Finance Act 2011

(228A) (1) This section applies if the individual has unused annual allowance available for the tax year (“the current tax year”). (2) The annual allowance for the current tax year in the case of the individual is to be treated as increased by the amount of the unused annual allowance available for the current tax year. (3) The individual has unused annual allowance available for the current tax year if— (a) the amount of the annual allowance (before any increase under this section) for the immediately preceding tax year exceeded the total pension input amount in the case of the individual for that tax year, or (b) the amount of the annual allowance (before any such increase) for either or both of the two tax years immediately preceding that immediately preceding tax year exceeded the total pension input amount in the case of the individual for the tax year concerned and the excess (or, where there is an excess for both of those tax years, the excess for both tax years) has not been used up, or both. (4) Subsection (3)— (a) does not apply in relation to a tax year preceding the current tax year unless the individual was a member of a registered pension scheme at some time during that tax year, but (b) subject to that, applies in relation to such a tax year even if the total pension input amount in the case of the individual for that tax year was nil (in which case the excess within paragraph (a) or (b) of that subsection is the whole amount of the annual allowance before any increase under this section). (5) The amount of the unused annual allowance available for the current tax year is the aggregate of— (a) any excess within subsection (3)(a), and (b) so much of any excess within subsection (3)(b) as has not been used up. (6) An amount of an excess within subsection (3)(b) for a tax year has been “used up” if— (a) for a tax year falling between that tax year and the current tax year (an “intervening tax year”), the total pension input amount in the case of the individual exceeded the annual allowance (apart from any increase under this section), and (b) the amount of the excess had effect by virtue of this section to reduce (or eliminate) the annual allowance charge for the intervening tax year in the case of the individual. (7) In calculating for the purposes of subsection (6) the amount of which of the excesses for different tax years had effect to reduce or eliminate the annual allowance charge for an intervening tax year, an amount of the excess for an earlier tax year is to be taken to have done so before that for a later tax year.

6

• (1) Section 229 (total pension input amount) is amended as follows.

• (2) In subsection (2)(c), for “236” substitute “ 236A ”.

• (3) In subsection (3), for paragraph (a) substitute—

(a) satisfies the severe ill-health condition, or

.

• (4) After that subsection insert—

(4) For the purposes of subsection (3)(a) the individual satisfies the severe ill-health condition if the individual— (a) becomes entitled to all the benefits to which the individual is entitled under the arrangement in consequence of the scheme administrator having received evidence from a registered medical practitioner that the individual is suffering from ill-health which makes the individual unlikely to be able (otherwise than to an insignificant extent) to undertake gainful work (in any capacity) before reaching pensionable age, (b) becomes entitled to a serious ill-health lump sum under the arrangement, or (c) is a member of the armed forces of the Crown who becomes entitled under the arrangement to a benefit on which no liability to income tax arises by virtue of section 641(1) of ITEPA 2003.

7

• (1) Section 230 (cash balance arrangements) is amended as follows.

• (2) In subsection (4), for “beginning of the pension input period” substitute “ end of the immediately preceding pension input period (or is nil if the pension input period is the first pension input period of the arrangement) ”.

• (3) After subsection (5) insert—

(5A) If, during the pension input period, minimum payments are made under— (a) section 8 of the Pension Schemes Act 1993, or (b) section 4 of the Pension Schemes (Northern Ireland) Act 1993, in relation to the individual in connection with the arrangement, their amount is to be subtracted from what would otherwise be the pension input amount in the case of the individual in respect of the arrangement. (5B) The pension input amount in respect of the arrangement is nil if— (a) the individual is a deferred member of the pension scheme under which it is an arrangement (or would be if it were the only arrangement under the pension scheme relating to the individual) throughout the pension input period or is (or would be) such a deferred member for part of the pension input period and a pensioner member for the rest of it, and (b) the value of the relevant rights of the individual does not increase during the pension input period by more than the relevant percentage. (5C) In this section— - “guaranteed minimum pension” has the meaning given by— 1. section 8(2) of the Pension Schemes Act 1993, or 2. section 4(2) of the Pension Schemes (Northern Ireland) Act 1993; - “predecessor arrangement”, in relation to an arrangement, means another arrangement (under the same or another registered pension scheme) from which some or all of the sums or assets held for the purposes of the arrangement directly or indirectly derive; - “predecessor registered pension scheme”, in relation to a pension scheme, means another registered pension scheme from which some or all of the sums or assets held for the purposes of the arrangement under the pension scheme directly or indirectly derive; - “the relevant percentage”— 1. where throughout the pension input period the arrangement (or a predecessor arrangement) includes provision for the value of the relevant rights of the individual to increase at an annual rate specified in the rules of the pension scheme (or a predecessor registered pension scheme) on 14 October 2010, that percentage, and 2. otherwise, the percentage by which the consumer prices index for a month falling within the pension input period and nominated by the scheme administrator is higher than it was for the same month in the previous period of 12 months (or nil per cent if it is not higher); - “the relevant rights of the individual” means rights of the individual under the arrangement, other than any rights to a guaranteed minimum pension; - “specified”, in relation to an annual rate, means specified as a percentage figure or as a percentage produced by movement in an index (or a combination of the two) but does not include a percentage produced by the exercise of a discretion by any person.

8

In section 231 (cash balance arrangements: uprating of opening value), for subsection (3) substitute—

(3) The appropriate percentage is the percentage (if any) by which the consumer prices index for the September before the start of the tax year is higher than it was for the previous September.

9

• (1) Section 232 (cash balance arrangements: adjustments of closing value) is amended as follows.

• (2) In subsection (2), for “the debit” substitute “ the reduction ”.

• (3) In subsection (3), for “the credit” substitute “ the increase ”.

• (4) In subsection (4)—

• (a) for “Subsection (5) applies if” substitute “ If ”,

• (b) for “virtue of a transfer of any sum or asset” substitute “ reason of a transfer relating to the individual of any sums or assets ”,

• (c) omit “other”, and

• (d) insert at the end (not as part of paragraph (b)) “ the amount of the reduction is to be added. ”

• (5) Omit subsection (5).

• (6) In subsection (6)—

• (a) for “Subsection (7) applies if” substitute “ If ”,

• (b) for “virtue of a transfer” substitute “ reason of a transfer relating to the individual ”, and

• (c) insert at the end “ , the amount of the increase is to be subtracted. ”

• (7) Omit subsection (7).

