (b) or (d) of subsection (3). (5) In subsection (1)(e) “pension sharing order or provision” means any such order or provision as is mentioned in section 28(1) of WRPA 1999 or Article 25(1) of WRP(NI)O 1999.

(4) Section 394 (charge on benefit) is amended as follows.

(5) After subsection (1) insert—

(1A) Subsection (1) does not apply in relation to the benefit if the total amount of the benefits to which this Chapter applies received by the individual in the relevant tax year does not exceed £100.

(6) In subsection (2), for “administrator of” substitute “person who is (or persons who are) the responsible person in relation to”.

(7) In subsection (3), for “subsections (1) and (2)” substitute “this section”.

(8) For sections 395 to 397 substitute—

(395) (1) This section applies in relation to a relevant benefit under an employer-financed retirement benefits scheme in the form of a lump sum where, under the scheme, an employee has paid any sum or sums by way of contribution to the provision of the lump sum. (2) The amount which, by virtue of section 394, counts as employment income, or is chargeable to tax under subsection (2) of that section, is the amount of the lump sum reduced by the sum, or the aggregate of the sums, paid by the employee by way of contribution to the provision of the lump sum. (3) A reduction under this section may not be claimed in respect of the same contribution in relation to more than one lump sum. (4) It is to be assumed, unless the contrary is shown, that no reduction is applicable under this section.

(9) In subsection (1) of section 399 (valuation of benefit in form of loan), for “administrator of” substitute “person who is (or any of the persons who are) the responsible person in relation to”.

(10) In subsection (2) of that section, for “administrator” substitute “responsible person”.

(11) For section 400 substitute—

(399A) (1) The following heads specify the person who is, or persons who are, the responsible person in relation to an employer-financed retirement benefits scheme for the purposes of this Chapter. (2) But if a person is, or persons are, the responsible person in relation to the scheme by virtue of being specified under one head, no-one is the responsible person in relation to the scheme by virtue of being specified under a later head. Head 1 If there are one or more trustees of the scheme who are resident in the United Kingdom, that trustee or each of those trustees. Head 2 If there are one or more persons who control the management of the scheme, that person or each of those persons. Head 3 If alive or still in existence, the employer, or any of the employers, who established the scheme and any person by whom that employer, or any of those employers, has been directly or indirectly succeeded in relation to the provision of benefits under the scheme. Head 4 Any employer of employees to or in respect of whom benefits are, or are to be, provided under the scheme. Head 5 If there are one or more trustees of the scheme who are not resident in the United Kingdom, that trustee or each of those trustees. (400) In this Chapter— - “employer-financed retirement benefits scheme” has the meaning given by section 393A; - “relevant benefits” has the meaning given by section 393B; and - “responsible person” has the meaning given by section 399A.

(12) In Part 2 of Schedule 1 to ITEPA 2003 (defined expressions), insert at the appropriate places—

employer-financed retirement benefits scheme (in Chapter 2 of Part 6)	section 393A
relevant benefits (in Chapter 2 of Part 6)	section 393B
---	---
responsible person (in Chapter 2 of Part 6)	section 399A
---	---

Chapter 7 — Compliance

Information

Registered pension scheme return

250

(1) The Inland Revenue may, in relation to any tax year, by notice require the scheme administrator of a registered pension scheme—

(a) to make and deliver to the Inland Revenue a return containing any information reasonably required by the notice, and

(b) to deliver with the return any accounts, statements or other documents relating to information contained in the return which may reasonably be required by the notice.

(2) The information that may be required to be included in the return is any information relating to—

(a) contributions made under the pension scheme,

(b) transfers of sums or assets held for the purposes of, or representing accrued rights under, another pension scheme so as to become held for the purposes of, or to represent rights under, the pension scheme,

(d) other receipts of the pension scheme,

(e) the sums and other assets held for the purposes of the pension scheme,

(f) the liabilities of the pension scheme,

(g) the provision of benefits by the pension scheme,

(h) transfers of sums or assets held for the purposes of, or representing accrued rights under, the pension scheme so as to become held for the purposes of, or to represent rights under, another pension scheme,

(i) other expenditure of the pension scheme,

(j) the membership of the pension scheme, or

(k) any other matter relating to the administration of the pension scheme.

(3) The information that may be required to be included in the return may be limited to information concerning any particular arrangement or arrangements under the pension scheme.

(4) The notice must specify the period to be covered by the return.

(5) The period may be—

(a) the whole or any specified part of the tax year, or

(b) if audited accounts of the pension scheme have been prepared for any period or periods ending in the tax year, the period or periods covered by the accounts.

(6) “Audited accounts” means accounts audited by a person of a description specified in regulations made by the Board of Inland Revenue.

(7) A return relating to the whole or part of, or to a period or periods ending in, a tax year must be delivered—

(a) where the notice requiring the return is given after the 31st October in the next tax year, before the end of the period of three months beginning with the day on which the notice is given, and

(b) otherwise, not later than the 31st January in the next tax year (but subject as follows).

(8) If, in a case within paragraph (b) of subsection (7), the winding-up of the pension scheme has been completed before 31st October in the next tax year, the return must be delivered before the end of the period of three months beginning with the day on which the winding-up is completed.

