Legalize / United Kingdom / Public General Act

Finance Act 2016

Type Public General Act

Publication 2016-09-15

Last updated 2025-04-24

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(ii) paragraph 9(c) so far as relating to section 12AA of TMA 1970, and

(iii) paragraph 9(d) so far as relating to section 59B of TMA 1970.

(3) The amendment in paragraph 23 of Schedule 6 to F(No.2)A 1997 has effect in relation to foreign income dividends received on or after 6 April 2016.

(4) The amendments in sections 393 and 406 of ITTOIA 2005, and the repeal of paragraph 19 of Schedule 12 to FA 2008, have effect in relation to cash dividends paid over in the tax year 2016-17 or at any later time.

(5) The amendment in section 396A of ITTOIA 2005 has effect in relation to things received on or after 6 April 2016 (even if the choice to receive them was made before that date).

(6) The amendments in section 401 of ITTOIA 2005 have effect where the subsequent distribution is made in the tax year 2016-17 or at any later time, even if the prior distribution is made before 6 April 2016.

(7) The amendments in sections 411 and 414 of ITTOIA 2005, and the repeal of paragraph 520 of Schedule 1 to ITA 2007, have effect in relation to stock dividend income treated as arising in the tax year 2016-17 or at any later time.

(8) The amendments in sections 651 to 680A of ITTOIA 2005 (but not the repeal of section 680(3)(a) of that Act) and the amendment in section 425(5)(b) of ITA 2007—

(a) so far as they relate to income within section 664(2)(c) of ITTOIA 2005 (stock dividends), have effect in relation to stock dividend income treated as arising in the tax year 2016-17 or at any later time, and

(b) so far as they relate to income within section 664(2)(d) of ITTOIA 2005 (release of loans), have effect in relation to amounts released or written off in the tax year 2016-17 or at any later time.

(9) The amendments in Chapter 6 of Part 4 of ITTOIA 2005 and in section 463 of CTA 2010, and the repeal of paragraph 522 of Schedule 1 to ITA 2007, have effect in relation to amounts released or written off in the tax year 2016-17 or at any later time.

(10) The amendments in section 614ZD of ITA 2007 have effect in relation to manufactured payments made on or after 6 April 2016.

(11) The amendments in section 687 of ITA 2007 have effect where the relevant consideration is received in the tax year 2016-17 or at any later time.

(12) The amendments in section 1222 of CTA 2009 have effect in relation to income arising in the tax year 2016-17 or at any later time.

(13) The amendment in section 1026(1) of CTA 2010 has effect where the bonus share capital is issued on or after 6 April 2016.

(14) Sub-paragraph (1) does not apply in relation to—

(a) the amendments in section 401B of ITTOIA 2005;

(b) the amendment in paragraph 14 of Schedule 19 to FA 2009.

SCHEDULE 2

Income tax: sporting testimonial payments treated as earnings

1

After section 226D of ITEPA 2003 (shareholder or connected person having material interest in company) insert—

(226E) (1) This section applies in relation to an individual who is or has been employed as a professional sportsperson (“S”). (2) In this section “sporting testimonial” means— (a) a series of relevant events or activities which each have the same controller, or (b) a single relevant event or activity not forming part of such a series. (3) An event or activity is (subject to subsection (4)(b)) a relevant event or activity if— (a) its purpose (or one of its purposes) is to raise money for or for the benefit of S, and (b) the only or main reason for doing that is to recognise S's service as a professional sportsperson who is or has been employed as such. (4) An activity that meets the conditions in subsection (3)(a) and (b) and consists solely of inviting and collecting donations for or for the benefit of S— (a) is a relevant activity if it is one of a series of relevant events or activities for the purposes of subsection (2)(a), but (b) is not a relevant activity for the purposes of subsection (2)(b) so long as both conditions in subsection (5) are met while the activity takes place. (5) The conditions are— (a) that any person who is responsible (alone or with others) for collecting the donations or who is the controller (or a member of a committee which is the controller) of the activity is not— (i) S, (ii) a person who is (or has been) the controller of any other relevant event or activity for or for the benefit of S, (iii) a person connected with S or a person mentioned in sub-paragraph (ii), (iv) a person acting for or on behalf of a person mentioned in sub-paragraphs (i) to (iii), and (b) that the donations collected do not include any sums paid (directly or indirectly) out of money raised by any other relevant event or activity. (6) A “sporting testimonial payment” is a payment made by (or on behalf of) the controller of a sporting testimonial out of money raised for or for the benefit of S which— (a) is made to S, to a member of S's family or household, to a prescribed person, to S's order or otherwise for S's benefit, and (b) does not (apart from this section) constitute earnings from an employment. (7) A sporting testimonial payment is to be treated as earnings of S from the employment or former employment to which the sporting testimonial is most closely linked. (8) For the purposes of this section if at any material time S is dead— (a) anything done for or for the benefit of S's estate is to be regarded as done for or for the benefit of S; and (b) a payment made to S's personal representatives or to their order is to be treated as a payment to S or to S's order. (9) In this section— - “controller”, in relation to an event or activity which meets the conditions in subsection (3)(a) and (b), means the person who controls the disbursement of any money raised for or for the benefit of S from that event or activity, - “money” includes money's worth and “payment” includes the transfer of money's worth or the provision of any benefit, - “prescribed person” means a person prescribed in regulations made by the Treasury. (10) Section 993 of ITA 2007 (meaning of “connected” persons) has effect for the purposes of this section.

Income tax: limited exemption for sporting testimonial payments

2

After section 306A of ITEPA 2003 (exemption for carers) insert—

(306B) (1) This section applies to any sporting testimonial payments which are— (a) made out of money raised by a sporting testimonial (“the sporting testimonial”), and (b) treated by virtue of section 226E as earnings of a person (“S”). (2) No liability to income tax arises in respect of sporting testimonial payments to which this section applies. (3) Subsection (2) has effect subject to and in accordance with the following provisions. (4) It only applies— (a) if the controller of the relevant event or activity (or of all the relevant events or activities in a series) constituting the sporting testimonial is an independent person, (b) if S has not already benefitted from an exemption under this section in relation to one or more sporting testimonial payments made out of money raised by another sporting testimonial, and (c) where the sporting testimonial consists of a series of relevant events or activities taking place over more than a year, if the sporting testimonial payment is made out of money raised by events or activities taking place within the period of one year beginning with the day on which the first event or activity in the series took place. (5) It only applies to the first £100,000 of sporting testimonial payments made out of money raised by the sporting testimonial. (6) If sporting testimonial payments are made (out of money raised by the sporting testimonial) in two or more tax years, any part of the exempt amount that is not used in the first of those years is to be carried forward to the next tax year (and so on). (7) This section applies to sporting testimonial payments made to or to the order of the personal representatives of S (where S has died) but only if the payments are made within the period of 24 months beginning with the date of death. (8) In subsection (4)(a) “independent person” means a person who is not (or where the controller is a committee, a committee none of whose members are)— (a) S or a person connected with S, (b) an employer or former employer of S or a person connected with an employer or former employer of S, or (c) a person acting for or on behalf of a person mentioned in paragraph (a) or (b). (9) If the first relevant event or activity in a series took place before 6 April 2017, subsection (4)(c) has effect as if it referred to the year beginning with 6 April 2017. (10) Section 993 of ITA 2007 (meaning of “connected” persons) has effect for the purposes of this section. (11) Terms used in this section and section 226E have the same meaning as in that section.