• (8) For subsection (8) substitute—

(8) If, during the pension input period, the rights of the individual under the arrangement have been reduced by any surrender made, or similar action taken, pursuant to an option available to the individual under the arrangement, the amount of the reduction is to be added. (8A) If, during the pension input period— (a) benefit crystallisation event 1, 2 or 4 occurs in relation to the individual and the arrangement, (b) benefit crystallisation event 3 occurs in relation to the individual and the arrangement otherwise than by reason of a provision contained in, or made under, any enactment, (c) benefit crystallisation event 6 occurs or, but for paragraph 15A of Schedule 32, would occur in relation to the individual and the arrangement by virtue of the individual becoming entitled to a pension commencement lump sum or a lifetime allowance excess lump sum, or (d) there is an allocation of rights of the individual under the arrangement (not falling within paragraph (a)), the relevant amount is to be added. (8B) In subsection (8A) “the relevant amount” is— (a) in the case of benefit crystallisation event 2, what the annual rate of the pension would be on the valuation assumptions, (b) in the case of benefit crystallisation event 3, the increase in the annual rate of the pension, (c) in the case of benefit crystallisation event 6, the amount of the lump sum, and (d) in any other case, the amount of the reduction in the amount of the rights available for the provision of benefits to or in respect of the individual occurring by reason of the benefit crystallisation event or allocation. (8C) If, during the pension input period, an adjustment to the individual's rights under the arrangement is made in consequence of the scheme administrator satisfying a liability under section 237B in respect of the individual, if and to the extent that the adjustment is reflected in the closing amount the amount of the adjustment is to be added to the closing amount. (8D) But no amount is to be added under subsection (8C) by reason of an adjustment made in consequence of the scheme administrator satisfying a liability under section 237B in a case where subsection (6) of that section applied.

• (9) Omit subsection (9).

10

• (1) Section 234 (defined benefits arrangements) is amended as follows.

• (2) In subsection (4)—

• (a) for “10” substitute “ 16 ”,

• (b) in the definition of PB, for “beginning of the pension input period” substitute “ end of the immediately preceding pension input period (or is nil if the pension input period is the first pension input period of the arrangement) ”, and

• (c) in the definition of LSB, for “that time” substitute “ the end of the immediately preceding pension input period (or is nil if the pension input period is the first pension input period of the arrangement) ”.

• (3) In subsection (5), for “10” substitute “ 16 ”.

• (4) After that subsection insert—

(5A) If, during the pension input period, minimum payments are made under— (a) section 8 of the Pension Schemes Act 1993, or (b) section 4 of the Pension Schemes (Northern Ireland) Act 1993, in relation to the individual in connection with the arrangement, their amount is to be subtracted from what would otherwise be the pension input amount in the case of the individual in respect of the arrangement. (5B) The pension input amount in respect of the arrangement is nil if— (a) the individual is a deferred member of the pension scheme under which it is an arrangement (or would be if it were the only arrangement under the pension scheme relating to the individual) throughout the pension input period or is (or would be) such a deferred member for part of the pension input period and a pensioner member for the rest of it, and (b) the value of the relevant rights of the individual does not increase during the pension input period by more than the relevant percentage. (5C) In this section— - “guaranteed minimum pension” has the meaning given by— 1. section 8(2) of the Pension Schemes Act 1993, or 2. section 4(2) of the Pension Schemes (Northern Ireland) Act 1993; - “predecessor arrangement”, in relation to an arrangement, means another arrangement (under the same or another registered pension scheme) from which some or all of the sums or assets held for the purposes of the arrangement directly or indirectly derive; - “predecessor registered pension scheme”, in relation to a pension scheme, means another registered pension scheme from which some or all of the sums or assets held for the purposes of the arrangement under the pension scheme directly or indirectly derive; - “the relevant percentage”— 1. where throughout the pension input period the arrangement (or a predecessor arrangement) includes provision for the value of the relevant rights of the individual to increase at an annual rate specified in the rules of the pension scheme (or a predecessor registered pension scheme) on 14 October 2010, that percentage, and 2. otherwise, the percentage by which the consumer prices index for a month falling within the pension input period and nominated by the scheme administrator is higher than it was for the same month in the previous period of 12 months (or nil per cent if it is not higher); - “the relevant rights of the individual” means rights of the individual under the arrangement, other than any rights to a guaranteed minimum pension; - “specified”, in relation to an annual rate, means specified as a percentage figure or as a percentage produced by movement in an index (or a combination of the two) but does not include a percentage produced by the exercise of a discretion by any person.

• (5) In subsection (6), for “and section 236 (adjustments of closing value)” substitute “ , section 236 (adjustments of closing value) and section 236A (post-entitlement enhancements) ”.

11

• (1) Section 235 (defined benefits arrangements: uprating of opening value) is amended as follows.

• (2) In subsection (1), omit “in a case where rights do not accrue to the individual under the arrangement during the pension input period”.

• (3) For subsection (3) substitute—

(3) The appropriate percentage is the percentage (if any) by which the consumer prices index for the September before the start of the tax year is higher than it was for the previous September.

12

• (1) Section 236 (defined benefits arrangements: adjustments of closing value) is amended as follows.

• (2) In subsection (1), for “the closing value of the individual's rights as calculated” substitute “ PE and LSE ”.

• (3) In subsection (2)—

• (a) for “rights of the individual under the arrangement have” substitute “ annual rate of the pension, or the amount of the lump sum, to which the individual would be entitled under the arrangement has ”,

• (b) for “the debit” substitute “ the reduction ”, and

• (c) insert at the end “ to PE or LSE ”.

• (4) In subsection (3)—

• (a) for “rights of the individual under the arrangement have” substitute “ annual rate of the pension, or the amount of the lump sum, to which the individual would be entitled under the arrangement has ”,

• (b) for “the credit” substitute “ the increase ”, and

• (c) insert at the end “ from PE or LSE ”.

• (5) For subsections (4) to (7) substitute—

(4) If, during the pension input period, the annual rate of the pension, or the amount of the lump sum, to which the individual would be entitled under the arrangement has been reduced by reason of a transfer relating to the individual of any sums or assets held for the purposes of, or representing accrued rights under, the arrangement so as to become held for the purposes of, or to represent rights under, any pension scheme that is— (a) a registered pension scheme, or (b) a qualifying recognised overseas pension scheme, the amount of the reduction is to be added to PE or LSE. (5) If, during the pension input period, the annual rate of the pension, or the amount of the lump sum, to which the individual would be entitled under the arrangement has been increased by reason of a transfer relating to the individual of any sums or assets held for the purposes of, or representing accrued rights under, any pension scheme so as to become held for the purposes of, or to represent rights under, the arrangement, the amount of the increase is to be subtracted from PE or LSE.