(9) But subsection (8) does not apply if the end of that period is before the end of the period of three months beginning with the day on which the notice is given; and in that case the return must be delivered before the end of that period.

Information: general requirements

251

(1) The Board of Inland Revenue may by regulations make provision requiring persons of a prescribed description—

(a) to provide to the Inland Revenue, in a form specified by the Board of Inland Revenue, information of a prescribed description relating to any of the matters mentioned in subsection (2), and

(b) to preserve for a prescribed period any documents relating to such information.

(2) Those matters are—

(a) any matter relating to a registered pension scheme,

(b) any matter relating to a pension scheme which has ceased to be a registered pension scheme,

(d) any matter relating to an annuity purchased with sums or assets held for the purposes of a registered pension scheme,

(e) the coming into operation of an employer-financed retirement benefits scheme, and

(f) the provision of relevant benefits under an employer-financed retirement benefits scheme.

(3) In subsection (2)—

“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).

(4) The Board of Inland Revenue may by regulations make provision—

(a) requiring scheme administrators of registered pension schemes or other persons of a prescribed description to provide information of a prescribed description to persons of such of the descriptions mentioned in subsection (5) as are prescribed or to the scheme administrators of other registered pension schemes, ...

(b) requiring persons of such of the descriptions specified in subsection (5) as are prescribed to provide information of a prescribed description to the scheme administrators of registered pension schemes,

(ba) requiring, in a case where a payment (“the onwards payment”) is made directly or indirectly out of a sum on whose payment tax has been charged under section 206, the person making the onwards payment to provide information of a prescribed description to the person to whom the onwards payment is made,

(c) requiring scheme administrators of registered pension schemes to provide information of a prescribed description to scheme managers of qualifying recognised overseas pension schemes, or

(d) requiring members or former members of a relevant non-UK pension scheme to provide information to the scheme administrators, or scheme managers, of registered pension schemes or other relevant non-UK pension schemes.

(5) Those persons are—

(a) members of a registered pension scheme,

(aa) employers of members of a registered pension scheme,

(b) persons who have ceased to be members of a registered pension scheme,

(d) the personal representatives of any person within paragraphs (a) to (c), and

(e) insurance companies who pay annuities purchased with sums or assets held for the purposes of registered pension schemes.

(5A) Regulations under this section may make different provision for different cases.

(6) “Prescribed”, in relation to regulations, means prescribed by the regulations; and “relevant non-UK scheme” has the meaning given by paragraph 1 of Schedule 34.

Notices requiring documents or particulars

252

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

Appeal against notices

253

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

Accounting and assessment

Accounting for tax by scheme administrators

254

(1) A scheme administrator of a registered pension scheme must make returns to the Inland Revenue of the income tax to which the scheme administrator is liable under this Part.

(2) A return is to be made for each period of three months ending with 31st March, 30th June, 30th September or 31st December if tax has been charged on the scheme administrator by virtue of this Part in that period.

(3) A return for any period must be made before the end of the period of 45 days beginning with the day immediately following the end of that period.

(4) A return must—

(a) show the income tax to which the scheme administrator is liable, and

(b) include such particulars of the events or other circumstances giving rise to the liability (including particulars as to the persons to whom the events or other circumstances relate) as are required to be included in returns under this section by regulations made by the Board of Inland Revenue.

(5) The income tax required to be shown in a return is due at the time by which the return is to be made and is payable without the making of an assessment.

(6) The Board of Inland Revenue may by regulations make provision for and in connection with—

(a) the charging of interest on tax due under this section which is not paid on or before the due date,

(b) the making of amended returns by scheme administrators in the event of error in a return under this section,

(ba) repayments under section 244M to scheme administrators,

(c) the making of assessments, repayments or adjustments in cases where the correct tax due under this section has not been paid on or before the due date, and

(d) otherwise for supplementing this section.

(7) The regulations may, in particular—

(a) modify the operation of any provision of the Tax Acts, or

(b) provide for the application of any provision of the Tax Acts (with or without modifications).

(7A) Where a scheme administrator is liable under section 237B in respect of the annual allowance charge for a tax year, for the purposes of subsection (2) the tax is to be taken to be charged on the scheme administrator in the later of—

(a) the period ending with 31 December in the year following that in which that tax year ended, and

(b) the period following the period in which the scheme administrator receives the notice which gives rise to the liability,

subject to subsections (7AA) and (7B).

(7AA) The tax described in subsection (7A) is to be taken for the purposes of subsection (2) to be charged in an earlier period if the scheme administrator makes an election to that effect in the return for the earlier period.

(7B) ...If the notice which gave rise to the liability is amended in accordance with regulations under section 237B(5)(c), any additional tax to which the scheme administrator becomes liable is to be taken for the purposes of subsection (2) to be charged in the later of the period in which it is taken to be charged by virtue of subsection (7A) or (7AA) and the period in which the scheme administrator receives notice of the amendment.

(8) References in this section to the income tax to which a scheme administrator is liable under this Part do not include any to which the scheme administrator is liable under section 239 (scheme sanction charge).

