Finance Act 2017

(147A) (1) This section applies in calculating the relevant amount in respect of a car for a tax year for the purposes of section 120A (benefit of car treated as earnings: optional remuneration arrangements) if— (a) the age of the car at the end of the year is 15 years or more, (b) the market value of the car for the year is £15,000 or more, and (c) that market value exceeds the specified amount (see subsection (4)). (2) In calculating the modified cash equivalent of the benefit of the car, for the interim sum calculated under step 2 of section 121B(1) substitute the market value of the car for the tax year in question. (3) Section 132A (capital contributions by employee: optional remuneration arrangements) has effect as if— (a) in subsection (1)(b) the reference to calculating under section 121B the modified cash equivalent of the benefit of the car were to determining the market value of the car, and (b) in subsection (5)(a)(ii) the reference to calculating under section 121B the modified cash equivalent of the benefit of the car for the tax year in question were to determining the market value of the car for the tax year in question. (4) The “specified amount” is found as follows. - Step 1 Find what would be the interim sum under step 2 of section 121B(1) (if subsection (2) of this section did not have effect). - Step 2 (Assuming for this purpose that the reference in section 132(2) to step 2 of section 121(1) includes a reference to step 1 of this subsection) make any deduction under section 132 for capital contributions made by the employee to the cost of the car or accessories.The resulting amount is the specified amount. (5) The market value of a car for a tax year is to be determined in accordance with section 147(3) and (4).

33

• (1) Section 148 (reduction of cash equivalent where car is shared) is amended as follows.

• (2) In subsection (1)—

• (a) in the words before paragraph (a), after “applies” insert “ for the purposes of sections 121 and 121B ”;

• (b) in the words after paragraph (c), for “section 120” substitute “ sections 120 and 120A ”.

• (3) For subsection (2) substitute—

(2) The amount to be treated as earnings in respect of the benefit of the car is to be calculated separately for each of those employees for that tax year (whether under section 120 or section 120A).

• (4) In subsection (2A), at the beginning insert “ In the case of an employee chargeable to tax in respect of the car by virtue of section 120 ”.

• (5) After subsection (2A) insert—

(2B) In the case of an employee chargeable to tax in respect of the car by virtue of section 120A, the modified cash equivalent (as determined under section 121B(1)) is to be reduced on a just and reasonable basis.

34

In section 149 (benefit of car fuel treated as earnings), in subsection (1)(b), at the end insert “ or 120A ”.

35

After section 149 insert—

(149A) (1) This section applies if— (a) fuel is provided for a car in a tax year by reason of an employee's employment, (b) the employee is chargeable to tax in respect of the car in the tax year by virtue of section 120 or 120A, and (c) the fuel is provided pursuant to optional remuneration arrangements. (2) If the condition in subsection (3) is met— (a) the amount foregone with respect to the benefit of the fuel (see section 69B) is to be treated as earnings from the employment for the tax year, and (b) section 149(1) does not apply. (3) The condition mentioned in subsection (2) is that the amount foregone with respect to the benefit of the fuel is greater than the cash equivalent of the benefit of the fuel. (4) For the purposes of subsection (3), assume that the cash equivalent of the benefit of the fuel is zero if the condition in subsection (5) is met. (5) The condition mentioned in subsection (4) is that the benefit of the fuel would be exempt from income tax but for section 228A (exclusion of certain exemptions). (6) References in this section to fuel do not include any facility or means for supplying electrical energy or any energy for a car which cannot in any circumstances emit CO₂ by being driven. (7) Where it is necessary for the purposes of subsections (2)(a) and (3) to apportion an amount of earnings to the benefit of the fuel in the tax year, the apportionment is to be made on a just and reasonable basis. In this subsection “earnings” is to be interpreted in accordance with section 69B(5).

36

In section 154 (benefit of van treated as earnings), after subsection (3) insert—

(4) This section is subject to section 154A.