• (6) For subsection (8) substitute—

(8) If, during the pension input period, the annual rate of the pension, or the amount of the lump sum, to which the individual would be entitled under the arrangement has been reduced by any surrender made in return for any other entitlement, any allocation made, or any similar action taken, pursuant to an option available to the individual under the arrangement, the amount of the reduction (to the extent that it is not reflected in an amount added under subsection (8A)) is to be added to PE or LSE. (8A) If, during the pension input period— (a) benefit crystallisation event 2 occurs in relation to the individual and the arrangement, (b) benefit crystallisation event 3 occurs in relation to the individual and the arrangement otherwise than by reason of a provision contained in, or made under, any enactment, or (c) benefit crystallisation event 6 occurs in relation to the individual and the arrangement by virtue of the individual becoming entitled to a pension commencement lump sum or a lifetime allowance excess lump sum, the relevant amount is to be added to PE or LSE. (8B) In subsection (8A) “the relevant amount” is— (a) in the case of benefit crystallisation event 2, the annual rate of the pension to which the individual became entitled, (b) in the case of benefit crystallisation event 3, the increase in the annual rate of the pension, and (c) in the case of benefit crystallisation event 6, the amount of the lump sum. (8C) If, during the pension input period, an adjustment to the annual rate of the pension, or the amount of the lump sum, to which the individual would be entitled under the arrangement has been made in consequence of the scheme administrator satisfying a liability under section 237B in respect of the individual, if and to the extent that the adjustment is reflected in PE or LSE the amount of the adjustment is to be added to PE or LSE. (8D) But no amount is to be added under subsection (8C) by reason of an adjustment made in consequence of the scheme administrator satisfying a liability under section 237B in a case where subsection (6) of that section applied.

• (7) Omit subsection (9).

13

After section 236 insert—

(236A) (1) This section applies in relation to the arrangement if, during the pension input period (“the affected pension input period”), the individual enters into a scheme for the making of an avoidance-inspired post-entitlement enhancement. (2) A “post-entitlement enhancement” is an increase in the annual rate of a scheme pension under the arrangement, at a time after the member has become entitled to the scheme pension. (3) A post-entitlement enhancement is “avoidance-inspired” if the main purpose, or one of the main purposes, of the individual in entering into the scheme was to avoid or reduce a liability to the annual allowance charge. (4) This Part has effect in relation to the arrangement and the individual, as respects the affected pension input period and all subsequent pension input periods, as if— (a) section 234 were modified in accordance with subsection (5), and (b) sections 235 and 236 were omitted. (5) The modifications of section 234 are that— (a) in subsection (4), for the words after “the arrangement is” there are substituted “ such amount as, applying normal actuarial practice, is the expected cost of giving effect to the individual's rights under the arrangement at the end of the immediately preceding pension input period (or is nil if the pension input period is the first pension input period of the arrangement). ”, (b) in subsection (5), for the words after “the arrangement is” there are substituted “ such amount as, applying normal actuarial practice, is the expected cost of giving effect to the individual's rights under the arrangement at the end of the pension input period. ”, and (c) subsection (6) is omitted. (6) In this section “scheme” includes any arrangements, agreement, understanding, transaction or series of transactions (whether or not legally enforceable).

14

In subsection (5) of section 237 (hybrid arrangements), for “236” substitute “ 236A ”.

15

After that section insert—

(237A) (1) The individual is liable to the annual allowance charge. (2) The individual is liable to the annual allowance charge whether or not— (a) the individual, and (b) the scheme administrator of the pension scheme or pension schemes concerned, are resident, ordinarily resident or domiciled in the United Kingdom. (237B) (1) This section applies if— (a) the amount of the individual's liability to the annual allowance charge for a tax year exceeds £2,000, and (b) the pension scheme input amount in the case of the individual in relation to a registered pension scheme for the tax year exceeds the amount of the annual allowance specified in section 228(1) for the tax year. (2) The pension scheme input amount in the case of the individual in relation to a pension scheme for a tax year is the aggregate of the pension input amounts for the tax year in respect of arrangements relating to the individual under the pension scheme. (3) The individual may give a notice to the scheme administrator of the pension scheme specifying that the individual and the scheme administrator are to be jointly and severally liable in respect of so much of the annual allowance charge arising in the case of the individual as— (a) does not exceed the amount of the annual allowance charge which would be chargeable on the excess mentioned in subsection (1)(b) if it were charged at the relevant rate, and (b) is specified in the notice, (“the joint liability amount”). (4) In subsection (3)(a) “the relevant rate” means— (a) in relation to so much of the excess as does not exceed the amount (if any) on which tax is chargeable in the case of the individual for the tax year at the additional rate by virtue of paragraph (c) of subsection (4A) of section 227, the additional rate, (b) in relation to so much of the excess as is not within paragraph (a) and does not exceed the amount (if any) on which tax is so chargeable at the higher rate by virtue of paragraph (b) of that subsection, the higher rate, and (c) in relation to any remaining part of the excess, the basic rate. (5) The notice— (a) must be given not later than 31 July in the year following that in which the tax year ends (but subject to subsection (6)), (b) must be made in such manner and form, and contain such particulars, as may be prescribed by regulations made by the Commissioners for Her Majesty's Revenue and Customs, and (c) may be amended by giving the scheme administrator notice in accordance with provision made by regulations made by the Commissioners for Her Majesty's Revenue and Customs but may not be revoked. (6) In a case in which the individual becomes actually entitled to all of the individual's benefits under the pension scheme in the tax year or benefit crystallisation event 5, 5A or 5B occurs in the tax year in relation to the individual and the pension scheme, the notice must be given before the date on which the individual becomes so entitled or the benefit crystallisation event occurs. (7) On receipt by the scheme administrator of the notice the scheme administrator and the individual become jointly and severally liable to pay the joint liability amount, but subject to sections 237C and 237D and to any amendment made to the notice in accordance with regulations under subsection (5)(c). (8) The scheme administrator is liable under subsection (7) whether or not— (a) the individual, and (b) the scheme administrator, are resident, ordinarily resident or domiciled in the United Kingdom. (9) Where (but for this subsection) a notice could be given to a scheme administrator of a pension scheme but, before it is given, there is a transfer of all of the sums or assets— (a) held for the purposes of, or (b) representing accrued rights under, the pension scheme so as to become held for the purposes of, or to represent rights under, another registered pension scheme, the notice may not be given to that scheme administrator but may instead be given to the scheme administrator of that other pension scheme. (10) The Treasury may by regulations make provision modifying the operation of this section in other cases in which there is a transfer of any of the sums or assets— (a) held for the purposes of, or (b) representing accrued rights under, the pension scheme so as to become held for the purposes of, or to represent rights under, another registered pension scheme. (11) The Treasury may by order amend paragraph (a) of subsection (1) so as to increase the sum for the time being specified in that paragraph. (237C) (1) The scheme administrator of a pension scheme does not become liable under section 237B if the time when the scheme administrator would become liable is during an assessment period in relation to the pension scheme; and if an assessment period in relation to a pension scheme begins at a time when the scheme administrator is already so liable (but has not satisfied the liability), the liability ceases when the assessment period begins. References to an assessment period are to be construed in accordance with sections 132 and 159 of the Pensions Act 2004 and articles 116 and 143 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)). (2) The scheme administrator of a pension scheme is not liable under section 237B in respect of any amount if there is no power to make a consequential adjustment to the entitlement of the individual concerned to benefits under the pension scheme in respect of the amount because of section 237E(2) (inalienability of guaranteed minimum pension etc). (3) The Treasury may by regulations prescribe other circumstances in which a scheme administrator of a pension scheme does not become, or ceases to be, liable under section 237B. (237D) (1) If the scheme administrator of a pension scheme is liable under section 237B, the scheme administrator may apply to an officer of Revenue and Customs for the discharge of the scheme administrator's liability on either of the following grounds. (2) The grounds are— (a) that paying the amount to which the scheme administrator is liable would be to the substantial detriment of the interests of the members of the pension scheme, and (b) that in all the circumstances of the case it would not be just and reasonable for the scheme administrator to be liable to that amount. (3) On receiving an application under subsection (1), an officer of Revenue and Customs must decide whether to discharge the scheme administrator's liability. (4) An officer of Revenue and Customs must notify the scheme administrator of the decision on the application. (5) The discharge of the scheme administrator's liability does not affect the liability of any other person in respect of the same amount. (6) The Treasury may by regulations amend this section so as to alter the grounds on which an application under subsection (1) may be made. (7) Regulations made by the Commissioners for Her Majesty's Revenue and Customs 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. (237E) (1) Where the scheme administrator of a pension scheme satisfies a liability under section 237B in respect of the individual, consequential adjustment must be made to the entitlement of the individual to benefits under the pension scheme on a basis that is just and reasonable having regard to normal actuarial practice. (2) Any power to make such consequential adjustment is subject to section 159 of the Pension Schemes Act 1993 or section 155 of the Pension Schemes (Northern Ireland) Act 1993 (inalienability of guaranteed minimum pension etc). (237F) The Commissioners for Her Majesty's Revenue and Customs may by regulations make any modification of the rules of registered pension schemes that appear appropriate to facilitate the operation of sections 237A to 237E.