(9) Where the registration of a registered pension scheme has been withdrawn, this section has effect as if references to the scheme administrator were to the person who was, or each of the persons who were, the scheme administrator immediately before the registration was withdrawn.

Assessments under this Part

255

(1) The Board of Inland Revenue may by regulations make provision for and in connection with the making of assessments in respect of—

(a) the unauthorised payments charge,

(b) the unauthorised payments surcharge,

(ca) liability to the annual allowance charge by virtue of section 237B,

(d) the scheme sanction charge,

(da) liability of the scheme administrator of a registered pension scheme, or the scheme manager of a qualifying recognised overseas pension scheme or of a former such scheme, to the overseas transfer charge,

(e) liability under section 272 (trustees etc. liable as scheme administrator),

(ea) liability under section 272C (former scheme administrator to retain liability in cases involving independent trustees etc),

(f) liability under section 273 (member liable as scheme administrator), ...

(g) liability under section 394 of ITEPA 2003 (benefit under employer-financed retirement benefits scheme: charge on responsible person), and

(h) the charge to tax under Part 9 of ITEPA 2003 (pension income) on pension income to which section 579A of that Act (pension income under registered pension schemes) applies by virtue of any of the following provisions—

(i) section 637H(2) (certain defined benefits lump sum death benefits);

(ii) section 637H(2) (certain defined benefits lump sum death benefits);

(iii) section 637I(2) (certain pension protection lump sum death benefits);

(iv) section 637J(2) (certain uncrystallised funds lump sum death benefits);

(v) section 637K(2) (certain annuity protection lump sum death benefits);

(vi) section 637L(2) (certain drawdown pension fund lump sum death benefits).

(2) The provision that may be made by the regulations includes (in particular) provision for the charging of interest on tax due under such assessments which remains unpaid.

(3) The regulations may, in particular—

(a) modify the operation of any provision of the Tax Acts, or

(b) provide for the application of any provision of the Tax Acts (with or without modification).

Registration regulations

Enhanced lifetime allowance regulations

256

(1) This section applies to regulations made by the Board of Inland Revenue under—

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

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

(d) paragraph 7(1)(b) or 11A(1)(c) of Schedule 36 (enhancement of allowances: primary protection),

(e) paragraph 12(1) or 15A(1)(b) of that Schedule (...: enhanced protection), ...

(f) paragraph 18(1)(b) of that Schedule (enhancement of allowances: pre-commencement pension credits),

(g) paragraph 20A(1)(d) of that Schedule (enhancement factor: pension credits from previously crystallised rights),

(h) paragraph 20B(1)(b) of that Schedule (enhancement factor: non-residence), and

(i) paragraph 20E(1)(b) of that Schedule (enhancement factor: transfers from recognised overseas pension scheme).

(2) The regulations to which this section applies are referred to in this Part as “enhanced ... allowance regulations”.

(3) Enhanced ... allowance regulations may include any provision that appears appropriate for securing that the correct tax is charged—

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

(b) in respect of the payment of lump sums by registered pension schemes.

(4) Enhanced ... allowance regulations may, for that purpose, in particular contain provision—

(a) requiring any person to produce or make available documents, produce certificates or provide information, and

(b) for the review from time to time of any matter registered in accordance with the regulations.

Penalties

Registered pension scheme return

257

(1) If the scheme administrator of a registered pension scheme fails to comply with a notice under section 250 (registered pension scheme return), the scheme administrator is liable to a penalty of £100.

(2) If the failure continues after a penalty is imposed under subsection (1), the scheme administrator is liable to a further penalty not exceeding £60 for each day on which the failure continues after the day on which that penalty was imposed (but excluding any day for which a penalty under this subsection has already been imposed).

(3) No penalty may be imposed under subsection (1) or (2) in respect of a failure after it has been remedied.

(4) If the scheme administrator of a registered pension scheme fraudulently or negligently—

(a) makes an inaccurate return required by a notice under section 250, or

(b) delivers any inaccurate accounts, statements or other documents with such a return,

the scheme administrator is liable to a penalty not exceeding £3,000.

Information required by regulations

258

(1) In section 98 of TMA 1970 (penalties for failure to provide information and providing false information), in the second column of the Table, insert at the appropriate place— “regulations under section 251(1)(a) or (4) of the Finance Act 2004;”.

(2) A person who fails to comply with regulations under section 251(1)(b) (preservation of documents) is liable to a penalty not exceeding £3,000.

Documents and particulars required by notice

259

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

Accounting return

260

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

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

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

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

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

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

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enhanced lifetime allowance regulations: documents and information

261

(1) This section applies where an individual fraudulently or negligently—

(a) produces or makes available an inaccurate document, or produces an inaccurate certificate, in connection with any matter registered in accordance with enhanced ... allowance regulations, or

(b) provides false information in connection with any such matter,

and the condition in subsection (2) is met.

(2) The condition is that—

(a) the amount of the individual’s lump sum allowance or lump sum and death benefit allowance at the time which is relevant for the purposes of this paragraph, or

(b) the amount of the pension commencement lump sums or the uncrystallised funds pension lump sums to which the individual may be entitled at the time which is relevant for the purposes of this paragraph,

would be greater than it actually is were the document or certificate correct or the information true.