Corporation tax: deductions from total profits for sporting testimonial payments and associated payments

3

After section 996 of CTA 2010 (miscellaneous provisions: use of different accounting periods within a group of companies) insert—

(996A) (1) This section applies where a company, in any accounting period— (a) is the controller of a relevant event or activity that constitutes or is part of a sporting testimonial, and (b) makes a relevant sporting testimonial payment out of money raised by the sporting testimonial. (2) In this section “relevant sporting testimonial payment” means a sporting testimonial payment that is (or so much of it as is) made out of proceeds of a relevant event or activity which are brought into account in determining the company's total profits or any component of its total profits. (3) In calculating the amount of corporation tax chargeable for the accounting period, an amount equal to the aggregate of the following amounts is allowed as a deduction from the company's total profits— (a) so much of the relevant sporting testimonial payment as is paid to or for the benefit of the sportsperson to whom the sporting testimonial relates, (b) any income tax or employee's national insurance contributions deducted at source from that payment, and (c) any employer's national insurance contributions relating to that payment. (4) The amount is deducted— (a) from the company's total profits for the accounting period in which the relevant sporting testimonial payment is made, and (b) if a claim by the company for relief so requires, previous accounting periods. (5) A claim under subsection (4)(b) must be made within 2 years after the end of the accounting period in which the relevant sporting testimonial payment is made. (6) If for an accounting period deductions under subsection (4) are to be made for relevant sporting testimonial payments made in more than one accounting period, the deductions are to be made in the order in which the payments were made (starting with the earliest of them). (7) The amount of the deduction to be made under subsection (4) for an accounting period is the amount that cannot be deducted under that subsection for a subsequent accounting period. (8) The amount of the deduction to be made for any accounting period is limited to the amount that reduces the company's taxable total profits for that period to nil. (9) The deduction is only available if and to the extent that the amount mentioned in subsection (3) is not otherwise deductible in calculating the company's total profits or any component of its total profits. (10) Terms used in this section and in section 226E of ITEPA 2003 have the same meaning as in that section.

Application of this Schedule

4

(1) The amendments made by this Schedule have effect in relation to a sporting testimonial payment made out of money raised by a sporting testimonial if—

(a) the sporting testimonial was made public on or after 25 November 2015, and

(b) the payment is made out of money raised by one or more relevant events or activities which take place on or after 6 April 2017.

(2) Terms used in sub-paragraph (1) and section 226E of ITEPA 2003 (as inserted by paragraph 1) have the same meaning as in that section.

SCHEDULE 3

Enterprise management incentives and employee ownership trusts

1

(1) In section 534 of ITEPA 2003 (disqualifying events relating to relevant company), at the end insert—

(7) Subsection (1)(a) and (b) do not apply where the relevant company is subject to an employee-ownership trust (within the meaning of paragraph 27(4) to (6) of Schedule 2).

(2) The amendment made by this paragraph is treated as having come into force on 1 October 2014.

2

(1) Schedule 2 to ITEPA 2003 (share incentive plans) is amended as follows.

(2) In paragraph 1 (introduction), after sub-paragraph (4) insert—

(5) Sub-paragraph (A1) is also subject to Part 10A of this Schedule (disqualifying events).

(3) After Part 10 insert—

(85A) (1) A SIP ceases to be a Schedule 2 SIP if (and with effect from the time when) a disqualifying event occurs. (2) The following are disqualifying events— (a) an alteration being made in— (i) the share capital of a company any of whose shares are subject to the plan trust, or (ii) the rights attaching to any shares of such a company, that materially affects the value of the shares that are subject to the plan trust; (b) shares of a class of shares that is subject to the plan trust receiving different treatment in any respect from the other shares of that class. (3) Sub-paragraph (2)(b) applies in particular to different treatment in respect of— (a) the dividend payable, (b) repayment, or (c) any offer of substituted or additional shares, securities or rights of any description in respect of the shares. (4) Sub-paragraph (2)(b) does not however apply where the difference in treatment arises from— (a) a key feature of the plan, or (b) any of the participants' shares being subject to any restriction. (5) Nor does sub-paragraph (2)(b) apply as a result only of the fact that shares which have been newly issued receive, in respect of dividends payable with respect to a period beginning before the date on which they were issued, treatment less favourable than that accorded to shares issued before that date. (6) For the purposes of this paragraph a “key feature” of a plan is a provision of it that is necessary to meet the requirements of this Schedule. (7) This paragraph does not affect the operation of the SIP code in relation to shares awarded to participants in the plan before the disqualifying event occurred.

(4) The amendments made by this paragraph have effect in relation to disqualifying events occurring on or after the day on which this Act is passed.

Notification of plans and schemes to HMRC

3

(1) In Schedule 2 to ITEPA 2003 (share incentive plans), Part 10 (notification of plans etc) is amended as follows.

(2) In paragraph 81A (notice of SIP to be given to HMRC), after sub-paragraph (5) insert—

(5A) Sub-paragraph (5) does not apply if the company satisfies HMRC (or, on an appeal under paragraph 81K, the tribunal) that there is a reasonable excuse for failing to give notice on or before the initial notification deadline. (5B) Paragraph 81C(9) (what constitutes a reasonable excuse) applies for the purposes of sub-paragraph (5A). (5C) Where HMRC are required under sub-paragraph (5A) to consider whether there was a reasonable excuse, HMRC must notify the company of their decision within the period of 45 days beginning with the day on which HMRC received the company's request to consider the excuse. (5D) Where HMRC are required to notify the company as specified in sub-paragraph (5C) but do not do so— (a) HMRC are to be treated as having decided that there was no reasonable excuse, and (b) HMRC must notify the company of the decision which they are treated as having made.

(3) In paragraph 81K (appeals)—

(a) at the beginning insert—

(A1) The company may appeal against a decision of HMRC under paragraph 81A(5A) that there was no reasonable excuse for its failure to give notice on or before the initial notification deadline.

;

(b) in sub-paragraph (6), before paragraph (a) insert—

(za) in the case of an appeal under sub-paragraph (A1), notice of HMRC's decision is given to the company;

;

(4) The amendments made by this paragraph have effect in relation to notices given under paragraph 81A of Schedule 2 to ITEPA 2003 on or after 6 April 2016.

4

(1) In Schedule 3 to ITEPA 2003 (SAYE option schemes), Part 8 (notification of schemes etc) is amended as follows.

(2) In paragraph 40A (notice of scheme to be given to HMRC), after sub-paragraph (5) insert—

(5A) Sub-paragraph (5) does not apply if the scheme organiser satisfies HMRC (or, on an appeal under paragraph 40K, the tribunal) that there is a reasonable excuse for the failure to give notice on or before the initial notification deadline. (5B) Paragraph 40C(9) (what constitutes a reasonable excuse) applies for the purposes of sub-paragraph (5A). (5C) Where HMRC are required under sub-paragraph (5A) to consider whether there was a reasonable excuse, HMRC must notify the scheme organiser of their decision within the period of 45 days beginning with the day on which HMRC received the scheme organiser's request to consider the excuse. (5D) Where HMRC are required to notify the scheme organiser as specified in sub-paragraph (5C) but do not do so— (a) HMRC are to be treated as having decided that there was no reasonable excuse, and (b) HMRC must notify the scheme organiser of the decision which they are treated as having made.

(3) In paragraph 40K (appeals)—

(a) at the beginning insert—

(A1) The scheme organiser may appeal against a decision of HMRC under paragraph 40A(5A) that there was no reasonable excuse for the failure to give notice on or before the initial notification deadline.

;

(b) in sub-paragraph (5), before paragraph (a) insert—

(za) in the case of an appeal under sub-paragraph (A1), notice of HMRC's decision is given to the scheme organiser;

;

(4) The amendments made by this paragraph have effect in relation to notices given under paragraph 40A of Schedule 3 to ITEPA 2003 on or after 6 April 2016.

5

(1) In Schedule 4 to ITEPA 2003 (CSOP schemes), Part 7 (notification of schemes etc) is amended as follows.

(2) In paragraph 28A (notice of scheme to be given to HMRC), after sub-paragraph (5) insert—

(5A) Sub-paragraph (5) does not apply if the scheme organiser satisfies HMRC (or, on an appeal under paragraph 28K, the tribunal) that there is a reasonable excuse for the failure to give notice on or before the initial notification deadline. (5B) Paragraph 28C(9) (what constitutes a reasonable excuse) applies for the purposes of sub-paragraph (5A). (5C) Where HMRC are required under sub-paragraph (5A) to consider whether there was a reasonable excuse, HMRC must notify the scheme organiser of their decision within the period of 45 days beginning with the day on which HMRC received the scheme organiser's request to consider the excuse. (5D) Where HMRC are required to notify the scheme organiser as specified in sub-paragraph (5C) but do not do so— (a) HMRC are to be treated as having decided that there was no reasonable excuse, and (b) HMRC must notify the scheme organiser of the decision which they are treated as having made.

(3) In paragraph 28K (appeals)—

(a) at the beginning insert—

(A1) The scheme organiser may appeal against a decision of HMRC under paragraph 28A(5A) that there was no reasonable excuse for the failure to give notice on or before the initial notification deadline.