37

After section 154 insert—

(154A) (1) Where this Chapter applies to a van in relation to a particular tax year and the conditions in subsection (2) are met— (a) the relevant amount is to be treated as earnings from the employment for that tax year, and (b) section 154(1) does not apply. In such a case (including a case where the relevant amount is nil) the employee is referred to in this Chapter as being chargeable to tax in respect of the van in the tax year. (2) The conditions are that— (a) the van is made available to the employee or member of the employee's household pursuant to optional remuneration arrangements, and (b) the amount foregone with respect to the benefit of the van (see section 69B) is greater than the modified cash equivalent of the benefit of the van. (3) To find the relevant amount for the purposes of this section take the following steps— - Step 1 Take the amount foregone with respect to the benefit of the van for the tax year. - Step 2 Make any deduction under section 158A in respect of payments by the employee for the private use of the van.The result is the “relevant amount”. (4) In subsection (2) the reference to the “modified cash equivalent” is to the amount which would be the cash equivalent of the benefit of the van (after any reductions under section 156 or 157) if this Chapter had effect the following modifications— (a) omit paragraph (c) of section 155(8); (b) omit section 158; (c) in section 159(2)(b), for “155, 157 and 158” substitute “ 155 and 157 ”. (5) For the purposes of subsection (2) assume that the modified cash equivalent of the benefit of the van is zero if the condition in subsection (6) is met. (6) The condition is that the benefit of the van would be exempt from income tax but for section 228A (exclusion of certain exemptions). (7) Where it is necessary for the purposes of subsection (2)(b) and step 1 of subsection (3) to apportion an amount of earnings to the benefit of the van in the tax year, the apportionment is to be made on a just and reasonable basis. In this subsection “earnings” is to be interpreted in accordance with section 69B(5).

38

After section 158 insert—

(158A) (1) In calculating the relevant amount under section 154A in relation to a van and a tax year, a deduction is to be made under step 2 of subsection (3) of that section if, as a condition of the van being available for the employee's private use, the employee— (a) is required in that year to pay (whether by way of deduction from earnings or otherwise) an amount of money for that use, and (b) pays that amount on or before 6 July following that year. (2) The amount of the deduction is— (a) the amount paid as mentioned in subsection (1)(b) by the employee in respect of the year, or (b) if less, the amount that would reduce the relevant amount to nil. (3) In this section the reference to the van being available for the employee's private use includes a reference to the van being available for the private use of a member of the employee's family or household.

39

• (1) Section 160 (benefit of van fuel treated as earnings) is amended as follows.

• (2) In subsection (1)(b), after “154” insert “ or 154A ”.

• (3) At the end insert—

(5) This section is subject to section 160A.

40

After section 160 insert—

(160A) (1) This section applies if— (a) fuel is provided for a van in a tax year by reason of an employee's employment, (b) the benefit of the fuel is provided pursuant to optional remuneration arrangements, and (c) the employee is chargeable to tax in respect of the van in the tax year by virtue of section 154 or 154A. (2) If the condition in subsection (3) is met— (a) the amount foregone with respect to the benefit of the fuel (see section 69B) is to be treated as earnings from the employment for that year, and (b) section 160(1) does not apply. (3) The condition mentioned in subsection (2) is that the amount foregone with respect to the benefit of the fuel is greater than the cash equivalent of the benefit of the fuel. (4) For the purposes of subsection (3), assume that the cash equivalent of the benefit of the fuel is zero if the condition mentioned in subsection (5) is met. (5) The condition mentioned in subsection (4) is that the benefit of the fuel would be exempt from income tax but for section 228A (exclusion of certain exemptions). (6) Where it is necessary for the purposes of subsections (2)(a) and (3) to apportion an amount of earnings to the benefit of the fuel in the tax year, the apportionment is to be made on a just and reasonable basis. In this subsection “earnings” is to be interpreted in accordance with section 69B(5).

41

In section 170 (orders etc relating to Chapter 6 of Part 3), in subsection (1)—

• (a) after paragraph (c) insert—

(ca) section 132A(5)(b) (corresponding provision with respect to optional remuneration arrangements),

;

• (b) omit “or” at the end of paragraph (d);

• (c) after paragraph (e) insert

, or (f) section 147A(1)(b) (classic car: minimum value: optional remuneration arrangements).

42

In section 173 (loans to which Chapter 7 applies), in subsection (1A)(b), for the words from “provide” to the end substitute “ make provision about amounts which, in the case of a taxable cheap loan, are to be treated as earnings in certain circumstances ”.