(3) The individual is liable to a penalty not exceeding 25% of the relevant excess.

(4) In a case within paragraph (a) of subsection (2), the relevant excess is the difference between what would be the amount of the individual’s lump sum and death benefit allowance at the time which is relevant for the purposes of that paragraph (were the document or certificate correct or the information true) and the actual amount of the individual’s lump sum and death benefit allowance at that time.

(5) The time which is relevant for the purposes of paragraph (a) of subsection (2)—

(a) where a relevant benefit crystallisation event within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) has occurred in relation to the individual since the document was produced or made available, the certificate produced or the information provided (but before a penalty under this section is imposed), is the time when the relevant benefit crystallisation event occurred, and

(b) otherwise, is the time when the document was produced or made available, the certificate produced or the information provided.

(6) In a case within paragraph (b) of subsection (2), the relevant excess is the difference between—

(a) what would be the amount of the pension commencement lump sums or the uncrystallised funds pension lump sums to which the individual may be entitled at the time which is relevant for the purposes of that paragraph (were the document or certificate correct or the information true), and

(b) the actual amount at that time of the pension commencement lump sums or the uncrystallised funds pension lump sums to which the individual may be entitled.

(7) The time which is relevant for the purposes of paragraph (b) of subsection (2) is the time when the document was produced or made available, the certificate produced or the information provided.

Enhanced lifetime allowance regulations: failures to comply

262

An individual who fails—

(a) to produce or make available any document required to be produced by enhanced ... allowance regulations,

(b) to produce any certificate required to be produced by enhanced ... allowance regulations, or

is liable to a penalty not exceeding £3,000.

Lifetime allowance enhanced protection: benefit accrual

263

(1) This section applies where—

(a) paragraph 12 of Schedule 36 (enhancement of allowances: enhanced protection) applies in relation to an individual, and

(b) relevant benefit accrual occurs in relation to the individual (as to which see paragraph 13 of that Schedule).

(2) If the individual fails to notify the Inland Revenue of the relevant benefit accrual within the period of 90 days beginning with the day on which it occurs, the individual is liable to a penalty not exceeding £3,000.

False statements etc

264

(1) A person who fraudulently or negligently makes a false statement or representation is liable to a penalty not exceeding £3,000 if, in consequence of the statement or representation—

(a) that person or any other person obtains relief from, or repayment of, tax chargeable under this Part or 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, or

(b) a registered pension scheme makes a payment which is an unauthorised payment.

(2) A person who assists in or induces the preparation of any document which the person knows—

(a) is inaccurate, and

(b) will, or is likely to, cause a registered pension scheme to make an unauthorised payment,

is liable to a penalty not exceeding £3,000.

Winding-up to facilitate payment of lump sums

265

(1) This section applies where the winding-up of a registered pension scheme has begun and the Inland Revenue considers the pension scheme is being wound up wholly or mainly for the purpose specified in subsection (2).

(2) That purpose is facilitating the payment of winding-up lump sums ... under the pension scheme.

(3) The scheme administrator is liable to a penalty not exceeding the relevant amount.

(4) The relevant amount is £3,000 in respect of—

(a) each member to whom a winding-up lump sum is paid under the pension scheme, ...

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

Transfers to insured schemes

266

(1) This section applies where sums held for the purposes of, or representing accrued rights under, a registered pension scheme (“the transferor scheme”) are transferred so as to become held for the purposes of, or to represent rights under, a registered pension scheme that is an insured scheme (“the transferee scheme”).

(2) The scheme administrator of the transferor scheme is liable to a penalty not exceeding £3,000 unless the sums are transferred either to the scheme administrator of the transferee scheme or to a relevant insurance company.

(3) In this section—

“insured scheme” means a pension scheme all the income and other assets of which are invested in policies of insurance, and

“relevant insurance company” means an insurance company that issued any of the policies of insurance.

Discharge of tax liability: good faith

Lifetime allowance charge

267

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

Unauthorised payments surcharge and scheme sanction charge

268

(1) This section applies where—

(a) a person is liable to the unauthorised payments surcharge in respect of an unauthorised payment, or

(b) the scheme administrator of a registered pension scheme is liable to the scheme sanction charge in respect of a scheme chargeable payment.

(2) The person liable to the unauthorised payments surcharge may apply to the Inland Revenue for the discharge of the person’s liability to the unauthorised payments surcharge in respect of the unauthorised payment on the ground mentioned in subsection (3).

(3) The ground is that in all the circumstances of the case, it would be not be just and reasonable for the person to be liable to the unauthorised payments surcharge in respect of the payment.

(4) On receiving an application by a person under subsection (2) the Inland Revenue must decide whether to discharge the person’s liability to the unauthorised payments surcharge in respect of the payment.

(5) The scheme administrator may apply to the Inland Revenue for the discharge of the scheme administrator’s liability to the scheme sanction charge in respect of a scheme chargeable payment on the ground mentioned in subsection (6) or (7).