;

(b) in sub-paragraph (5), before paragraph (a) insert—

(za) in the case of an appeal under sub-paragraph (A1), notice of HMRC's decision is given to the scheme organiser;

;

(4) The amendments made by this paragraph have effect in relation to notices given under paragraph 28A of Schedule 4 to ITEPA 2003 on or after 6 April 2016.

6

(1) In Schedule 3 to ITEPA 2003 (SAYE option schemes), paragraph 28 (requirements as to price for acquisition of shares) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (b), for “at that time” substitute

— (i) at that time, or (ii) at such earlier time as may be determined in accordance with guidance issued by the Commissioners for Her Majesty's Revenue and Customs.

(b) for “sub-paragraphs (2) and (3)” substitute “ sub-paragraph (3) ”.

(3) Omit sub-paragraph (2).

7

(1) In Schedule 4 to ITEPA 2003 (CSOP schemes), paragraph 22 (requirements as to price for acquisition of shares) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (b), for “at the time when the option is granted” substitute

— (i) at the time when the option is granted, or (ii) at such earlier time as may be determined in accordance with guidance issued by the Commissioners for Her Majesty's Revenue and Customs.

;

(b) for “sub-paragraphs (2) and (3)” substitute “ sub-paragraph (3) ”.

(3) Omit sub-paragraph (2).

Tag-along rights

8

(1) In Schedule 5 to ITEPA 2003 (enterprise management incentives), in paragraph 39 (company reorganisations: introduction), in sub-paragraph (2)(c), after “982” insert “ or 983 to 985 ”.

(2) The amendment made by this paragraph is treated as having come into force on 17 July 2013.

Exercise of EMI options

9

(1) In section 238A of TCGA 1992 (share schemes and share incentives), in subsection (2), omit paragraph (d) and the preceding “and”.

(2) In Schedule 7D to TCGA 1992 (share schemes and share incentives), omit Part 4.

(3) In section 527 of ITEPA 2003 (enterprise management incentives: qualifying options), in subsection (3)—

(a) after paragraph (a) insert “ and ”;

(b) omit paragraph (c) and the preceding “and”.

(4) The amendments made by this paragraph do not affect—

(a) the application of paragraph 14(4) of Schedule 7D to TCGA 1992 in relation to a disqualifying event occurring before 6 April 2016, or

(b) the application of paragraph 16 of that Schedule in relation to an allotment for payment mentioned in section 126(2)(a) of that Act taking place before 6 April 2016.

SCHEDULE 4

PART 1 — “Fixed protection 2016”

The protection

1

(1) Sub-paragraph (2) applies at any particular time on or after 6 April 2016 in the case of an individual if—

(a) each of the conditions specified in paragraph 2 is met,

(b) there is no protection-cessation event (see paragraph 3) in the period beginning with 6 April 2016 and ending with the particular time,

(c) paragraph 1(2) of Schedule 6 to FA 2014 (“individual protection 2014”) does not apply in the individual's case at the particular time, and

(d) at the particular time or any later time, the individual has a reference number (see Part 3 of this Schedule) for the purposes of sub-paragraph (2).

(2) 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 £312,500, 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, £1,250,000.

(3) For the purposes of paragraph 20H of Schedule 36 to FA 2004, the individual’s “protected lump sum and death benefit allowance” is £1,250,000.

The initial conditions

2

The conditions mentioned in paragraph 1(1)(a) are—

(a) that, on 6 April 2016, the individual has one or more arrangements under—

(i) a registered pension scheme, or

(ii) a relieved non-UK pension scheme of which the individual is a relieved member,

(b) that paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not apply on 6 April 2016 in relation to the individual,

(d) that paragraph 14 of Schedule 18 to FA 2011 (transitional provision relating to new standard lifetime allowance for the tax year 2012-13) does not apply in the individual's case on 6 April 2016, and

(e) that paragraph 1 of Schedule 22 to FA 2013 (“fixed protection 2014” relating to new standard lifetime allowance for the tax year 2014-15) does not apply in the individual's case on 6 April 2016.

Protection-cessation events

3

There is a protection-cessation event if the reference number for the purposes of paragraph 1(2) was issued pursuant to an application made on or after 15 March 2023 and—

(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.

Protection-cessation events: interpretation: “benefit accrual”

4

(1) For the purposes of paragraph 3(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 2016,

(b) in the case of a cash balance arrangement or 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 (5)), and

(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 2016, 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 (5)).

(2) For the purposes of sub-paragraphs (1)(b) and (c)(ii) and (5) whether there is an increase in the value of the individual's rights under an 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 individual (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.

(3) For the purposes of sub-paragraph (2)(b) “the benefits amount” is—

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

(4) Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid under an arrangement) applies for the purposes of sub-paragraph (1)(a) and (c)(i).

(5) Increases in the value of the individual's rights under an arrangement are to be ignored for the purposes of sub-paragraph (1)(b) or (c)(ii) if in no tax year do they exceed the relevant percentage.

(6) 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 2015—

(i) that percentage (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) otherwise—

(i) 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 September before that (or 0% if it is not higher), or

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

(7) In sub-paragraph (6)(a)—

“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 registered 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.

(8) In sub-paragraph (6) “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).

(9) Sub-paragraph (10) 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.

(10) Sub-paragraph (6)(b)(i) applies as if it referred instead to the annual rate of the increase in the value of the rights during the tax year.

(11) For the purposes of sub-paragraph (9)(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.

Protection-cessation events: interpretation: “impermissible transfer”

5

Paragraph 17A of Schedule 36 to FA 2004 (impermissible transfers) applies for the purposes of paragraph 3(b) but as if—

(a) the references to a relevant existing arrangement were to the arrangement, and

(b) the reference in sub-paragraph (2) to 5 April 2006 were to 5 April 2016.

Protection-cessation events: interpretation: “permitted transfer”

6

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 paragraph 3(c).

Protection-cessation events: interpretation: “permitted circumstances”

7

Sub-paragraphs (2A) to (2C) of paragraph 12 of Schedule 36 to FA 2004 (“permitted circumstances”) apply for the purposes of paragraph 3(d).

Protection-cessation events: interpretation: relieved non-UK pension schemes

8

(1) Subject to sub-paragraphs (2) to (4), paragraph 3 applies in relation to an individual who is a relieved member of a relieved non-UK pension scheme as if the relieved non-UK pension scheme were a registered pension scheme; and the other paragraphs of this Part of this Schedule apply accordingly.

(2) Sub-paragraphs (3) and (4) apply for the purposes of paragraph 3(a) (instead of paragraph 4(1)) 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.

(3) 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.

(4) 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.

PART 2 — “Individual protection 2016”

The protection

9

(1) Sub-paragraphs (2) to (2B) apply at any particular time on or after 6 April 2016 in the case of an individual if—

(a) the individual has one or more relevant arrangements (see sub-paragraph (3)) on 5 April 2016,

(b) the individual's relevant amount at the particular time is greater than £1,073,100(see sub-paragraphs (4) and (7)),

(c) paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not apply on 6 April 2016 in relation to the individual,

(d) none of the provisions listed in sub-paragraph (5) applies in the individual's case at the particular time, and

(e) at the particular time or any later time, the individual has a reference number (see Part 3 of this Schedule) for the purposes of sub-paragraph (2).

(2) 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 the amount specified in section 637P of that Act (individual’s lump sum allowance) were the lower of—

(a) 25% of the individual’s relevant amount, and

(b) £312,500.

(2A) 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 the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were the lower of—

(a) 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

(b) otherwise, the lower of—

(i) the individual’s relevant amount, and

(ii) £1,250,000.

(2B) For the purposes of paragraph 20H of Schedule 36 to FA 2004, the individual’s “protected lump sum and death benefit allowance” is the lower of—

(a) the individual’s relevant amount, and

(b) £1,250,000.

(3) “Relevant arrangement”, in relation to an individual, means an arrangement relating to the individual under—

(a) a registered pension scheme of which the individual is a member, or

(b) a relieved non-UK pension scheme of which the individual is a relieved member.

(4) An individual's “relevant amount” is the sum of amounts A, B, C and D (see paragraphs 10 to 13, but see also sub-paragraph (7)).

(5) The provisions mentioned in sub-paragraph (1)(d) are—

(a) paragraph 12 of Schedule 36 to FA 2004 (enhanced protection);

(b) paragraph 14 of Schedule 18 to FA 2011 (fixed protection 2012);

(d) paragraph 1(2) of Schedule 6 to FA 2014 (individual protection 2014);

(e) paragraph 1(2) of this Schedule (fixed protection 2016).