16

• (1) Section 238 (pension input period) is amended as follows.

• (2) In subsection (1)(a), for the words after “ending with” substitute

— (i) a nominated date falling before the anniversary of the relevant commencement date, or (ii) if there is not such a nominated date, the first 5 April after the relevant commencement date (or, if the relevant commencement date is itself 5 April, that date), and

• (3) After subsection (4) insert—

(4A) A date nominated for the purposes of subsection (3) must not be a date before that on which the nomination is made.

• (4) In subsection (6)—

• (a) omit “the earlier of”,

• (b) for “and” substitute “ or ”, and

• (c) insert at the beginning of paragraph (b) “ if there is not such a nominated date, ”.

• (5) In subsection (7), for “to be treated as having ended when” substitute “ that in which ”.

17

After that section insert—

(238A) (1) The Treasury may by order make provision about the annual allowance charge. (2) The provision may include modifications of any of sections 227 to 238. (3) The provision may include provision consequential on, or supplementary or incidental to, the provision made by those sections and transitional provisions (including provision making modifications of enactments). (4) “Modifications” includes amendments.

18

In section 254 (accounting for tax by scheme administrators), after subsection (7) insert—

(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 period ending with 31 December in the year following that in which that tax year ended (or such earlier period as the scheme administrator may elect in a return for that earlier period). (7B) But 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) and the period in which the scheme administrator receives notice of the amendment.

19

In section 255(1) (assessments), after paragraph (c) insert—

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

.

20

In section 269(1)(a) (appeal against discharge of liability), after “under” insert “ section 237D (discharge of scheme administrator's liability to annual allowance charge), ”.

21

In section 279(1) (other definitions), insert at the appropriate places—

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

, and

“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,

.

22

In section 280(2) (general index), insert at the appropriate places—

23

In section 282(1A) (orders and regulations subject to Commons-only draft affirmative procedure)—

• (a) for “227(5A),” substitute “ 237B(11), ”, and

• (b) after “242(5)” insert “ , no order may be made under section 228(2) which specifies an amount for any tax year less than the annual allowance for the immediately preceding tax year and no order may be made under section 238A which increases any person's liability to tax ”.

24

• (1) Schedule 34 (currently-relieved non-UK pension schemes etc) is amended as follows.

• (2) In paragraph 8(1), after “a currently-relieved non-UK pension scheme” insert “ and its scheme manager ”.

• (3) After paragraph 9 insert—

(9A) (1) This paragraph applies where an individual— (a) is a currently-relieved member of a currently-relieved non-UK pension scheme in relation to a tax year, but (b) was a member, but not a currently-relieved member, of the currently-relieved non-UK pension scheme in relation to any one or more of the 3 immediately preceding tax years (a “relevant tax year”). (2) Section 228A has effect in relation to the individual for the tax year as it would if the individual had been a currently-relieved member of the pension scheme for the relevant tax year (or each of the relevant tax years) and paragraphs 10 and 11 of this Schedule were omitted. (9B) (1) This paragraph applies where an individual— (a) is a member of a registered pension scheme in relation to a tax year, and (b) was a currently-relieved member of a currently-relieved non-UK pension scheme in relation to any one or more of the 3 immediately preceding tax years (a “relevant tax year”). (2) Section 228A has effect in relation to the individual for the tax year as it would if the currently-relieved non-UK pension scheme had been a registered pension scheme for the relevant tax year (or each of the relevant tax years).

• (4) In paragraph 12(1), after “a currently-relieved non-UK pension scheme” insert “ and its scheme manager ”.

25

In Schedule 36 (transitional provision etc), omit paragraph 49 (disapplication of annual allowance charge for individuals with enhanced protection) and the heading before it.

26

• (1) In FA 2009—

• (a) in Schedule 2, omit paragraph 15, and

• (b) in Schedule 35, omit paragraph 22.

• (2) In the Registered Pension Schemes (Standard Lifetime and Annual Allowances) Order 2010 (S.I. 2010/922), omit article 3.

Part 2 — Commencement and transitional provision

27

• (1) The amendments made by Part 1 have effect for the tax year 2011-12 and subsequent tax years.

• (2) Apart from the amendments made by paragraph 16(2) and (4), such of the amendments as apply in relation to pension input periods have effect in relation to pension input periods ending in the tax year 2011-12 but beginning earlier (as well as those beginning in that tax year).

28

• (1) This paragraph applies where—

• (a) the pension input period in respect of any arrangement relating to the individual which ends in the tax year 2011-12 begins before 14 October 2010 (a “straddling pension input period”), and

• (b) the total pension input amount in the case of the individual for that tax year exceeds £50,000.

• (2) The following provisions apply for arriving at the amount in respect of which the annual allowance charge is charged for that tax year (instead of the charge being in respect of the amount by which the total pension input amount exceeds the amount of the annual allowance).

• (3) Treat each straddling pension input period as if it were 2 separate pension input periods—

• (a) one beginning when the straddling pension input period begins and ending with 13 October 2010 (a “pre-announcement period”), and

• (b) the other beginning with 14 October 2010 and ending when the straddling pension input period ends (a “post-announcement period”).

And treat any pension input period in respect of any arrangement relating to the individual which ends in the tax year 2011-12 which is not a straddling pension input period as if it were a post-announcement period.

• (4) Arrive at the pension input amount in respect of each post-announcement period (as if it were a pension input period ending in the tax year 2011-12) and aggregate those amounts.