(6) In the case of a scheme chargeable payment which is treated as being an unauthorised member payment by section 172, 172A, 172B, ... 172C or 172D ..., the ground is that, in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge.

(7) In any other case, the ground is that—

(a) the scheme administrator reasonably believed that the unauthorised payment was not a scheme chargeable payment, and

(b) in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment.

(7A) Subsection (7) applies with the omission of its paragraph (a) if the scheme chargeable payment is a payment of a lump sum where the conditions in paragraph 1B(2)(a) to (g) of Schedule 29 are met.

(8) On receiving an application under subsection (5), the Inland Revenue must decide whether to discharge the scheme administrator’s liability to the scheme sanction charge in respect of the unauthorised payment.

(9) The Inland Revenue must notify the applicant of the decision on an application under this section.

(10) Regulations made by the Board of Inland Revenue may make provision supplementing this section; and the regulations may in particular make provision as to the time limits for the making of an application.

Appeal against decision on discharge of liability

269

(1) This section applies where the Inland Revenue—

(a) decides to refuse an application under section 237D (discharge of scheme administrator's liability to annual allowance charge), section 244N (discharge of liability to overseas transfer charge), ... or section 268 (discharge of liability to unauthorised payments surcharge or scheme sanction charge), ...

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

(2) The applicant may appeal against the decision.

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

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

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

(6) On an appeal under subsection (1)(a) that is notified to the tribunal, the tribunal must consider whether the applicant’s liability to the ... unauthorised payments surcharge or scheme sanction charge ought to have been discharged.

(7) If the tribunal considers that the applicant’s liability ought not to have been discharged, the tribunal must dismiss the appeal.

(8) If the tribunal considers that the applicant’s liability ought to have been discharged, the tribunal must grant the application.

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Scheme administrator

Meaning of “scheme administrator”

270

(1) References in this Part to the scheme administrator, in relation to a pension scheme, are to the person who is, or persons who are, appointed in accordance with the rules of the pension scheme to be responsible for the discharge of the functions conferred or imposed on the scheme administrator of the pension scheme by and under this Part.

(2) But a person cannot be the person who is, or one of the persons who are, the scheme administrator of a pension scheme unless the person—

(a) is resident in the United Kingdom or another state which is a member State or a non-member EEA State, ...

(b) has made the required declaration to the Inland Revenue, and

(c) has made to an officer of Revenue and Customs any other declarations which are reasonably required by Her Majesty's Revenue and Customs.

(3) “The required declaration”is a declaration that the person—

(a) understands that the person will be responsible for discharging the functions conferred or imposed on the scheme administrator of the pension scheme by and under this Part, and

(b) intends to discharge those functions at all times, whether resident in the United Kingdom or another state which is a member State or a non-member EEA State.

(4) “Non-member EEA State” means a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 (as adjusted by the Protocol signed at Brussels on 17th March 1993) but which is not a member State.

Liability of scheme administrator

271

(1) Any liability of a person who is, or of any of the persons who are, the scheme administrator of a registered pension scheme ceases to be a liability of that person on the person ceasing to be, or to be one of the persons who is, the scheme administrator of the pension scheme.

This subsection does not apply to a liability to pay a penalty and is subject to subsection (4).

(2) Where a person becomes, or becomes one of the persons who is, the scheme administrator of a registered pension scheme, the person assumes any existing liabilities of the scheme administrator of the pension scheme, other than any liability to pay a penalty.

(3) Subsection (4) applies where, on the person who is or the persons who are the scheme administrator of a registered pension scheme ceasing to be the scheme administrator, there is no scheme administrator of the pension scheme.

(4) Any liability of the person or persons as scheme administrator remains a liability of that person or those persons as if still the scheme administrator (unless dead or having ceased to exist) until another person becomes, or other persons become, the scheme administrator of the pension scheme.

(5) But a person who retains, or persons who retain, any liability by virtue of subsection (4) may apply to the Inland Revenue to be released from the liability.

(6) On receipt of the application the Inland Revenue must decide whether or not to release the applicant or applicants from the liability and must notify the applicant, or each of the applicants, of the decision.

(7) If the decision is not to release the applicant or applicants from the liability the applicant or applicants may appeal against the decision.

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) The appeal must be brought within the period of 30 days beginning with the day on which the applicant was notified of the decision.

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11) On an appeal that is notified to the tribunal, the tribunal must consider whether the applicant or applicants ought to have been released from the liability.

(12) If the tribunal decides that the applicant or applicants ought not to have been released from the liability, the tribunal must dismiss the appeal.

(13) If the tribunal decides that the applicant or applicants ought to have been released from the liability, the applicant is, or applicants are, to be treated as having been released from the liability (but subject to any further appeal ...).

Trustees etc. liable as scheme administrator

272

(1) This section applies in relation to a registered pension scheme if—

(a) there is no scheme administrator of the pension scheme and no-one who remains subject to the liabilities of the scheme administrator by virtue of section 271(4) (continuation of liability where no scheme administrator),

(b) the person who is, or all the persons who are, the scheme administrator of the pension scheme or remain so subject cannot be traced, or

(c) the person who is, or all the persons who are, the scheme administrator of the pension scheme or remain so subject are in serious default.