(6) Sub-paragraph (7) applies if rights of an individual under a relevant arrangement become subject to a pension debit where the transfer day falls on or after 6 April 2016.

(7) For the purpose of applying sub-paragraph (2) in the case of the individual on and after the transfer day, the individual's relevant amount is reduced (or further reduced) by the following amount—

$$X − ( Y × Z )$where—X is the appropriate amount,Y is 5% of X, andZ is the number of tax years beginning after 5 April 2016 and ending on or before the transfer day.(If the formula gives a negative amount, it is to be taken to be nil.)$

(8) In sub-paragraphs (6) and (7) “appropriate amount” and “transfer day”, in relation to a pension debit, have the same meaning as in section 29 of WRPA 1999 or Article 26 of WRP(NI)O 1999 (as the case may be).

Amount A (pre-6 April 2006 pensions in payment)

10

(1) To determine amount A—

(a) apply sub-paragraph (2) if a benefit crystallisation event has occurred in relation to the individual during the period beginning with 6 April 2006 and ending with 5 April 2016;

(b) otherwise, apply sub-paragraph (6).

(2) If this sub-paragraph is to be applied, amount A is—

$$25 × ARP × £ 1,250,000 SLT$where—ARP is (subject to sub-paragraph (3)) an amount equal to—the annual rate at which any relevant existing pension was payable to the individual at the time immediately before the benefit crystallisation event occurred, orif more than one relevant existing pension was payable to the individual at that time, the sum of the annual rates at which each of the relevant existing pensions was so payable, andSLT is an amount equal to what the standard lifetime allowance was at the time the benefit crystallisation event occurred.$

(3) Paragraph 20(4) of Schedule 36 to FA 2004 applies for the purposes of the definition of “ARP” in sub-paragraph (2) (and, for this purpose, in paragraph 20(4) any reference to “the time” is to be read as a reference to the time immediately before the benefit crystallisation event occurred).

(4) If the time immediately before the benefit crystallisation event occurred falls before 6 April 2015, in sub-paragraph (3) references to paragraph 20(4) are to be read as references to that provision as it had effect in relation to benefit crystallisation events occurring at the time immediately before the benefit crystallisation event occurred.

(5) If more than one benefit crystallisation event has occurred, in sub-paragraphs (2) to (4) references to the benefit crystallisation event are to be read as references to the first benefit crystallisation event.

(6) If this sub-paragraph is to be applied, amount A is—

$$25 × ARP$where ARP is (subject to sub-paragraph (7)) an amount equal to—the annual rate at which any relevant existing pension is payable to the individual at the end of 5 April 2016, orif more than one relevant existing pension is payable to the individual at the end of 5 April 2016, the sum of the annual rates at which each of the relevant existing pensions is so payable.$

(7) Paragraph 20(4) of Schedule 36 to FA 2004 applies for the purposes of the definition of “ARP” in sub-paragraph (6) (and, for this purpose, in paragraph 20(4) any reference to “the time” is to be read as a reference to 5 April 2016).

(8) In this paragraph “relevant existing pension” means (subject to sub-paragraph (9)) a pension, annuity or right—

(a) which was, at the end of 5 April 2006, a “relevant existing pension” as defined by paragraph 10(2) and (3) of Schedule 36 to FA 2004, and

(b) to the payment of which the individual had, at the end of 5 April 2006, an actual (rather than a prospective) right.

(9) If—

(a) before 6 April 2016, there was a recognised transfer of sums or assets representing a relevant existing pension, and

(b) those sums or assets were, after the transfer, applied towards the provision of a scheme pension (“the new scheme pension”),

the new scheme pension is also to be a “relevant existing pension” (including for the purposes of this sub-paragraph).

Amount B (pre-6 April 2016 benefit crystallisation events)

11

(1) To determine amount B—

(a) identify each benefit crystallisation event that has occurred in relation to the individual during the period beginning with 6 April 2006 and ending with 5 April 2016,

(b) determine the amount that was crystallised by each of those benefit crystallisation events (applying paragraph 14 of Schedule 34 to FA 2004 if relevant), and

$$1,250,000 SLT$where SLT is an amount equal to what the standard lifetime allowance was at the time when the benefit crystallisation event in question occurred.$

(2) Amount B is the sum of the crystallised amounts determined under sub-paragraph (1)(b) as adjusted under sub-paragraph (1)(c).

Amount C (uncrystallised rights at end of 5 April 2016 under registered pension schemes)

12

Amount C is the total value of the individual's uncrystallised rights at the end of 5 April 2016 under arrangements relating to the individual under registered pension schemes of which the individual is a member as determined in accordance with section 212 of FA 2004.

Amount D (uncrystallised rights at end of 5 April 2016 under relieved non-UK schemes)

13

(1) To determine amount D—

(a) identify each relieved non-UK pension scheme of which the individual is a relieved member at the end of 5 April 2016, and

(b) in relation to each such scheme—

(i) assume that a benefit crystallisation event occurs in relation to the individual at the end of 5 April 2016, and

(ii) in accordance with paragraph 14 of Schedule 34 to FA 2004, determine what the untested portion of the relevant relieved amount would be immediately before the assumed benefit crystallisation event.

(2) Amount D is the sum of the untested portions determined under sub-paragraph (1)(b)(ii).

PART 3 — Reference numbers etc

Issuing of reference numbers for fixed or individual protection 2016

14

(1) An individual has a reference number for the purposes of paragraph 1(2), or for the purposes of paragraph 9(2), if a reference number—

(a) has been issued by or on behalf of the Commissioners in respect of the individual for the purposes concerned, and

(b) has not been withdrawn.

(2) Such a reference number—

(a) may include, or consist of, characters other than figures, and

(b) may be issued only if a valid application for its issue is received by or on behalf of the Commissioners.

(3) A valid application is an application—

(a) made by or on behalf of the individual concerned,

(b) made on or after 6 April 2016 but before 6 April 2025,

(c) made by means of a digital service provided for the purpose by or on behalf of the Commissioners, or by other means authorised in a particular case by an officer of Revenue and Customs,

(d) containing—

(i) the following details for the individual and, where the individual is not the applicant, also for the applicant: title, full name, full postal address and e-mail address,

(ii) the individual's date of birth,

(iii) the individual's national insurance number, or the reason why the individual does not qualify for a national insurance number, and

(iv) a declaration that everything stated in the application is true and complete to the best of the applicant's knowledge and belief,

(e) containing also in the case of an application for a reference number for the purposes of paragraph 1(2)—

(i) a declaration that the conditions specified in paragraph 2 are met in the individual's case, and

(ii) a declaration that there has been no protection-cessation event (see paragraph 3) in the individual's case in the period beginning with 6 April 2016 and ending with the making of the application, and

(f) containing also in the case of an application for a reference number for the purposes of paragraph 9(2)—

(i) the individual's relevant amount (see paragraph 9(4) and (7)),

(ii) amounts A, B, C and D for the individual (see paragraphs 10 to 13),

(iii) if rights of the individual under a relevant arrangement have become subject to a relevant pension debit, the appropriate amount and transfer day for each such pension debit,

(iv) a declaration that the condition in paragraph 9(1)(c) is met in the individual's case, and

(v) a declaration that paragraph 1(2) of Schedule 6 to FA 2014 (“individual protection 2014”) does not apply in the individual's case.

(4) Where an application for a reference number for the purposes of paragraph 1(2) or 9(2) is unsuccessful, or is successful on a dormant basis, that must be notified to the applicant by or on behalf of the Commissioners.

(5) In sub-paragraph (3)(f)(iii) and this sub-paragraph—

“relevant arrangement” has the meaning given by paragraph 9(3);

“relevant pension debit”, in relation to an application for a reference number, means a pension debit where—the transfer day falls on or after 6 April 2016 and before the day on which the application is made, andthe individual has, before the day on which the application is made, received notice under regulation 8(2) or (3) of the Pensions on Divorce etc. (Provision of Information) Regulations 2000 (S.I. 2000/1048) relating to discharge of liability in respect of the pension credit corresponding to the pension debit;

“appropriate amount” and “transfer day”, in relation to a pension debit, have the same meaning as in paragraph 9(6) and (7) (see paragraph 9(8)).