43

In section 175 (benefit of taxable cheap loan treated as earnings), for subsection (1) substitute—

(A1) This section applies where an employment-related loan is a taxable cheap loan in relation to a tax year. (1) The cash equivalent of the benefit of the loan is to be treated as earnings from the employee's employment for the tax year. (1A) If the benefit of the loan is provided pursuant to optional remuneration arrangements and the condition in subsection (1B) is met— (a) subsection (1) does not apply, and (b) the relevant amount (see section 175A) is to be treated as earnings from the employee's employment for the tax year. (1B) The condition is that the amount foregone with respect to the benefit of the loan for the tax year (see section 69B) is greater than the modified cash equivalent of the benefit of the loan for the tax year (see section 175A).

44

• (1) After section 175 insert—

(175A) (1) In section 175(1A) “the relevant amount”, in relation to a loan the benefit of which is provided pursuant to optional remuneration arrangements, means the difference between— (a) the amount foregone (see section 69B) with respect to the benefit of the loan, and (b) the amount of interest (if any) actually paid on the loan for the tax year. (2) For the purposes of section 175 the “modified cash equivalent” of the benefit of an employment-related loan for a tax year is the amount which would be the cash equivalent if section 175(3) had effect with the following modifications— (a) in the opening words, omit “the difference between”; (b) omit paragraph (b) and the “and” before it. (3) But the modified cash equivalent of the benefit of the loan is to be taken to be zero if the condition in subsection (4) is met. (4) The condition is that the benefit of the loan for the tax year would be exempt from income tax but for section 228A (exclusion of certain exemptions). (5) For the purpose of calculating the modified cash equivalent of the benefit of an employment-related loan, assume that section 186(2) (replacement loans: aggregation) and section 187(3) (aggregation of loans by close company to a director) do not have effect. (6) Where it is necessary for the purposes of section 175(1B) and subsection (1) of this section to apportion an amount of earnings to the benefit of the loan for the tax year, the apportionment is to be made on a just and reasonable basis. In this subsection “earnings” is to be interpreted in accordance with section 69B(5).

45

In section 180 (threshold for benefit of loan to be treated as earnings), in subsection (1), for the words before paragraph (a) substitute “ Section 175 does not have effect in relation to an employee and a tax year— ”.

46

In section 184 (interest treated as paid), in subsection (1), for the words from “the cash equivalent” to the end substitute

— (a) the cash equivalent of the benefit of a taxable cheap loan is treated as earnings from an employee's employment for a tax year under section 175(1), or (b) the relevant amount in respect of the benefit of a taxable cheap loan is treated as earnings from an employee's employment for a tax year under section 175(1A).

47

In section 202 (excluded benefits), after subsection (1) insert—

(1A) But a benefit provided to an employee or member of an employee's family or household is to be taken not to be an excluded benefit by virtue of subsection (1)(c) so far as it is provided under optional remuneration arrangements.

48

After section 203 insert—

(203A) (1) Where an employment-related benefit is provided pursuant to optional remuneration arrangements— (a) the relevant amount is to be treated as earnings from the employment for the tax year in which the benefit is provided, and (b) section 203(1) does not apply. (2) To find the relevant amount, first determine which (if any) is the greater of— (a) the cost of the employment-related benefit, and (b) the amount foregone with respect to the benefit (see section 69B). (3) If the cost of the employment-related benefit is greater than or equal to the amount foregone, the “relevant amount” is the cash equivalent (see section 203(2)). (4) Otherwise, the “relevant amount” is— (a) the amount foregone with respect to the employment-related benefit, less (b) any part of the cost of the benefit made good by the employee, to the persons providing the benefit, on or before 6 July following the tax year in which it is provided. (5) For the purposes of subsections (2) and (3), assume that the cost of the employment-related benefit is zero if the condition in subsection (6) is met. (6) The condition is that the employment-related benefit would be exempt from income tax but for section 228A (exclusion of certain exemptions). (7) Where it is necessary for the purposes of subsections (2)(b) and (4) to apportion an amount of earnings to the benefit provided in the tax year, the apportionment is to be made on a just and reasonable basis. In this subsection “earnings” is to be interpreted in accordance with section 69B(5).