(2) Any person who assumes liability by reason of this section applying in relation to the pension scheme—

(a) is liable to pay any tax (and any interest on tax) due from the scheme administrator of the pension scheme by virtue of this Part, and

(b) is responsible for the discharge of all other obligations imposed on the scheme administrator of the pension scheme by or under this Part.

(3) In subsection (2)—

(a) the references in paragraph (a) to tax, and interest on tax, include any that has become due before this section applied in relation to the pension scheme and remains unpaid, and

(b) the reference in paragraph (b) to obligations includes any that have become due before this section applied in relation to the pension scheme and remain unsatisfied, other than any liability to pay a penalty which has become due before this section so applied.

(4) The following heads specify the persons who assume liability by reason of this section applying in relation to the pension scheme or by reason of section 272C(7) applying in relation to a liability; but if—

(a) a person assumes, or persons assume, liability by virtue of being specified under one head, and

(b) that person, or any of those persons, can be traced and is not in default,

no-one assumes liability by virtue of being specified under a later head.

Head 1

If there are one or more trustees of the pension scheme who are resident in the United Kingdom, that trustee or each of those trustees.

Head 2

If there are one or more persons who control the management of the pension scheme, that person or each of those persons.

Head 3

If alive or still in existence, the person, or any of the persons, who established the pension scheme and any person by whom that person, or any of those persons, has been directly or indirectly succeeded in relation to the provision of benefits under the pension scheme.

Head 4

If the pension scheme is an occupational pension scheme, any sponsoring employer.

Head 5

If there are one or more trustees of the pension scheme who are not resident in the United Kingdom, that trustee or each of those trustees.

(5) Where a person assumes liability by reason of this section applying in relation to the pension scheme, the Inland Revenue must, as soon as is reasonably practicable, notify the person of that fact; but failure to do so does not affect the person’s liability.

(6) For the purposes of this section a person is in default if the person—

(a) has failed to pay all or any of the tax (or interest on tax) due from the person by virtue of this Part, or

(b) has failed to discharge any other obligation imposed on the person by or under this Part,

and a person in default is in serious default if the Inland Revenue considers the failure to be of a serious nature.

Members liable as scheme administrator

273

(1) This section applies in relation to a registered pension scheme if—

(a) a person has, or persons have, assumed liability by reason of section 272 (trustees etc.) applying in relation to the pension scheme,

(b) the person has, or the persons have, become liable to pay tax (or interest on tax) which became due by virtue of section 239 (scheme sanction charge) or section 242 (de-registration charge) before section 272 applied in relation to the pension scheme,

(d) that person, or each of those persons, has either died or ceased to exist or is a person in whose case the Inland Revenue considers the person’s failure to satisfy the liability to be of a serious nature.

(1A) This section also applies in relation to a registered pension scheme if—

(a) a person has, or persons have, by reason of section 272C(7) assumed a liability to pay tax (or interest on tax) by virtue of section 239 (scheme sanction charge) in respect of the whole or a part of a scheme chargeable payment falling within section 241(1)(b) or (c) made (or treated as having been made) by the pension scheme,

(b) that person, or each of those persons, has failed (in whole or in part) to satisfy the liability, and

(c) that person, or each of those persons, has either died or ceased to exist or is a person in whose case an officer of Revenue and Customs considers the person's failure to satisfy the liability to be of a serious nature.

(2) Any person who was a member of the pension scheme at any time during the relevant three-year period is liable to pay the appropriate share of the unpaid amount if—

(a) any of the conditions in subsection (5) is met, and

(b) the Inland Revenue notifies the person of the person’s liability to do so.

(3) “The relevant three-year period” is the period of three years ending with the date on which the liability to pay the tax arose.

(4) The “appropriate share of the unpaid amount”, in the case of a person, is—

$$AAPAA×UT$where—AA is an amount equal to aggregate of the amount of the sums and the market value of the assets held for the purposes of the pension scheme at the time when the liability to pay the tax arose,AAP is an amount equal to so much of AA as is held for the purposes of such of the arrangements under the pension scheme as relate to the person or a person connected with the person, andUT is so much of the tax (and any interest on it) as remains unpaid.$

(5) The conditions referred to in subsection (2)(a) are—

(a) that the pension scheme ... was not an occupational pension scheme,

(b) that at any time during the relevant three-year period the pension scheme received a transfer value in which there were represented relevant personal pension contributions made by or in respect of the person,

(c) that the pension scheme was an occupational pension scheme and at any time during the relevant three-year period the person was a controlling director of a company that was a sponsoring employer, and

(d) that at any time during the relevant three-year period the pension scheme received a transfer value in which there were represented relevant controlling director contributions made by or in respect of the person.

(6) A notification under subsection (2)(b) may be included in an assessment in respect of a liability under this section; and such an assessment made in relation to an amount is not out of time if made within the period of three years beginning with the date on which the person assessed first became liable to pay the amount.