(6) Sub-paragraph (3)(c) is not to be read as requiring a digital service to be provided and available for the purpose referred to.

(7) For the purposes of this Part of this Schedule, an application for a reference number for the purposes of paragraph 1(2) is successful on a dormant basis if the decision on the application is that—

(a) the application would have been unconditionally successful but for the fact that paragraph 1(2) of Schedule 6 to FA 2014 (“individual protection 2014”) applies in the case of the individual concerned, and

(b) a reference number for the purposes of paragraph 1(2) will be issued in response to the application but only when paragraph 1(2) of Schedule 6 to FA 2014 does not apply in the individual's case.

(8) For the purposes of this Part of this Schedule, an application for a reference number for the purposes of paragraph 9(2) is successful on a dormant basis if the decision on the application is that—

(a) the application would have been unconditionally successful but for the fact that a prior provision applies in the case of the individual concerned, and

(b) a reference number for the purposes of paragraph 9(2) will be issued in response to the application but only when no prior provision applies in the individual's case.

(9) For the purposes of sub-paragraph (8), the prior provisions are—

(a) paragraph 12 of Schedule 36 to FA 2004 (enhanced protection),

(b) paragraph 14 of Schedule 18 to FA 2011 (fixed protection 2012),

(d) paragraph 1(2) of this Schedule (fixed protection 2016).

Withdrawal of reference numbers

15

(1) This paragraph applies where a reference number for the purposes of paragraph 1(2) or 9(2) has been issued by or on behalf of the Commissioners in respect of an individual.

(2) The number may be withdrawn by an officer of Revenue and Customs.

(3) The number may be withdrawn only if—

(a) something contained in the application for the number was incorrect, or

(b) where the number was for the purposes of paragraph 1(2)—

(i) there has been a protection-cessation event (see paragraph 3) in the individual's case since the making of the application, or

(ii) paragraph 1(2) of Schedule 6 to FA 2014 has come to apply in the individual's case, or

(i) a provision listed in paragraph 9(5) has come to apply in the individual's case, or

(ii) paragraph 9(2) has ceased to apply in the individual's case as a result of the operation of paragraph 9(7), or

(d) the individual—

(i) has been given a notice under paragraph 1 of Schedule 36 to FA 2008 (information and inspection powers: taxpayer notice) in connection with (as the case may be) Part 1 or 2 of this Schedule, and

(ii) fails to comply with the notice within the period specified in the notice.

(4) Where the number is withdrawn—

(a) notice of the withdrawal, and

(b) reasons for the withdrawal,

are to be given by an officer of Revenue and Customs to the individual.

(5) Where the number is withdrawn, the effect of the withdrawal is as follows—

(a) in the case of withdrawal in reliance on sub-paragraph (3)(a), the number is treated as never having been issued,

(b) in the case of withdrawal in reliance on paragraph (b) or (c) of sub-paragraph (3), the number is treated as having been withdrawn at the time of the event mentioned in sub-paragraph (i) or (ii) of that paragraph, and

(c) in the case of withdrawal in reliance on sub-paragraph (3)(d), the number is treated as having been withdrawn at the time specified in the notice of the withdrawal as the effective time of the withdrawal, which may be any time not earlier than the time of issue of the number.

Appeals against non-issue or withdrawal of reference numbers

16

(1) Where—

(a) an application is made for a reference number for the purposes of paragraph 1(2) or 9(2) in respect of an individual, and

(b) the application is unsuccessful (see sub-paragraph (9)),

the individual may appeal against the decision on the application.

(2) Where a reference number issued in respect of an individual for the purposes of paragraph 1(2) or 9(2) is withdrawn, the individual may appeal against the withdrawal.

(3) Where a reference number issued in respect of an individual for the purposes of paragraph 1(2) or 9(2) is withdrawn in reliance on paragraph 15(3)(d), the individual may appeal against the time specified (in the notice of the withdrawal) as the effective time of the withdrawal.

(4) Where an appeal under sub-paragraph (1) is notified to the tribunal, the tribunal—

(a) must allow the appeal if satisfied—

(i) that the application was a valid application,

(ii) that everything in the application was correct, and

(iii) that, at the time of deciding the appeal, paragraph 15(3)(b), (c) or (d) does not authorise withdrawal of the requested number (assuming it had been issued), and

(b) must otherwise dismiss the appeal.

(5) Where an appeal under sub-paragraph (2) is notified to the tribunal, the tribunal—

(a) must allow the appeal if satisfied that the withdrawal was not authorised by paragraph 15(3), and

(b) must otherwise dismiss the appeal.

(6) Where an appeal under sub-paragraph (3) is notified to the tribunal, the tribunal must decide whether it was just and reasonable to specify the particular time specified and—

(a) if the tribunal decides that it was, the tribunal must dismiss the appeal, and

(b) otherwise—

(i) the tribunal must decide what time it would have been just and reasonable to specify, and

(ii) the withdrawal has effect as if the notice of the withdrawal had specified the time decided by the tribunal.

(7) Notice of an appeal under this paragraph must be given to Her Majesty's Revenue and Customs before the end of 30 days beginning with the date on which notice under paragraph 14(4) or 15(4) (as the case may be) is given.

(8) In this paragraph “the tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

(9) The references in sub-paragraph (1) and paragraph 17(3)(b)(ii) to an application being unsuccessful do not include a case where an application for a reference number for the purposes of paragraph 1(2) or 9(2) is successful on a dormant basis (see paragraph 14(7) and (8)).

Notification of subsequent protection-cessation events

17

(1) Sub-paragraph (2) applies if, in the case of an individual, there is a protection-cessation event (see paragraphs 3 to 8) at a time when—

(a) the individual has a reference number for the purposes of paragraph 1(2),

(b) there is a pending application for a reference number for those purposes in respect of the individual, or

(c) an appeal under paragraph 16(2) or (3) is in progress in connection with withdrawal of a reference number issued for those purposes in respect of the individual.

(2) The individual—

(a) must notify the Commissioners of the event, and

(b) must do so—

(i) before the end of 90 days beginning with the day on which the individual could first reasonably be expected to have known that the event had occurred, and

(ii) by means of a digital service provided for the purpose by or on behalf of the Commissioners, or by other means authorised in a particular case by an officer of Revenue and Customs.

(3) For the purposes of this paragraph—

(a) an application is pending if—

(i) it has been made,

(ii) no reference number has been issued in response to the application, and

(iii) the applicant has not been notified that the application has been unsuccessful;

(b) an application is also pending if—

(i) it has been made,

(ii) it has been unsuccessful, and

(iii) an appeal under paragraph 16(1) is in progress against the decision on the application;

(i) it, or any further appeal, is withdrawn, or

(ii) it and any further appeal brought have been determined, and there is no prospect of further appeal.

Notification of subsequent pension debits

18

(1) Sub-paragraph (2) applies if an individual receives a discharge notice related to a pension debit at a time when—

(a) the individual has a reference number for the purposes of paragraph 9(2),

(b) there is a pending application for a reference number for those purposes in respect of the individual, or

(c) an appeal under paragraph 16(2) or (3) is in progress in connection with withdrawal of a reference number issued for those purposes in respect of the individual.

(2) The individual—

(a) must notify the Commissioners of the appropriate amount and transfer day for the pension debit, and

(b) must do so—

(i) before the end of 60 days beginning with the date of the discharge notice related to the pension debit, and

(ii) by means of a digital service provided for the purpose by or on behalf of the Commissioners, or by other means authorised in a particular case by an officer of Revenue and Customs.

(3) For the purposes of this paragraph—

(a) a notice is a discharge notice related to a pension debit if it is notice under regulation 8(2) or (3) of the Pensions on Divorce etc. (Provision of Information) Regulations 2000 (S.I. 2000/1048) relating to discharge of liability in respect of the pension credit corresponding to the pension debit;

(b) an application is pending if—

(i) it has been made,

(ii) no reference number has been issued in response to the application,

(iii) the applicant has not been notified that the application has been unsuccessful, and

(iv) the applicant has not been notified that the application has been successful on a dormant basis (see paragraph 14(8));

(i) it has been made,

(ii) it has been unsuccessful, and

(iii) an appeal under paragraph 16(1) is in progress against the decision on the application;

(d) an appeal under paragraph 16(1), (2) or (3) is in progress until one of the following happens—

(i) it, or any further appeal, is withdrawn, or

(ii) it and any further appeal brought have been determined, and there is no prospect of further appeal.