• (5) Deduct £50,000 from that aggregate.

The result (or, if a negative amount, nil) is the post-announcement periods total.

• (6) Arrive at the pension input amount in respect of each pre-announcement period (as if it were a pension input period ending in the tax year 2011-12) and aggregate those amounts.

In the case of a defined benefits arrangement, subsections (4) and (5) of section 234 of FA 2004 are to apply for the purposes of this calculation as if the references to “16” were to “10”.

• (7) Deduct from that aggregate the difference between £255,000 and the lesser of—

• (a) £50,000, and

• (b) the aggregate arrived at under sub-paragraph (4).

The result (or, if a negative amount, nil) is the pre-announcement periods total.

• (8) Aggregate the post-announcement periods total and the pre-announcement periods total.

• (9) Deduct any amount by which (apart from this paragraph) the annual allowance in the case of the individual for the tax year would have been increased by virtue of section 228A of FA 2004 or, if less, by so much of any such amount as equals that aggregate.

• (10) Any result is the amount in respect of which the annual allowance charge is charged for the tax year 2011-12.

29

Where paragraph 28 applies in the case of the individual, section 228A of FA 2004 has effect in the case of the individual for tax years subsequent to the tax year 2011-12—

• (a) as if the references in subsections (3)(a) and (b) of that section to the amount of the annual allowance for that tax year were to £50,000, and

• (b) as if any amount deducted under sub-paragraph (9) of that paragraph had been “used-up” within the meaning of that section.

30

• (1) This paragraph has effect in relation to the application of section 228A of FA 2004 for the tax years 2011-12, 2012-13 and 2013-14.

• (2) The assumptions in sub-paragraph (3) are to be made in determining—

• (a) whether the amount of the annual allowance for the tax years 2008-09, 2009-10 and 2010-11 exceeded the total pension input amount in the case of the individual for the tax year, and

• (b) whether any excess of the annual allowance over the total pension input amount in the case of the individual for any of those tax years has been used up.

• (3) The assumptions are—

• (a) that the annual allowance for each of the tax years 2008-09, 2009-10 and 2010-11 was £50,000, and

• (b) that the provisions of Part 4 of FA 2004 apply in relation to pension input periods in respect of arrangements relating to the individual that end in any of those tax years subject to the amendments made by this Schedule (including that inserting section 228A).

31

In determining under section 233 of FA 2004 the pension input amount in respect of an arrangement relating to an individual for a pension input period of the arrangement that ends in the tax year 2009-10, 2010-11 or 2011-12, there is to be deducted from what would otherwise be the pension input amount so much of any contributions refund lump sum (within the meaning of paragraph 15 of Schedule 35 to FA 2009) paid to the individual (or the personal representatives of the individual) as is attributable to contributions paid under the arrangement in the pension input period.

32

Section 237B has effect in relation to the tax year 2011-12 as if the reference in subsection (5)(a) of that section to 31 July in the year following that in which the tax year ends were to 31 December 2013.

33

Section 254(7A) has effect in relation to the tax year 2011-12 as if the reference in that provision to 31 December in the year following that in which the tax year ends were to 31 March 2014.

34

Expressions used in this Part of this Schedule and Part 4 of FA 2004 have the same meaning in this Part of this Schedule as in that Part of that Act.

SCHEDULE 18

Part 1 — Amendments

1

Part 4 of FA 2004 (pension schemes etc) is amended as follows.

2

• (1) Section 218 (individual's lifetime allowance and standard lifetime allowance) is amended as follows.

• (2) For subsections (2) and (3) substitute—

(2) The standard lifetime allowance for the tax year 2012-13 and, subject to subsection (3), subsequent tax years is £1,500,000. (3) The Treasury may by order provide that the standard lifetime allowance for any tax year subsequent to the tax year 2012-13 is such amount, not being less than the standard lifetime allowance for the immediately preceding tax year, as is specified in the order.

• (3) After subsection (5) insert—

(5A) Where the operation of a lifetime allowance enhancement factor is provided for by any of sections 220, 222, 223 and 224 and the time mentioned in the definition of SLA in the section concerned was before 6 April 2012, subsection (4) has effect as if the amount to be multiplied by LAEF were £1,800,000 (the standard lifetime allowance for the tax year 2011-12) if that is greater than SLA. (5B) Where the operation of a lifetime allowance enhancement factor is provided for by paragraph 7 of Schedule 36, subsection (4) has effect as if SLA were £1,800,000 (the standard lifetime allowance for the tax year 2011-12) if that is greater than SLA. (5C) Where benefit crystallisation event 7 occurs on or after 6 April 2012 by reason of the payment of a relevant lump sum death benefit in respect of the death of the individual before that date, the standard lifetime allowance at the time of the benefit crystallisation event is £1,800,000 (the standard lifetime allowance for the tax year 2011-12).

3

Schedule 29 (authorised lump sums) is amended as follows.

4

• (1) Paragraph 7 (trivial commutation lump sum) is amended as follows.

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

• (3) After that sub-paragraph insert—

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

5

• (1) Paragraph 10 (winding-up lump sum) is amended as follows.

• (2) In sub-paragraph (2), for “1% of the standard lifetime allowance when the lump sum is paid,” substitute “ £18,000, ”.

• (3) After that sub-paragraph insert—

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

6

• (1) Paragraph 20 (trivial commutation lump sum death benefit) is amended as follows.

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

• (3) After that sub-paragraph insert—

(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.

7

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

8

Schedule 36 (transitional provision) is amended as follows.

9

In paragraph 16(3), for “standard lifetime allowance when the first relevant event occurs.” substitute “ underpinned lifetime allowance when the first relevant event occurs; and “the underpinned lifetime allowance” is the greater of the current standard lifetime allowance and £1,800,000 (the standard lifetime allowance for the tax year 2011-12). ”

10

• (1) Paragraph 28(3) is amended as follows.

• (2) In the sub-paragraphs (6A) and (7) treated as substituted—

• (a) in the formula, for “CSLA” substitute “ ULA ”, and

• (b) for the definition of CSLA substitute— “ ULA is the underpinned lifetime allowance, and ”.

• (3) After the sub-paragraph (7) treated as substituted insert—

(7A) The underpinned lifetime allowance” is the greater of the current standard lifetime allowance and £1,800,000 (the standard lifetime allowance for the tax year 2011-12).

11

• (1) Paragraph 34(2) is amended as follows.

• (2) In the sub-paragraph (5) treated as substituted, for “ CSLA ” substitute “ULA”.

• (3) In the sub-paragraph (7) treated as substituted, for the definition of CSLA substitute— “ ULA is the underpinned lifetime allowance, ”.

• (4) After the sub-paragraph (7A) treated as substituted insert—

(7AZA) The underpinned lifetime allowance” is the greater of the current standard lifetime allowance and £1,800,000 (the standard lifetime allowance for the tax year 2011-12).