Exemptions

49

In Part 4 of ITEPA 2003 (employment income: exemptions), after section 228 insert—

(228A) (1) A relevant exemption does not apply (whether to prevent liability to income tax from arising or to reduce liability to income tax) in respect of a benefit or facility so far as the benefit or facility is provided pursuant to optional remuneration arrangements. (2) For the purposes of subsection (1) it does not matter whether the relevant exemption would (apart from that subsection) have effect as an employment income exemption or an earnings-only exemption. (3) For the purposes of this section an exemption conferred by this Part is a “relevant exemption” unless it is— (a) a special case exemption (see subsection (4)), or (b) an excluded exemption (see subsection (5)). (4) “Special case exemption” means an exemption conferred by any of the following provisions— (a) section 289A (exemption for paid or reimbursed expenses); (b) section 289D (exemption for other benefits); (c) section 308B (independent advice in respect of conversions and transfers of pension scheme benefits); (d) section 312A (limited exemption for qualifying bonus payments); (e) section 317 (subsidised meals); (f) section 320C (recommended medical treatment); (g) section 323A (trivial benefits provided by employers). (5) “Excluded exemption” means an exemption conferred by any of the following provisions— (a) section 239 (payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles); (b) section 244 (cycles and cyclist's safety equipment); (c) section 266(2)(c) (non-cash voucher regarding entitlement to exemption within section 244); (d) section 270A (limited exemption for qualifying childcare vouchers); (e) section 307 (death or retirement provision), so far as relating to provision made for retirement benefits; (f) section 308 (exemption of contribution to registered pension scheme); (g) section 308A (exemption of contributions to overseas pension scheme); (h) section 308C (provision of pensions advice); (i) section 309 (limited exemptions for statutory redundancy payments); (j) section 310 (counselling and other outplacement services); (k) section 311 (retraining courses); (l) section 318 (childcare: exemption for employer-provided care); (m) section 318A (childcare: limited exemption for other care). (6) In subsection (5) “retirement benefit” has the meaning that would be given by subsection (2) of section 307 if “or death” were omitted in both places where it occurs in that subsection. (7) In this section “benefit or facility” includes anything which constitutes employment income or in respect of which employment income is treated as arising to the employee (regardless of its form and the manner of providing it). (8) In this section “optional remuneration arrangements” has the same meaning as in the benefits code (see section 69A). (9) The Treasury may by order amend subsections (4) and (5) by adding or removing an exemption conferred by Part 4.

Other amendments

50

• (1) Section 19 of ITEPA 2003 (receipt of non-money earnings) is amended as follows.

• (2) In subsection (2), after “94” insert “ or 94A ”.

• (3) In subsection (3), after “87” insert “ or 87A ”.

51

In section 95 of ITEPA 2003 (disregard for money, goods or services obtained), in subsection (1), in the words before paragraph (a), after “credit-token” insert “ or the relevant amount in respect of a cash voucher, a non-cash voucher or a credit-token ”.

52

• (1) In section 236 of ITEPA 2003 (interpretation of Chapter 2 of Part 4: exemptions for mileage allowance relief etc), in subsection (2)(b)—

• (a) in the words before sub-paragraph (i), for “the cash equivalent of” substitute “ an amount in respect of ”;

• (b) in sub-paragraph (i), after “120” insert “ or 120A ”;

• (c) in sub-paragraph (ii), after “154” insert “ or 154A ”;

• (d) in sub-paragraph (iii), after “203” insert “ or 203A ”.

• (2) In section 236 of ITEPA 2003 (interpretation of Chapter 2 of Part 4), in subsection (2)(c), for “the cash equivalent of” substitute “ an amount in respect of ”.

53

• (1) Section 239 of ITEPA 2003 (payments and benefits connected with taxable cars and vans etc) is amended as follows.

• (2) In subsection (3)—

• (a) after “149” insert “ or 149A ”;

• (b) after “160” insert “ or 160A ”.

• (3) In subsection (6), for “the cash equivalent of” substitute “ an amount (whether the cash equivalent or the relevant amount) in respect of ”.

54

In section 362 of ITEPA 2003 (deductions where non-cash voucher provided), in subsection (1)(a), for “87(1) (cash equivalent” substitute “ 87(1) or 87A(1) (amount in respect ”.

55

In section 318A of ITEPA 2003 (childcare: limited exemption for other care), in subsection (1)(b), for “cash equivalent of the benefit” substitute “ amount treated as earnings in respect of the benefit by virtue of section 203(1) or 203A(1) (as the case may be) ”.

56

In section 363 of ITEPA 2003 (deductions where credit-token provided), in subsection (1)(a), for “94(1) (cash equivalent” substitute “ 94(1) or 94A(1) (amount in respect ”.