Personal representatives

19

If an individual dies—

(a) anything which could have been done under or by virtue of this Part of this Schedule by the individual may be done by the individual's personal representatives,

(b) paragraph 14(3)(d)(ii) has effect in relation to an application made in respect of the individual after the individual's death as if it also required a valid application to contain the individual's date of death, and

(c) any notice or reasons given under paragraph 15(4) after the individual's death are to be given to the individual's personal representatives.

Penalties for non-supply, or fraudulent etc supply, of information under paragraph 17 or 18

20

In column 2 of the Table in section 98 of TMA 1970 (provisions about information where non-compliance etc attracts penalties), at the appropriate place insert—

	paragraph 17 or 18 of Schedule 4 to FA 2016;

PART 4 — Information

Preservation of records in connection with individual protection 2016

21

If an individual is issued with a reference number for the purposes of paragraph 9(2), the individual must preserve, for the period of 6 years beginning with the date the application for the reference number was made, all such records as were required for the purpose of enabling the individual's relevant amount (see paragraph 9), and amounts A, B, C and D for the individual (see paragraphs 10 to 13), to be correctly calculated.

Amendments of regulations

22

(1) The Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567) are amended in accordance with paragraphs 23 to 26.

(2) The amendments made by those paragraphs are to be treated as having been made by the Commissioners under such of the powers cited in the instrument containing the Regulations as are applicable.

23

In regulation 2(1) (interpretation)—

(a) after the entry for “fixed protection 2014” insert—

“fixed protection 2016” means protection under paragraph 1(2) of Schedule 4 to FA 2016;

, and

(b) after the entry for “individual protection 2014” insert—

“individual protection 2016” means protection under paragraph 9(2) of Schedule 4 to FA 2016;

24

(1) In the table in regulation 3(1) (provision of event reports by scheme administrators to HM Revenue and Customs), the entry for reportable event 6 (report where benefit crystallisation event occurs in relation to member of scheme) is amended as follows.

(2) In column 1 of the entry, in paragraph (b)—

(a) omit the “or” at the end of sub-paragraph (iv), and

(b) after sub-paragraph (v) insert

, or (vi) fixed protection 2016 or individual protection 2016.

(3) In column 2 of the entry—

(a) in the words before paragraph (a), before “the Commissioners” insert “ or on behalf of ”,

(b) omit the “or” at the end of paragraph (c), and

, or (e) Schedule 4 to the Finance Act 2016 (where the member relies on fixed protection 2016 or individual protection 2016).

(4) In the heading of the entry, for the words after “Benefit crystallisation events and” substitute “ non-standard lifetime allowances ”.

25

(1) Regulation 11 (information provided to scheme administrator by member intending to rely on transitional protection in connection with lifetime allowance) is amended as follows.

(2) In paragraph (1)—

(a) omit the “or” at the end of sub-paragraph (b),

(b) after sub-paragraph (c) (but before the closing words of paragraph (1)) insert

, or (d) fixed protection 2016 by virtue of Part 1 of Schedule 4 to the Finance Act 2016,

, and

(i) before “the Commissioners” insert “ or on behalf of ”, and

(ii) before “in respect of that entitlement” insert “ or Schedule 4 to the Finance Act 2016 ”.

(3) After paragraph (2) insert—

(3) If the member of a registered pension scheme intends to rely on individual protection 2016 by virtue of Part 2 of Schedule 4 to the Finance Act 2016, the member must notify the scheme administrator of— (a) the reference number in respect of the member issued by or on behalf of the Commissioners for the purposes of paragraph 9(2) of that Schedule, and (b) the member's relevant amount calculated in accordance with Part 2 of that Schedule.

(4) In the heading—

(a) for the “or” substitute a comma, and

(b) at the end insert “ , fixed protection 2016 or individual protection 2016 ”.

26

After regulation 14B insert—

(14C) (1) Where— (a) an individual is a member of a registered pension scheme on 5 April 2016, (b) the individual makes a written request to the scheme administrator for the information mentioned in paragraph (2), and (c) the request is received by the scheme administrator before 6 April 2020, the scheme administrator must provide the individual with the information within 3 months following receipt of the request. (2) The information is such information relating to the member's rights under the scheme as is necessary for calculating, in accordance with Part 2 of Schedule 4 to the Finance Act 2016 (individual protection 2016), the member's relevant amount for the purposes of paragraph 9(2) of that Schedule.

27

In consequence of paragraph 24(4), in each of—

(a) the Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2013 (S.I. 2013/1742), and

(b) the Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2014 (S.I. 2014/1843),

omit regulation 4(2)(a).

PART 5 — Amendments in connection with protection of pre-6 April 2006 rights

28

(1) In Part 1 of Schedule 29 to FA 2004 (pension schemes: interpretation of the lump sum rule), in paragraph 2 (permitted maximum amount of pension commencement lump sums, calculated in certain cases by deducting adjusted value of previously crystallised amounts from current standard lifetime allowance), in sub-paragraph (10) (modified adjustments where member has protection under paragraph 7 or 12 of Schedule 36 by reference to pre-6 April 2006 rights), after “have effect” insert

— (a) where the member becomes entitled to the lump sum on or after 6 April 2014, as if PSLA in the case of any previous benefit crystallisation event which occurs on or after 6 April 2014 were £1,500,000 if that is greater than PSLA in that case, and (b)

(2) In paragraph 28(3) of Schedule 36 to FA 2004 (transitional provision for pre-6 April 2006 rights: modified version of paragraph 2 of Schedule 29 that applies in certain cases), in the sub-paragraph (7) treated as substituted in paragraph 2 of Schedule 29 to FA 2004, in the definition of “ PSLA ”, after “became entitled to the lump sum” insert “ if that occurred before 6 April 2012 but, if that occurred on or after 6 April 2012, PSLA is the greater of £1,800,000 and the standard lifetime allowance at the time the individual became entitled to the lump sum ”.

(3) The amendment made by sub-paragraph (1) is treated as having come into force on 6 April 2014.

(4) The amendment made by sub-paragraph (2) is treated as having come into force on 6 April 2012.

PART 6 — Interpretation and regulations

Interpretation of Parts 1, 2 and 3

29

(1) Expressions used in Part 1, 2 or 3 of this Schedule, and in Part 4 of FA 2004 (pension schemes), have the same meaning in that Part of this Schedule as in that Part of that Act.

(2) 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).

Interpretation of Parts 3 and 4 and this Part

30

In Parts 3 and 4, and this Part, of this Schedule “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.

Regulations

31

(1) The Commissioners may by regulations amend Part 1, 2 or 3 of this Schedule.

(2) Regulations under this paragraph may (for example)—

(a) add to the cases in which paragraph 1(2) is to apply or is to cease to apply;

(b) add to the cases in which paragraph 9(2) is to apply.

(3) Regulations under this paragraph may include provision having effect in relation to a time before the regulations are made, but—

(a) the time must not be earlier than 6 April 2016, and

(b) the provision must not increase any person's liability to tax.

(4) Regulations under this paragraph may include—

(a) supplementary or incidental provision;

(b) consequential amendments of the Table in section 98 of TMA 1970 (information requirements: penalties).

(5) Power to make regulations under this paragraph is exercisable by statutory instrument.

(6) A statutory instrument containing regulations under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.

SCHEDULE 5

Serious ill-health lump sums

1

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

(2) Omit section 205A (serious ill-health lump sum charge on payment to member who has reached 75).

(3) In Part 1 of Schedule 29 (interpretation of lump sum rule), paragraph 4 (serious ill-health lump sums) is amended in accordance with sub-paragraphs (4) and (5).

(4) In sub-paragraph (1) (meaning of “serious ill-heath lump sum”)—

(a) at the end of paragraph (b) insert “ and ”, and

(b) for paragraphs (c) and (d) substitute—

(ca) either— (i) it is paid in respect of an uncrystallised arrangement, and it extinguishes the member's entitlement to benefits under the arrangement, or (ii) it is paid in respect of uncrystallised rights of the member under an arrangement other than an uncrystallised arrangement, and it extinguishes the member's uncrystallised rights under the arrangement.

(5) After sub-paragraph (2) insert—

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

2

(1) Section 636A of ITEPA 2003 (exemption for certain lump sums under registered pension schemes) is amended as follows.