(7) “Relevant personal pension contributions” means contributions under a pension scheme (whether or not the pension scheme from which the transfer value was received) which ... was not an occupational pension scheme.

(8) “Relevant controlling director contributions” means contributions under an occupational pension scheme (whether or not the pension scheme from which the transfer value was received) made by reference to service (or remuneration in respect of service) as a controlling director of a company that was a sponsoring employer.

(9) A person is a “controlling director” of a company if the person is a director of the company and is within section 452(2)(b) of the Corporation Tax Act 2010 (director able to control 20% of ordinary share capital) in relation to the company.

(10) References to receipt of a transfer value by the pension scheme are to the transfer, so as to become held for the purposes of or to represent rights under the pension scheme, of any sums or assets held for the purposes of or representing accrued rights under any other pension scheme.

(11) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

Supplementary

274

(1) The fact that any person is liable to pay any tax or interest, or is responsible for the discharge of any other obligation, under section 272 (trustees etc.), section 272C(7) or section 273 (members) does not relieve any other person of any liability to pay the tax or interest, or any obligation to discharge the obligation, arising—

(a) by reason of that other person being, or being one of the persons who is, the scheme administrator of the pension scheme, or

(b) under section 271(4) (continuation of liability where no scheme administrator), section 272C(3) or (4).

(2) Where a liability imposed on the scheme administrator of a registered pension scheme falls to be satisfied by two or more persons (whether or not they constitute the scheme administrator), they are jointly and severally liable.

(3) No liability to pay tax or interest, or other obligation, of any person in relation to a registered pension scheme arising—

(a) by reason of the person being, or being one of the persons who is, the scheme administrator of the pension scheme concerned, or

(b) under section 271(4), 272, 272C or 273 or regulations under section 273A,

is affected by the termination of the pension scheme or by its ceasing to be a registered pension scheme.

Chapter 8 — Supplementary

Interpretation

Insurance company

275

(1) In this Part “insurance company” means—

(a) a person who has permission under Part 4 of FISMA 2000 to effect or carry out contracts of long-term insurance, ...

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

(2) “Contracts of long-term insurance” means contracts which fall within Part 2 of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544).

Relevant valuation factor

276

(1) For the purposes of this Part the relevant valuation factor in relation to any registered pension scheme, or any arrangement under a registered pension scheme, is 20.

(2) But the Inland Revenue and the scheme administrator of any registered pension scheme may agree that the relevant valuation factor in relation to the pension scheme, or any arrangement under the pension scheme, is to be a number greater than 20.

Valuation assumptions

277

For the purposes of this Part the valuation assumptions in relation to a person, benefits and a date are—

(a) if the person has not reached such age (if any) as must have been reached to avoid any reduction in the benefits on account of age, that the person reached that age on the date, and

(b) that the person’s right to receive the benefits had not been occasioned by physical or mental impairment.

Market value

278

(1) For the purposes of this Part the market value of an asset held for the purposes of a pension scheme is to be determined in accordance with section 272 of TCGA 1992.

(2) Where an asset held for the purposes of a pension scheme is a right or interest in respect of any money lent (directly or indirectly) to any relevant associated person, the value of the asset is to be treated as being the amount owing (including any unpaid interest) on the money lent.

(3) The following are “relevant associated persons”—

(a) any employer who has at any time (whether or not before the making of the loan) made contributions under the pension scheme,

(b) any company connected (at the time of the making of the loan or subsequently) with any such employer,

(c) any person who has at any time (whether or not before the making of the loan) been a member of the pension scheme, and

(d) any person connected (at the time of the making of the loan or subsequently) with any such person.

(3A) For the purposes of this Part the market value of taxable property, or of an interest in taxable property, is to be determined in accordance with section 272 of TCGA 1992.

(3B) Subsection (3A) is subject to any provision made by regulations under paragraph 36(2) of Schedule 29A.

(4) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

Other definitions

279

(1) In this Part—

“abatement”, in relation to a scheme pension to which a person has become entitled under a public service pension scheme, means the reduction of the pension (including its reduction to nil) in accordance with the rules of the pension scheme by reason of the person's employment in public service,

“the Board of Inland Revenue” means the Commissioners of Inland Revenue,

“consumer prices index” means—the general index for consumer prices published by the Statistics Board, orif that index is not published for a relevant month, any substituted index or index figures published by the Statistics Board,

“employee” and “employer” have the same meaning as in the employment income Parts of ITEPA 2003 (see sections 4 and 5 of that Act) but include (respectively) a former employee and a former employer (and “employment” is to be read accordingly),

“the Inland Revenue” means any officer of the Board of Inland Revenue,

“normal minimum pension age” means—in relation to, and to a member of, a pension scheme that is not a uniformed services pension scheme—before 6 April 2010, 50,on and after that date but before 6 April 2028, 55, andon and after 6 April 2028, 57, andin relation to, and to a member of, a uniformed services pension scheme—before 6 April 2010, 50, andon and after that date, 55,

“pension credit” and “pension debit” have the same meaning as in Chapter 1 of Part 4 of WRPA (see section 46(1) of that Act) or Chapter 1 of Part 5 of WRP(NI)O 1999 (see Article 43(1) of that Order), and

“pension sharing order or provision” means any order or provision mentioned in section 28(1) of WRPA 1999 or Article 25(1) of WRP(NI)O 1999,

“pensionable age” has the meaning given by the rules in paragraph 1 of Schedule 4 to the Pensions Act 1995 or paragraph 1 of Schedule 2 to the Pensions (Northern Ireland) Order 1995,

“Scottish basic rate limit” means a rate limit set by the Scottish Parliament under section 80C(2A) of the Scotland Act 1998 for the purposes of determining the extent to which a Scottish taxpayer’s income is charged at the Scottish basic rate where a Scottish rate resolution under that Act has set more than one rate for the tax year.