57

In section 693 of ITEPA 2003 (cash vouchers), in subsection (1), for “section 81(2)” substitute “ subsection (2) of, or (as the case may be) referred to in subsection (1A)(b) of, section 81 ”.

58

In section 694 of ITEPA 2003 (non-cash vouchers), in subsection (1), after “87(2)” insert “ or 87A(4) ”.

59

In section 695 of ITEPA 2003 (benefit of credit-token treated as earnings), after subsection (1) insert—

(1A) If the credit-token is provided pursuant to optional remuneration arrangements, the reference in subsection (1) to the amount ascertained under section 94(2) is to be read as a reference to what that amount would be were the credit-token provided otherwise than pursuant to optional remuneration arrangements. In this subsection “optional remuneration arrangements” is to be interpreted in accordance with section 69A.

60

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

amount foregone (in relation to a benefit) (in the benefits code)	section 69B
optional remuneration arrangements (in the benefits code)	section 69A
---	---

61

In Part 2 of Schedule 1 to ITEPA 2003 (index of defined expressions), in the entry relating to “the taxable period”, for “102(2)” substitute “ 102(1) ”.

Commencement and transitional provision

62

• (1) The amendments made by paragraphs 1, 52(1)(a) and (2) and 60 of this Schedule have effect for the tax year 2017-18 and subsequent tax years.

• (2) The amendments made by paragraphs 2 to 51, 52(1)(b) to (d), 53 to 59 and 61 of this Schedule have effect for the tax year 2017-18 and subsequent tax years.

• (3) In relation to a benefit provided pursuant to pre-6 April 2017 arrangements, the amendment made by paragraph 49 has effect for the tax year 2018-19 and subsequent tax years.

• (4) In relation to a benefit provided pursuant to pre-6 April 2017 arrangements, the amendments made by paragraphs 7 to 41, 52(1)(b) and (c), 53 and 61 (and paragraph 2, so far as relating to those paragraphs) have effect for the tax year 2021-22 and subsequent tax years.

• (5) In relation to a benefit provided pursuant to pre-6 April 2017 arrangements, the amendments made by paragraphs 3 to 6, 42 to 48, 50, 51, 52(1)(d) and 54 to 59 (and paragraph 2, so far as relating to those paragraphs) have effect for the tax year 2018-19 and subsequent tax years (but see sub-paragraph (10)).

• (6) If any terms of a pre-6 April 2017 arrangement which relate to the provision of a particular benefit are varied on or after 6 April 2017, that benefit is treated, with effect from the beginning of the day on which the variation takes effect, as not being provided pursuant to pre-6 April 2017 arrangements for the purposes of this paragraph.

• (7) If pre-6 April 2017 arrangements are renewed on or after 6 April 2017, this paragraph has effect as if those arrangements were entered into at the beginning of the day on which the renewal takes effect (and are distinct from the arrangements existing immediately before that day).

• (8) In sub-paragraph (6) the reference to variation does not include any variation which is required in connection with accidental damage to a benefit provided under the arrangements, or otherwise for reasons beyond the control of the parties to the arrangements.

• (9) In sub-paragraph (6) the reference to variation does not include any variation which occurs in connection with a person's entitlement to statutory sick pay, statutory maternity pay, statutory adoption pay, statutory paternity pay , statutory shared parental pay or statutory parental bereavement pay.

• (10) In relation to relevant school fee arrangements which were entered into before 6 April 2017—

• (a) sub-paragraph (5) is to be read as if it did not include a reference to paragraph 48;

• (b) the amendment made by paragraph 48 has effect for the tax year 2021-22 and subsequent tax years.

• (11) Relevant school fee arrangements to which an employee is a party (“the continuing arrangements”) are to be regarded for the purposes of this paragraph as the same arrangements as any relevant school fee arrangements to which the employee was previously a party (“the previous arrangements”) if the continuing arrangements and the previous arrangements relate—

• (a) to employment with the same employer,

• (b) to the same school, and

• (c) to school fees in respect of the same child.

• (12) Sub-paragraphs (6) and (7) do not have effect in relation to relevant school fee arrangements.

• (13) If a non-cash voucher is provided under pre-6 April 2017 arrangements and is used to obtain anything (whether money, goods or services) that is provided on or after 6 April 2018 (“delayed benefits”), so much of the benefit of the voucher as it is reasonable to regard as being applied to obtain the delayed benefits is to be treated for the purposes of this paragraph as not having been provided pursuant to pre-6 April 2017 arrangements.