12

In the Registered Pension Schemes (Standard Lifetime and Annual Allowances) Order 2010 (S.I. 2010/922), omit article 2.

Part 2 — Commencement and transitional provision

13

The amendments made by Part 1 have effect for the tax year 2012-13 and subsequent tax years.

14

• (1) This paragraph applies on and after 6 April 2012 in the case of an individual—

• (a) who has one or more arrangements under a registered pension scheme on that date,

• (b) in relation to whom paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not apply on that date, and

• (c) in relation to whom paragraph 12 of that Schedule (enhanced protection) does not apply on that date,

if notice of intention to rely on it is given to an officer of Revenue and Customs.

• (1A) This paragraph also applies on or after 6 April 2012 in the case of an individual—

• (a) who, on that date—

• (i) has one or more arrangements under a relieved non-UK pension scheme of which the individual is a relieved member, and

• (ii) is not a member of a registered pension scheme,

• (b) in relation to whom paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not apply on that date, and

• (c) in relation to whom paragraph 12 of that Schedule (enhanced protection) does not apply on that date,

if notice of intention to rely on it is given to an officer of Revenue and Customs.

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

• (3) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if—

• (a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were £450,000, and

• (b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were—

• (i) if one or more lump sum and death benefit allowance enhancement factors operate in relation to the individual for the purposes of paragraph 20H of Schedule 36 to FA 2004, the individual’s enhanced lump sum and death benefit allowance (as determined under that paragraph of that Schedule), and

• (ii) otherwise, £1,800,000.

• (3A) For the purposes of paragraph 20H of Schedule 36 to FA 2004, the individual’s “protected lump sum and death benefit allowance” is £1,800,000.

• (4) But this paragraph ceases to apply if the notice under sub-paragraph (1) or (as the case may be) sub-paragraph (1A) is given on or after 15 March 2023 and, on or after 6 April 2012—

• (a) there is benefit accrual in relation to the individual under an arrangement under a registered pension scheme,

• (b) there is an impermissible transfer into any arrangement under a registered pension scheme relating to the individual,

• (c) a transfer of sums or assets held for the purposes of, or representing accrued rights under, any such arrangement is made that is not a permitted transfer, or

• (d) an arrangement relating to the individual is made under a registered pension scheme otherwise than in permitted circumstances.

• (4A) Subject to sub-paragraphs (4B) to (4E), sub-paragraph (4) applies in relation to an individual who is a relieved member of a relieved non-UK pension scheme as if the scheme were a registered pension scheme; and the other sub-paragraphs of this paragraph apply accordingly.

• (4B) In relation to an arrangement under a relieved non-UK pension scheme, in sub-paragraph (4) the reference to 6 April 2012 is to be read as a reference to 6 April 2013.

• (4C) Sub-paragraphs (4D) and (4E) apply (instead of sub-paragraph (5)) for the purposes of sub-paragraph (4)(a) in determining if there is benefit accrual in relation to an individual under an arrangement under a relieved non-UK pension scheme of which the individual is a relieved member.

• (4D) There is benefit accrual in relation to the individual under the arrangement if there is a pension input amount under sections 230 to 237 of FA 2004 (as applied by Schedule 34 to that Act) greater than nil in respect of the arrangement for a tax year; and, in such a case, the benefit accrual is treated as occurring at the end of the tax year.

• (4E) There is also benefit accrual in relation to the individual under the arrangement if—

• (a) in a tax year there occurs a benefit crystallisation event in relation to the individual (whether in relation to the arrangement or to any other arrangement under any pension scheme or otherwise), and

• (b) had the tax year ended immediately before the benefit crystallisation event, there would have been a pension input amount under sections 230 to 237 of FA 2004 greater than nil in respect of the arrangement for the tax year,

and, in such a case, the benefit accrual is treated as occurring immediately before the benefit crystallisation event.

• (5) For the purposes of sub-paragraph (4)(a) there is benefit accrual in relation to the individual under an arrangement—

• (a) in the case of a money purchase arrangement that is not a cash balance arrangement, if a relevant contribution is paid under the arrangement on or after 6 April 2012,

• (b) in the case of a cash balance arrangement or a defined benefits arrangement, if there is an increase in the value of the individual's rights under the arrangement at any time on or after that date (but subject to sub-paragraph (12)), and

• (c) in the case of a hybrid arrangement—

• (i) where the benefits that may be provided to or in respect of the individual under the arrangement include money purchase benefits other than cash balance benefits, if a relevant contribution is paid under the arrangement on or after 6 April 2012, and

• (ii) in any case, if there is an increase in the value of the individual's rights under the arrangement at any time on or after that date (but subject to sub-paragraph (12)).

• (6) For the purposes of sub-paragraphs (5)(b) and (c)(ii) and (12) whether there is an increase in the value of the individual's rights under the arrangement (and its amount if there is) is to be determined—

• (a) in the case of a cash balance arrangement (or a hybrid arrangement under which cash balance benefits may be provided to or in respect of the individual under the arrangement), by reference to whether there is an increase in the amount that would, on the valuation assumptions, be available for the provision of benefits to or in respect of the member (and, if there is, the amount of the increase), and

• (b) in the case of a defined benefits arrangement (or a hybrid arrangement under which defined benefits may be provided to or in respect of the individual under the arrangement), by reference to whether there is an increase in the benefits amount.

• (7) For the purposes of sub-paragraph (6)(b) “the benefits amount” is—

$$( P RVF ) + LS$where—LS is ... the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension);P is the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement;RVF is the relevant valuation factor.$

• (8) Paragraph 17A of Schedule 36 to FA 2004 (impermissible transfers) applies for the purposes of sub-paragraph (4)(b) but as if the references to a relevant existing arrangement were to the arrangement and the reference in sub-paragraph (2) to 5 April 2006 were to 5 April 2012.

• (9) Sub-paragraphs (7) to (8B) of paragraph 12 of Schedule 36 to FA 2004 (when there is a permitted transfer) apply for the purposes of sub-paragraph (4)(c); and where there is a permitted transfer—

• (a) if it is a permitted transfer by virtue of sub-paragraph (8)(a) of paragraph 12, this paragraph applies in relation to the arrangement to which the transfer is made,

• (b) if it is a permitted transfer by virtue of sub-paragraph (8)(b) of that paragraph, this paragraph applies in relation to the arrangement to which the transfer is made as if it were the same as that from which it is made, and

• (c) if it is a permitted transfer by virtue of sub-paragraph (8)(c) of that paragraph, this paragraph applies in relation to the arrangement to which the transfer is made as if it were the same as that from which it is made and (if the employment is transferred) as if the employment with the transferee were the employment with the transferor.

• (10) Sub-paragraphs (2A) to (2C) of paragraph 12 of Schedule 36 to FA 2004 (“permitted circumstances”) apply for the purposes of sub-paragraph (4)(d).

• (11) Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid under an arrangement) applies for the purposes of sub-paragraph (5)(a)and (c)(i).