(1A) In this Part, so far as it forms part of the Corporation Tax Acts, expressions which are defined for the purposes of the Income Tax Acts are to be given the same meaning as they have in the Income Tax Acts.

(1B) In this Part “Master Trust scheme” means a pension scheme—

(a) that is a Master Trust scheme within the meaning of the Pension Schemes Act 2017 (see sections 1 and 2 of that Act) or corresponding provision in force in Northern Ireland, and

(b) whose operation would be unlawful under Part 1 of that Act (Master Trusts), or corresponding provision in force in Northern Ireland, were the scheme not authorised under that Part or that corresponding provision.

(1C) For the purposes of determining whether the condition in subsection (1B)(b) is met, the following are to be ignored—

(a) any regulations under section 40 of the Pension Schemes Act 2017 (regulations modifying application of Part 1 of that Act);

(b) any provision in force in Northern Ireland corresponding to regulations that could be made under that section.

(1D) For the purposes of this Part a Master Trust scheme is “unauthorised” if—

(a) it is not authorised under Part 1 of the Pension Schemes Act 2017 or corresponding provision in force in Northern Ireland, and

(b) its operation would be unlawful under that Part or that corresponding provision without such authorisation.

(1E) Section 1169 of the Companies Act 2006 (dormant companies) applies for the purposes of this Part.

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

(1G) For the purposes of this Part “CMP periodic income” means income payable by virtue of section 36(7)(b) or 87(7)(b) of the Pension Schemes Act 2021 (periodic income paid under collective money purchase arrangement while pursuing continuity option 1).

(2) In this Part references to payments made, or benefits provided, by a pension scheme are to payments made or benefits provided from sums or assets held for the purposes of the pension scheme.

(3) For the purposes of this Part the sums and assets held for the purposes of an arrangement under a pension scheme are so much of the sums and assets held for the purposes of the pension scheme under which the arrangement is made as are properly attributable, in accordance with the provisions of the pension scheme and any just and reasonable apportionment, to the arrangement.

(4) In this section “uniformed services pension scheme” means a pension scheme that—

(a) is established by or under an enactment or Royal Warrant for the benefit of persons described in subsection (5) (whether or not other persons may be members of such a scheme), or

(b) is established solely for the receipt of additional voluntary contributions from members of a scheme falling within paragraph (a),

subject to any regulations made under subsection (6).

(5) Those persons are persons who are or were—

(a) members of the naval, military or air forces of the Crown (including members of any reserve force);

(b) members of a police force other than the Civil Nuclear Constabulary;

(6) The Treasury may by regulations —

(a) amend subsection (5) by adding to, varying or omitting descriptions of persons;

(b) provide for a pension scheme not falling within subsection (4)(a) or (b) that is specified, or is of a specified description, to be treated as a uniformed services pension scheme;

(c) provide for a pension scheme falling within subsection (4)(a) or (b) that is specified, or is of a specified description, to be treated as not being a uniformed services pension scheme.

“Specified” means specified in the regulations.

(7) Regulations under subsection (6) may make transitional provision and savings.

Abbreviations and general index

280

(1) In this Part—

“NIA 1965” means the National Insurance Act 1965 (c. 51),

“NIA(NI) 1966” means the National Insurance Act (Northern Ireland) 1966 (c. 6 (N.I.)),

“TMA 1970” means the Taxes Management Act 1970 (c. 9),

“ICTA 1970” means the Income and Corporation Taxes Act 1970 (c. 10),

“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1),

“SSCBA 1992” means the Social Security Contributions and Benefits Act 1992 (c. 4),

“SSCB(NI)A 1992” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7),

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12),

“WRPA 1999” means the Welfare Reform and Pensions Act 1999 (c. 30),

“WRP(NI)O 1999” means the Welfare Reform and Pensions (Northern Ireland) Order 1999 (S.I. 1999/ 3147 (N.I. 11)),

“FISMA 2000” means the Financial Services and Markets Act 2000 (c. 8), ...

“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1), ...

“ITTOIA 2005” means the Income Tax (Trading and Other Income Act) 2005 ...

“ITA 2007” means the Income Tax Act 2007,

“FA 2008” means the Finance Act 2008, ...

“CTA 2009” means the Corporation Tax Act 2009 and

“CTA 2010” means the Corporation Tax Act 2010

“FA 2012” means the Finance Act 2012

(2) In this Part the following expressions are defined or otherwise explained by the provisions indicated—

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.