• (14) For the purposes of this paragraph arrangements are “relevant school fee arrangements” if the benefit mentioned in section 69A(1) of ITEPA 2003 consists in the payment or reimbursement (in whole or in part) of, or a waiver or reduction of, school fees.

• (15) In this paragraph—

• “arrangements” means optional remuneration arrangements (as defined in section 69A of ITEPA 2003);

• “benefit” includes any benefit or facility, regardless of the manner of providing it;

• “non-cash voucher” has the same meaning as in Chapter 4 of Part 3 of ITEPA 2003;

• “pre-6 April 2017 arrangements” means arrangements which are entered into before 6 April 2017.

SCHEDULE 3

Part 1 — Registered pension schemes established outside the UK

1

• (1) In Chapter 5A of Part 4 of FA 2004 (registered pension schemes established outside the UK), after section 242B (inserted by Schedule 4 to this Act) insert—

(242C) (1) This Part (so far as would not otherwise be the case) is to be read— (a) as applying in relation to UK-relieved funds of a non-UK registered scheme as it applies in relation to sums or assets held for the purposes of, or representing accrued rights under, a registered pension scheme established in the United Kingdom, (b) as applying in relation to a non-UK registered scheme, so far as the scheme relates to the scheme's UK-relieved funds, as it applies in relation to a registered pension scheme established in the United Kingdom, (c) as applying in relation to members of a non-UK registered scheme, so far as their rights under the scheme are represented by UK-relieved funds of the scheme, as it applies in relation to members of a registered pension scheme established in the United Kingdom, and (d) as applying to relevant contributions to a non-UK registered scheme as it applies in relation to contributions to a registered pension scheme established in the United Kingdom. (2) Subsection (1) has effect subject to, and in accordance with, the following provisions of this Chapter. (3) The Commissioners for Her Majesty's Revenue and Customs may by regulations make— (a) provision elucidating the application of, or supplementing, subsection (1) or other provisions of this Chapter, or (b) where relief from tax is involved, other provision for or in connection with the application of this Part where the interpretative presumption against extra-territorial application means that it would otherwise not apply. (4) Regulations under subsection (3) may (in particular)— (a) amend provisions of or made under— (i) this Part, or (ii) any other enactment related to taxation in connection with pensions, and (b) make consequential amendments of provisions of, or made under, any enactment. (5) See section 242B for the meaning of “UK-relieved funds” and “relevant contribution”. (242D) (1) This section is about the application of the provisions of this Part relating to the annual allowance charge. (2) Pension input amounts in respect of arrangements relating to an individual under a non-UK registered scheme are to be taken into account in applying the provisions for a tax year in relation to the individual only if, in accordance with regulations made by the Commissioners for Her Majesty's Revenue and Customs, relieved inputs are to be taken to have been made in respect of the individual under the scheme in the year. (242E) For the purposes of the application of the taxable property provisions in relation to a non-UK registered scheme, property is taxable property in relation to the scheme if it would be taxable property in relation to the scheme were the scheme a registered pension scheme established in the United Kingdom.

• (2) The amendment made by this paragraph has effect for the tax year 2017-18 and subsequent tax years.

Part 2 — Income tax on pension income

UK residents to be taxed on 100%, not 90%, of foreign pension income

2

• (1) Omit section 575(2) of ITEPA 2003 (foreign pensions received by UK residents: taxable amount is 90% of actual amount).

• (2) Omit section 613(3) of ITEPA 2003 (annuities from non-UK sources: taxable amount is 90% of actual amount).

• (3) Omit section 635(3) of ITEPA 2003 (foreign voluntary annual payments: taxable amount is 90% of actual amount).