• (12) Increases in the value of the individual's rights under an arrangement are to be ignored for the purposes of sub-paragraph (5)(b) or (c)(ii) if in no tax year do they exceed the relevant percentage.

• (13) The relevant percentage, in relation to a tax year, means—

• (a) where the arrangement (or a predecessor arrangement) includes provision for the value of the rights of the individual to increase during the tax year at an annual rate specified in the rules of the pension scheme (or a predecessor registered pension scheme) on 9 December 2010—

• (i) the percentage specified (or, where more than one arrangement includes such provision, the higher or highest of the percentages specified), plus

• (ii) the relevant statutory increase percentage;

• (b) where the arrangement (or a predecessor arrangement) includes provision for the value of the rights of the individual to increase during the tax year at an annual rate specified by reference to the retail prices index in the rules of the pension scheme (or a predecessor registered pension scheme) on 6 April 2012 which does not exceed an increase in the retail prices index—

• (i) the percentage specified (or, where more than one arrangement includes such provision, the higher or highest of the percentages specified), plus

• (ii) the relevant statutory increase percentage; or

• (c) otherwise—

• (i) an increase in the consumer prices index, or

• (ii) if higher, the relevant statutory increase percentage.

Where both paragraphs (a) and (b) would otherwise apply giving different percentages, the paragraph giving the higher percentage applies.

• (14) In sub-paragraph (13)—

• “predecessor arrangement”, in relation to an arrangement, means another arrangement (under the same or another registered pension scheme) from which some or all of the sums or assets held for the purposes of the arrangement directly or indirectly derive;

• “predecessor registered pension scheme”, in relation to a pension scheme, means another registered pension scheme from which some or all of the sums or assets held for the purposes of the arrangement under the pension scheme directly or indirectly derive;

• “an increase in the retail prices index” means the percentage by which the retail prices index for a month specified in the rules of the pension scheme (or predecessor pension scheme) is higher than it was for the same month in the year before (or nil per cent if it is not higher);

• “an increase in the consumer prices index” means the percentage by which the consumer prices index for the month of September in the previous tax year is higher than it was for the same month in the year before (or nil per cent if it is not higher).

• (14A) In sub-paragraph (13) “the relevant statutory increase percentage”, in relation to a tax year, means the percentage increase in the value of the individual’s rights under the arrangement during the tax year so far as it is attributable solely to one or more of the following—

• (a) an increase in accordance with section 15 of the Pension Schemes Act 1993 or section 11 of the Pension Schemes (Northern Ireland) Act 1993 (increase of guaranteed minimum where commencement of guaranteed minimum pension postponed);

• (b) a revaluation in accordance with section 16 of the Pension Schemes Act 1993 or section 12 of the Pension Schemes (Northern Ireland) Act 1993 (early leavers: revaluation of earnings factors);

• (c) a revaluation in accordance with Chapter 2 of Part 4 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act 1993 (early leavers: revaluation of accrued benefits);

• (d) a revaluation in accordance with Chapter 3 of Part 4 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act 1993 (early leavers: protection of increases in guaranteed minimum pensions);

• (e) the application of section 67 of the Equality Act 2010 (sex equality rule for occupational pension schemes).

• (14B) Sub-paragraph (14C) applies in relation to a tax year if—

• (a) the arrangement is a defined benefits arrangement which is under an annuity contract treated as a registered pension scheme under section 153(8) of FA 2004,

• (b) the contract provides for the value of the rights of the individual to be increased during the tax year at an annual rate specified in the contract, and

• (c) the contract limits the annual rate to the percentage increase in the retail prices index over a 12 month period specified in the contract.

• (14C) Sub-paragraph (13)(c)(i) applies as if it referred instead to the annual rate of the increase in the value of the rights during the tax year.

• (14D) For the purposes of sub-paragraph (14B)(c) the 12 month period must end during the 12 month period preceding the month in which the increase in the value of the rights occurs.

• (15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (18) Expressions used in this paragraph and Part 4 of FA 2004 have the same meaning in this paragraph as in that Part.

• (19) In particular, references to a relieved non-UK pension scheme or a relieved member of such a scheme are to be read in accordance with paragraphs 13(3) and (4) and 18 of Schedule 34 to FA 2004 (application of lifetime allowance charge provisions to members of overseas pension schemes).

SCHEDULE 19

Part 1 — Introduction

1

There is to be a tax called “the bank levy”.

2

The bank levy is charged on certain types of equity and liabilities of certain groups of entities and individual entities as set out in Part 2 of this Schedule.

3

In this Schedule—

• Part 3 contains provision defining the different types of groups of entities in relation to which the bank levy is charged;

• Part 4 contains provision defining the equity and liabilities on which the bank levy is charged;

• Part 5 contains supplementary provision;

• Part 6 deals with the collection and management of the bank levy;

• Part 7 deals with double taxation reliefand with the deduction of foreign levies for the purposes of corporation tax and income tax ;

• Part 8 contains definitions;

• Part 9 confers a power to make changes to this Schedule in specified circumstances.

Part 2 — Charging of bank levy

Bank levy to be charged in relation to certain groups of entities

4

• (1) The bank levy is charged if, as at the end of a period of account (“the chargeable period”) of an entity (“the parent entity”)—

• (a) the parent entity is a parent and is not a subsidiary of any other entity, and

• (b) the group (“the relevant group”) for which the parent entity is the parent is a group within sub-paragraph (2).

• (2) The groups within this sub-paragraph are—

• (a) a UK banking group,

• (b) a building society group,

• (c) a foreign banking group, or

• (d) a relevant non-banking group.

See Part 3 of this Schedule for the definitions of these groups.

• (3) “Group”, “parent” and “subsidiary” have the meaning given by those provisions of international accounting standards relating to the preparation of consolidated financial statements (whether or not the parent entity prepares financial statements under those standards).

• (4) Accordingly, for the purposes of this Schedule the members of the relevant group are—

• (a) the parent entity, and

• (b) any other entity which, as at the end of the chargeable period, is a member of the group for the purposes of the provisions mentioned in sub-paragraph (3).

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

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

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

• (8) This paragraph applies in relation to periods of account ending on or after 1 January 2011.

Bank levy to be charged in relation to certain entities which are not members of groups

5

• (1) The bank levy is charged if, as at the end of a period of account (“the chargeable period”) of an entity (“the relevant entity”), the relevant entity—

• (a) is a UK resident bank, a building society or a relevant foreign bank, and

• (b) does not fall within sub-paragraph (2) or (3).

• (2) An entity falls within this sub-paragraph if it is an entity in relation to which paragraph 4(1) applies as at the end of the chargeable period.

• (3) An entity (“A”) falls within this sub-paragraph if—

• (a) there is another entity (“B”) in relation to which paragraph 4(1) applies as at the end of the chargeable period (or in relation to which paragraph 4(1) would apply if B had a period of account ending at the same time as the chargeable period), and

• (b) A is (or would be) a member of the relevant group.