(2) In the heading, for “Exemption” substitute “ Exemptions and liabilities ”.

(3) For subsection (3A) (serious ill-health lump sum paid to member who has reached 75 is taxed only under section 205A of FA 2004) substitute—

(3A) Section 579A applies in relation to a serious ill-health lump sum which is paid under a registered pension scheme to a member who has reached the age of 75 as it applies to any pension under a registered pension scheme.

3

(1) In consequence of the amendment made by paragraph 1(2), in Part 4 of FA 2004—

(a) in section 164(2)(b) omit “, the serious ill-health lump sum charge”,

(b) omit section 272A(7)(a)(ii),

(d) in Schedule 34—

(i) omit paragraph 1(3)(ca), and

(ii) in paragraph 5 omit “, serious ill-health lump sum charge”.

(2) In consequence of the amendment made by paragraph 1(2), in section 30(1) of ITA 2007 omit the entry for section 205A of FA 2004.

(3) In consequence of the amendments made by paragraphs 1 and 2 and sub-paragraphs (1) and (2)—

(a) in Schedule 16 to FA 2011, omit paragraphs 28(2)(a), 40, 42(3), 63, 77(4), 81(2) and (4)(b) and 83, and

(b) omit section 2(4) of the Taxation of Pensions Act 2014.

4

The amendments made by paragraphs 1 to 3 have effect in relation to lump sums paid after the day on which this Act is passed.

Charity lump sum death benefits

5

(1) In paragraph 18(1A) of Schedule 29 to FA 2004 (when lump sum paid out of uncrystallised funds is charity lump sum death benefit), omit paragraph (a) (member must have died after reaching 75).

(2) The amendment made by sub-paragraph (1) has effect in relation to lump sums paid after the day on which this Act is passed.

Dependants’ flexi-access drawdown funds

6

(1) Part 2 of Schedule 28 to FA 2004 (interpretation of pension death benefit rules) is amended as follows.

(2) In paragraph 15 (meaning of “dependant”), after sub-paragraph (2) insert—

(2A) A child of the member is a dependant of the member if the child— (a) has reached the age of 23, and (b) is not within sub-paragraph (2)(b). (2B) But this paragraph, so far as it has effect for the purpose of determining the meaning of “dependant”— (a) in paragraphs 16 to 17 and 27A, and (b) in paragraph 18 of Schedule 29, has effect with the omission of sub-paragraph (2A).

(3) In paragraph 22 (meaning of “dependant's drawdown pension fund”)—

(a) in sub-paragraph (2)(a) and (aa) omit “to the dependant”, and

(b) in sub-paragraph (3), after “representing a” insert “person's”.

(4) The amendments made by this paragraph come into force on the day after the day on which this Act is passed.

(5) The sub-paragraphs inserted by sub-paragraph (2)—

(a) apply for the purpose of determining whether a payment of an annuity is a payment of a dependants' short-term annuity only if the annuity is purchased after the day on which this Act is passed, and

(b) apply for the purpose of determining whether a payment to a person is a payment of dependants' income withdrawal if, but only if, the person reaches the age of 23 after the day on which this Act is passed.

(6) In sub-paragraph (5) “dependants' short-term annuity” and “dependants' income withdrawal” have the same meaning as in Part 4 of FA 2004.

Trivial commutation lump sum

7

(1) Paragraph 7 of Schedule 29 to FA 2004 (interpretation of lump sum rule: meaning of “trivial commutation lump sum”) is amended as follows.

(2) In sub-paragraph (1)(aa) (sum must be paid in respect of a defined benefits arrangement), after “arrangement,” insert “ or in respect of a scheme pension payable by the scheme administrator to which the member has become entitled under a money purchase arrangement (an “in-payment money-purchase in-house scheme pension”), or partly in respect of the former and partly in respect of the latter, ”.

(3) In sub-paragraph (1)(d) (sum must extinguish member's entitlement to defined benefits under the scheme), after “defined benefits” insert “ , and any entitlement to payments of in-payment money-purchase in-house scheme pensions, ”.

8

(1) Section 636B of ITEPA 2003 (taxation of trivial commutation, and winding-up, lump sums) is amended as follows.

(2) In subsection (3) (taxation of lump sum where member has uncrystallised rights under the pension scheme)—

(a) in the words before paragraph (a) omit “(within the meaning of section 212 of FA 2004)”, and

(b) in paragraph (b), for “the uncrystallised rights calculated in accordance with that section” substitute “ any uncrystallised rights extinguished by the lump sum ”.

(3) After subsection (4) insert—

(5) In this section “uncrystallised rights” has the same meaning as in section 212 of FA 2004; and the value for the purposes of this section of any uncrystallised rights is to be calculated in accordance with that section.

9

The amendments made by paragraphs 7 and 8 have effect in relation to lump sums paid after the day on which this Act is passed.

Top-up of dependants’ death benefits

10

(1) In paragraph 15 of Schedule 29 to FA 2004 (uncrystallised funds lump sum death benefits), after sub-paragraph (2) insert—

(2A) Where— (a) the arrangement is a cash balance arrangement, (b) under the arrangement, a dependant of the member is entitled to be paid after the member's death an amount by way of a lump sum, (c) the dependant's entitlement to a lump sum of that amount under the arrangement comes into being at a time no later than the member's death, (d) such of the sums and assets held for the purposes of the arrangement immediately after the member's death as are held for the purpose of meeting the liability to pay the lump sum are insufficient for that purpose (including where that is because none are held for that purpose), and (e) a person who was an employer in relation to the member pays a contribution to the scheme— (i) for or towards making good that insufficiency, and (ii) of no more than is needed for making good the insufficiency, the sums and assets held for the purposes of the arrangement that represent the contribution are to be treated as “relevant uncrystallised funds” for the purposes of this paragraph.

(2) The amendment made by sub-paragraph (1) has effect in relation to contributions paid after the day on which this Act is passed.

Inheritance tax as respects cash alternatives to annuities for dependants etc

11

(1) In section 152 of the Inheritance Tax Act 1984 (where annuity payable on person' death to dependant etc, person treated as not beneficially entitled to sum that could have been paid to personal representatives instead of being used for annuity), for “or dependant” substitute “ , dependant or nominee ”.

(2) The amendment made by sub-paragraph (1)—

(a) is to be treated as having come into force on 6 April 2015, and

(b) has effect where the person on whose death an annuity is payable dies on or after that date.

SCHEDULE 6

PART 1 — Abolition of duty to deduct tax from interest on certain investments

1

In Chapter 2 of Part 15 of ITA 2007 (deduction of income tax at source by deposit-takers and building societies) omit—

(a) section 851 (duty to deduct when making payment of interest on relevant investment), and

(b) the italic heading preceding it.

PART 2 — Deduction of tax from yearly interest: exception for deposit-takers

2

In section 876 of ITA 2007 (interest paid by deposit-takers), for subsections (1) and (2) substitute—

(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on an investment if— (a) the payment is made by a deposit-taker, and (b) when the payment is made, the investment is a relevant investment. (1A) In this section “deposit-taker”, “investment” and “relevant investment” have the meaning given by Chapter 2.

PART 3 — Amendments of or relating to Chapter 2 of Part 15 of ITA 2007

Amendments of Chapter 2 of Part 15 of ITA 2007

3

Chapter 2 of Part 15 of ITA 2007 (deduction of income tax at source by deposit-takers and building societies) is amended in accordance with paragraphs 4 to 18.

4

For the Chapter heading substitute “ Meaning of “relevant investment” for purposes of section 876 ”.

5

(1) Section 850 (overview of Chapter) is amended as follows.

(2) For subsection (1) substitute—

(1) This Chapter has effect for the purposes of section 876 (duty under section 874 to deduct tax from payments of yearly interest: exception for deposit-takers).

(3) Omit subsection (2) (which introduces sections 851 and 852).

(4) In subsection (4)(b) (which introduces sections 858 to 870), for “858” substitute “ 863 ”.

(5) In subsection (5) (which introduces sections 871 to 873), for “871 to” substitute “ 872 and ”.

(6) In subsection (6) (interpretation), for the words from “Chapter—” to “crediting” substitute “ Chapter, crediting ”.

6

Omit section 852 (power to disapply section 851).