• (4) In consequence—

• (a) in section 575 of ITEPA 2003—

• (i) in subsection (1) omit “, (2)”;

• (ii) in subsection (1A), for “subsections (2) and” substitute “ subsection ”;

• (iii) in subsection (3), for “That pension income” substitute “ The full amount of the pension income arising in the tax year, or (as the case may be) the UK part of the tax year, ”;

• (iv) in subsection (3), for “that Act” substitute “ ITTOIA 2005 ”;

• (b) in section 613 of ITEPA 2003—

• (i) in subsection (2), for “subsections (3) and” substitute “ subsection ”;

• (ii) in subsection (4), for “that Act” substitute “ ITTOIA 2005 ”;

• (c) in section 635 of ITEPA 2003—

• (i) in subsection (2), for “subsections (3) and” substitute “ subsection ”;

• (ii) in subsection (4), for “That pension income” substitute “ The full amount of the pension income arising in the tax year ”;

• (iii) in subsection (4), for “that Act” substitute “ ITTOIA 2005 ”;

• (d) in Schedule 45 to FA 2013 omit paragraph 72(4).

• (5) In sections 613(5) and 635(5) of ITEPA 2003 (application of section 839 of ITTOIA 2005 in certain cases), for “condition B” substitute “ conditions B1 and B2 (and the reference to them in subsection (1)) ”.

• (6) The amendments made by this paragraph have effect for the tax year 2017-18 and subsequent tax years, subject to sub-paragraph (7).

• (7) The amendments in section 575 of ITEPA 2003, so far as they relate to relevant withdrawals, have effect in relation to relevant withdrawals paid in or after the tax year 2017-18; and here “relevant withdrawal” has the meaning given by section 576A of ITEPA 2003.

Superannuation funds to which section 615(3) of ICTA applies

3

• (1) Section 615 of ICTA (trust funds for pensions in respect of employment outside UK) is amended as follows.

• (2) In subsection (6)—

• (a) in paragraph (b), omit the final “and”;

• (b) in paragraph (c), at the end insert “ and ”;

• (c) after paragraph (c) insert—

(d) meets the benefit accrual condition (see subsection (6A));

.

• (3) After subsection (6) insert—

(6A) The benefit accrual condition is— (a) that, in the case of any money purchase arrangement relating to a member of the fund that is not a cash balance arrangement, no contributions are made under the arrangement on or after 6 April 2017; (b) that, in the case of any cash balance arrangement relating to a member of the fund, there is no increase on or after 6 April 2017 in the value of any person's rights under the arrangement; (c) that, in the case of any defined benefits arrangement relating to a member of the fund, there is no increase on or after 6 April 2017 in the value of any person's rights under the arrangement; and (d) that, in the case of any arrangement relating to a member of the fund that is neither a money purchase arrangement nor a defined benefits arrangement— (i) no contributions are made under the arrangement on or after 6 April 2017, and (ii) there is no increase on or after 6 April 2017 in the value of any person's rights under the arrangement. (6B) For the purposes of subsection (6A)(b)— (a) whether there is an increase in the value of a person's rights is to be determined by reference to whether there is an increase in the amount that would, on the valuation assumptions, be available for the provision of benefits under the arrangement to or in respect of the person (and, if there is, the amount of the increase), but (b) in the case of rights that accrued to a person before 6 April 2017, ignore increases in the value of the rights if in no tax year do they exceed the relevant percentage. (6C) For the purposes of subsection (6A)(c)— (a) whether there is an increase in the value of a person's rights is to be determined by reference to whether there is an increase in the benefits amount as defined by paragraph 14(7) of Schedule 18 to the Finance Act 2011, but (b) in the case of rights that accrued to a person before 6 April 2017, ignore increases in the value of the rights if in no tax year do they exceed the relevant percentage. (6D) For the purposes of subsection (6A)(d)(ii), regulations made by the Commissioners for Her Majesty's Revenue and Customs may make provision— (a) for determining whether there is an increase in the value of a person's rights, (b) for determining the amount of any increase, and (c) for ignoring the whole or part of any increase; and regulations under this subsection may make provision having effect in relation to times before the regulations are made. (6E) In this section, “relevant percentage”, in relation to a tax year, means— (a) where, on 20 March 2017, the rules of the fund include provision for the value of the rights of a person to increase during the tax year at an annual rate specified in those rules, that rate, or (b) in any other case, the percentage by which the consumer prices index for September in the previous tax year is higher than it was for the September in the tax year before that (or, if greater, 0%). (6F) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision— (a) so as to change, or modify the effect of, the benefit accrual condition; (b) as to the matters to be taken into account in determining whether the benefit accrual condition is met; (c) for a superannuation fund to be treated to any extent as meeting or not meeting the benefit accrual condition. (6G) Provision under subsection (6D) or (6F) may be made by amending this section.