• (4) This paragraph applies in relation to periods of account ending on or after 1 January 2011.

Steps for determining the amount of the bank levy

6

• (1) This paragraph applies where the bank levy is charged as provided for by paragraph 4 or 5.

• (2) Here are the steps to be taken to determine the amount of the bank levy.

• Step 1 In accordance with Part 4 of this Schedule, determine the amount of the chargeable equity and liabilities of the relevant group or the relevant entity (as the case may be).

• Step 2 If the amount of the chargeable equity and liabilities is not more than £20,000,000,000, the amount of the bank levy is nil and no further steps are taken. If the amount of the chargeable equity and liabilities is more than £20,000,000,000, go to Step 3.

• Step 3 Determine how much of the chargeable equity and liabilities are long term equity and liabilities and how much are short term liabilities.

• Step 4 Determine the proportion (“A%”) of the chargeable equity and liabilities which is long term equity and liabilities and the proportion (“B%”) of the chargeable equity and liabilities which is short term liabilities.

• Step 5 Reduce the amount of the long term chargeable equity and liabilities by an amount equal to A% of £20,000,000,000 and the amount of the short term chargeable liabilities by an amount equal to B% of £20,000,000,000.

• Step 6 If the chargeable period is 12 months, go straight to Step 7. If not, adjust the amount of the long term chargeable equity and liabilities and the amount of the short term chargeable liabilities as follows. Divide the amount by 365 and then multiply the result by the number of days in the chargeable period.

• Step 7 Charge the amount of the long term chargeable equity and liabilities at the rate of 0.05%. Charge the amount of the short term chargeable liabilities at the rate of 0.1%.

• (3) The bank levy is to be paid as provided for by Part 6 of this Schedule.

Special provision for chargeable periods falling wholly or partly before 1 January 2012

7

• (1) Paragraph 6(2) applies subject to this paragraph if some or all of the chargeable period falls before 1 January 2021.

• (2) For Step 7 there is substituted—

Step 7 Determine the proportion (“P%”) (if any) of the chargeable period which falls within each of the periods (“rate periods”) specified in column 1 of the following table. In relation to each rate period— (a) charge P% of the amount of the long term chargeable equity and liabilities at the rate specified, in relation to the rate period concerned, in the second column of the table, and (b) charge P% of the amount of the short term chargeable liabilities at the rate specified, in relation to the rate period concerned, in the third column of the table. Add together the results for each rate period in which some or all of the chargeable period falls to give the amount of the bank levy.

Rate period	Rate for long term chargeable equity and liabilities	Rate for short term chargeable liabilities
1 January 2011 to 28 February 2011	0.025%	0.05%
1 March 2011 to 30 April 2011	0.05%	0.1%
1 May 2011 to 31 December 2011	0.0375%	0.075%
1 January 2012 to 31 December 2012	0.044%	0.088%
Any time on or after1 January 2014 to 31 March 2015	0.065%	0.130%
1 April 2015 to 31 December 2015	0.105%	0.21%
1 January 2016 to 31 December 2016	0.09%	0.18%
1 January 2017 to 31 December 2017	0.085%	0.17%
1 January 2018 to 31 December 2018	0.08%	0.16%
1 January 2019 to 31 December 2019	0.075%	0.15%
1 January 2020 to 31 December 2020	0.07%	0.14%
Any time on or after 1 January 2021	0.05%	0.1%

• (3) If the chargeable period starts before 1 January 2011, for the purposes of Step 6 and Step 7 (as substituted by sub-paragraph (2)) the part of the period falling before 1 January 2011 is ignored and, accordingly, the period is treated as having started on 1 January 2011.

Part 3 — Groups covered by the bank levy

Definitions of “UK banking group”, “building society group”, “foreign banking group” and “relevant non-banking group”

8

The relevant group is a “ UK banking group” if—

• (a) the group is a banking group (see paragraph 12), and

• (b) the parent entity is a UK resident entity.

9

The relevant group is a “building society group” if the parent entity is a building society.

10

The relevant group is a “foreign banking group” if—

• (a) the group is a banking group (see paragraph 12), and

• (b) the parent entity is a non-UK resident entity.

11

The relevant group is a “relevant non-banking group” if—

• (a) the members of the group include at least one UK resident bank or relevant foreign bank, and

• (b) the group is neither a banking group nor a building society group.

Definition of “banking group”

12

• (1) The relevant group is a “banking group” if—

• (a) condition A, B, C or D is met, and

• (b) the exempt activities condition is not met (see paragraph 13).

• (2) Condition A is that the parent entity is a UK resident bank (see paragraph 80) or a relevant foreign bank (see paragraph 78).

• (3) Condition B is that—

• (a) the parent entity is an investment entity, and

• (b) the members of the relevant group include at least one UK resident bank to which sub-paragraph (6) applies or relevant foreign bank to which that sub-paragraph applies.

• (4) Condition C is that—

• (a) the parent entity is a non-UK resident entity to which sub-paragraph (8) applies, and

• (b) the members of the relevant group include at least one UK resident bank or relevant foreign bank.

• (5) Condition D is that—

• (a) the parent entity is an investment entity,

• (b) the members of the relevant group include at least one non-UK resident entity to which both sub-paragraphs (6) and (8) apply, and

• (c) those members also include at least one UK resident bank or relevant foreign bank.

• (6) This sub-paragraph applies to an entity (“E”) if, for the purposes of the applicable accounting provisions, E is not a subsidiary of any other entity apart from investment entities.

• (7) “ The applicable accounting provisions ” means—

• (a) the provisions mentioned in paragraph 4(3), ...

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

• (8) This sub-paragraph applies to an entity (“F”) if—

• (a) F would be a UK resident bank if—

• (i) F were a UK resident entity,

• (ii) it carried on its activities in the United Kingdom,

• (iii) where it would be required to be an authorised person for the purposes of FISMA 2000 in order to carry on those activities in the United Kingdom, it were an authorised person with permission to carry on those activities, and

• (iv) where those activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in paragraph 79(b) to (f), as a result of carrying on those activities and having such permission it would be a BIPRU 730k firm and an FCA investment firm that meets the conditions in paragraph 70(1B), or

• (b) F is a member of a partnership which is a non-UK resident entity and F would be a UK resident bank if—

• (i) both F and the partnership were UK resident entities,

• (ii) the partnership carried on its activities in the United Kingdom,

• (iii) where the partnership would be required to be an authorised person for the purposes of FISMA 2000 in order to carry on those activities in the United Kingdom, the partnership were an authorised person with permission to carry on those activities, and

• (iv) where those activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in paragraph 79(b) to (f), as a result of carrying on those activities and having such permission the partnership would be an FCA investment firm that meets the conditions in paragraph 70(1B).

• (9) “Investment entity”—

• (a) means an entity the business of which consists wholly or mainly of, and the principal part of the income of which is derived from, the making of investments, and

• (b) also includes any savings bank or other bank for savings.

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