7

In section 853(1) (meaning of “deposit-taker”), after “In this Chapter” insert “ and section 876 ”.

8

In section 854(3) (meaning of “relevant investment” in section 851(1)(b)), for “851(1)(b)” substitute “ 876(1)(b) ”.

9

For section 855(1) (meaning of “investment”) substitute—

(1) In this Chapter, and section 876, “investment” means a deposit with a deposit-taker.

10

(1) Section 856 (meaning of “relevant investment”) is amended as follows.

(2) In subsection (1), for “this Chapter” substitute “ section 876 ”.

(3) In subsection (2) (exceptions), for “858” substitute “ 863 ”.

11

In section 857 (treating investments as being or not being relevant investments) omit “or building society” in each place.

12

Omit—

(a) sections 858 to 861 (investments which are not relevant investments and in relation to which duty under section 874 does not apply), and

(b) the italic heading preceding section 858.

13

In the italic heading preceding section 863, for “Other investments” substitute “ Investments ”.

14

In sections 863, 864, 865 and 868(4) (investments with deposit-takers or building societies) omit “or building society” in each place.

15

Omit sections 868(3), 869 and 870(2) (investments with building societies).

16

Omit section 871 (power to make regulations to give effect to Chapter).

17

In section 872 (power to amend Chapter)—

(a) in subsection (2) (different provision for different deposit-takers)—

(i) for “which amends this Chapter in its application to deposit-takers may do so” substitute “ may amend this Chapter ”, and

(ii) in each of paragraphs (a) and (b), for “relation” substitute “ its application ”, and

(b) omit subsections (4) and (5) (which refer to provisions repealed by this Act).

18

Omit section 873(3) to (6) (interpretation of section 861).

Amendments relating to Chapter 2 of Part 15 of ITA 2007

19

In Schedule 12 to FA 1988 (transfer of building society's business to a company), in paragraph 6(1) (treatment for tax purposes of benefits conferred in connection with a transfer) omit—

(a) “either”, and

(b) paragraph (b) (benefit not to be subject to deduction of tax under Chapter 2 of Part 15 of ITA 2007), and the “or” preceding it.

20

(1) In section 564Q(1) of ITA 2007 (alternative finance return: deduction of income tax at source under Chapter 2 of Part 15)—

(a) after “Chapter 2 of Part 15” insert “ and section 876 ”,

(b) for “deduction by deposit-takers and building societies” substitute “ exception for deposit-takers ”, and

(2) In section 564Q(5) of ITA 2007 (alternative finance return: deduction of income tax at source under Chapters 3 to 5 of Part 15)—

(a) after “of Part 15” insert “ except section 876 ”, and

(b) for “those Chapters” substitute “ those provisions ”.

21

In section 847 of ITA 2007 (overview of Part 15)—

(a) in subsection (2) omit paragraph (a) (which introduces Chapter 2), and

(b) in subsection (5) (which introduces Chapters containing provision connected with the duties to deduct), before paragraph (a) insert—

(za) Chapter 2 (interpretation of section 876 in Chapter 3: exception for deposit-takers),

22

In section 946 of ITA 2007 (collection of tax deducted at source: payments to which Chapter applies) omit paragraph (a) (payments from which deductions required to be made under section 851).

23

In Schedule 2 to ITA 2007 omit paragraphs 154 to 156 (transitional provisions related to Chapter 2 of Part 15 of ITA 2007).

24

In Schedule 4 to ITA 2007 (index of defined expressions)—

(a) omit the entry for “beneficiary under a discretionary or accumulation settlement (in Chapter 2 of Part 15)”,

(b) in the entry for “deposit-taker (in Chapter 2 of Part 15)”, after “Part 15” insert “ and section 876 ”,

(d) in the entry for “investment (in Chapter 2 of Part 15)”, after “Part 15” insert “ and section 876 ”, and

(e) omit the entry for “relevant investment (in Chapter 2 of Part 15)”.

25

In consequence of the amendments made by Part 1 of this Schedule and the preceding provisions of this Part of this Schedule—

(a) in Schedule 1 to ITA 2007 omit paragraph 277,

(b) in Schedule 1 to FA 2008 omit paragraph 25,

(i) in paragraph 68(1) omit paragraph (a) including the “and” at the end,

(ii) in paragraph 69(1) omit paragraph (a) including the “and” at the end,

(iii) omit paragraph 70(1), and

(iv) in paragraph 71(3) omit paragraph (b) and the “and” preceding it, and

(d) in FA 2014 omit section 3(4).

PART 4 — Deduction of tax from UK public revenue dividends

26

In section 877 of ITA 2007 (duty to deduct under section 874: exception relating to UK public revenue dividends)—

(a) for “in respect of” substitute “ that is ”, and

(b) after “dividend” insert “ (as defined by section 891) ”.

27

(1) Chapter 5 of Part 15 of ITA 2007 (deduction from payments of UK public revenue dividends) is amended as follows.

(2) In section 893(2) (securities which are gross-paying government securities)—

(a) before the “or” at the end of paragraph (a) insert—

(aa) securities, so far as they are not gilt-edged securities, issued or treated as issued under— (i) the National Loans Act 1939, or (ii) the National Loans Act 1968,

, and

(b) in paragraph (b), for “894(1) or (3)” substitute “ 894(3) ”.

(3) In section 894 (power to direct that securities are gross-paying government securities)—

(a) omit subsections (1) and (2) (power in relation to securities within the new section 893(2)(aa)), and

(b) in subsection (5) omit “(1) or”.

PART 5 — Commencement

28

(1) The amendments made by Parts 1 and 3 of this Schedule have effect in relation to—

(a) interest paid or credited on or after 6 April 2016, and

(b) dividends or other distributions paid by a building society on or after that date.

(2) Sub-paragraph (1) does not apply to—

(a) the repeals in Schedule 12 to FA 1988;

(b) the amendments in section 564Q of ITA 2007;

(3) The repeals mentioned in sub-paragraph (2)(a) and (c) have effect in relation to benefits conferred on or after 6 April 2016.

(4) The amendments mentioned in sub-paragraph (2)(b) have effect in relation to alternative finance return paid on or after 6 April 2016.

(5) The amendments made by Part 2 of this Schedule, and the amendments made by this Schedule in sections 893 and 894 of ITA 2007, have effect in relation to interest paid on or after 6 April 2016.

SCHEDULE 7

Introductory

1

CTA 2009 is amended as follows.

Non-market loans

2

In Chapter 15 of Part 5 (loan relationships: tax avoidance), after section 446 insert—

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.

Finance Act 2016

SCHEDULE 2

Income tax: sporting testimonial payments treated as earnings

1

Income tax: limited exemption for sporting testimonial payments

2

Corporation tax: deductions from total profits for sporting testimonial payments and associated payments

3

Application of this Schedule

4

SCHEDULE 3

Enterprise management incentives and employee ownership trusts

1

Share incentive plans

2

Notification of plans and schemes to HMRC

3

4

5

Price for acquisition of shares under share option

6

7

Tag-along rights

8

Exercise of EMI options

9

SCHEDULE 4

PART 1 — “Fixed protection 2016”

The protection

1

The initial conditions

2

Protection-cessation events

3

Protection-cessation events: interpretation: “benefit accrual”

4

Protection-cessation events: interpretation: “impermissible transfer”

5

Protection-cessation events: interpretation: “permitted transfer”

6

Protection-cessation events: interpretation: “permitted circumstances”

7

Protection-cessation events: interpretation: relieved non-UK pension schemes

8

PART 2 — “Individual protection 2016”

The protection

9

Amount A (pre-6 April 2006 pensions in payment)

10

Amount B (pre-6 April 2016 benefit crystallisation events)

11

Amount C (uncrystallised rights at end of 5 April 2016 under registered pension schemes)

12

Amount D (uncrystallised rights at end of 5 April 2016 under relieved non-UK schemes)

13

PART 3 — Reference numbers etc

Issuing of reference numbers for fixed or individual protection 2016

14

Withdrawal of reference numbers

15

Appeals against non-issue or withdrawal of reference numbers

16

Notification of subsequent protection-cessation events

17

Notification of subsequent pension debits

18

Personal representatives

19

Penalties for non-supply, or fraudulent etc supply, of information under paragraph 17 or 18

20

PART 4 — Information

Preservation of records in connection with individual protection 2016

21

Amendments of regulations

22

23

24

25

26

27