• (4) In subsection (7)—

• (a) for “In this section—” substitute

For the purposes of this section— “arrangement”, in relation to a member of a superannuation fund, means an arrangement relating to the member under the fund; a money purchase arrangement relating to a member of a superannuation fund is a “cash balance arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits; an arrangement relating to a member of a superannuation fund is a “defined benefits arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are defined benefits; an arrangement relating to a member of a superannuation fund is a “money purchase arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are money purchase benefits; “cash balance benefits”, “defined benefits” and “money purchase benefits” have the meaning given by section 152 of the Finance Act 2004, but for this purpose reading references in that section to a pension scheme as references to a superannuation fund; “member”, in relation to a superannuation fund, has the meaning given by section 151 of the Finance Act 2004, but for this purpose reading references in that section to a pension scheme as references to a superannuation fund;

;

• (b) at the end insert—

“the valuation assumptions” has the meaning given by section 277 of the Finance Act 2004.

• (5) After subsection (10) insert—

(11) Where the conditions in subsection (6)(a) to (c) are met in the case of a superannuation fund (“the actual fund”)— (a) any disqualifying contributions made under an arrangement relating to a member of the actual fund are treated for the purposes of the Income Tax Acts as instead made under an arrangement relating to the member under a separate superannuation fund (“the shadow fund” for the actual fund), (b) any disqualifying increase in the value of a person's rights under an arrangement relating to a member of the actual fund is treated for the purposes of the Income Tax Acts as instead being an increase under an arrangement relating to the member under the shadow fund for the actual fund, and (c) any reference in this or any other Act (including the reference in subsection (3) and any reference enacted after the coming into force of this subsection) to a fund, or superannuation fund, to which subsection (3) applies does not include so much of the actual fund as— (i) represents any contribution treated as made under, or any increase in the value of any rights treated as an increase under, the shadow fund of the actual fund or the shadow fund of any other superannuation fund, or (ii) arises, or (directly or indirectly) derives, from anything within sub-paragraph (i) or this sub-paragraph. (12) For the purposes of subsection (11) a contribution, or an increase in the value of any rights, is “disqualifying” if it would (ignoring that subsection) cause the benefit accrual condition not to be met in the case of the actual fund. (13) For the purposes of the provisions of this section relating to the benefit accrual condition, where there is a recognised transfer— (a) any transfer of sums or assets to the recipient fund by the recognised transfer is to be categorised as not being “a contribution” to the recipient fund, and (b) any increase in the value of rights under the recipient fund that occurs at the time of the recognised transfer is to be treated as not being an increase in that value if the increase is solely a result of the transfer effected by the recognised transfer. (14) For the purposes of subsection (13), where there is a transfer such that sums or assets held for the purposes of, or representing accrued rights under, an arrangement relating to a member of a superannuation fund (“the transferor fund”) are transferred so as to become held for the purposes of, or to represent rights under, an arrangement relating to that person as a member of another superannuation fund, the transfer is a “recognised transfer” if— (a) the conditions in subsection (6)(a) to (c) are met in the case of each of the funds, and (b) none of the sums and assets transferred— (i) represents any contribution treated as made under, or any increase in the value of any rights treated as an increase under, the shadow fund of the transferor fund or the shadow fund of any other superannuation fund, or (ii) arises, or (directly or indirectly) derives, from anything within sub-paragraph (i) or this sub-paragraph.

• (6) The amendments made by this paragraph are to be treated as having come into force on 6 April 2017.

Part 3 — Lump sums for UK residents from foreign pension schemes

Introductory

4

ITEPA 2003 is amended as follows.

Employer-financed retirement benefit schemes: ending of foreign-service relief

5

• (1) Section 395B (exemption or reduction for foreign service) is amended as follows.

• (2) In subsection (1) (conditions for entitlement to exemption or reduction), after paragraph (c) insert—

(ca) the recipient is not resident in the United Kingdom in the tax year in which the lump sum is received,

.

• (3) In subsection (8) (meaning of “foreign service”), for “413(2)” substitute “ 395C ”.

• (4) The amendments made by this paragraph have effect for the tax year 2017-18 and subsequent tax years.

6

After section 395B insert—

(395C) (1) In section 395B “foreign service” means service to which subsection (2), (3), (6) or (8) applies. (2) This subsection applies to service in or after the tax year 2013–14— (a) to the extent that it consists of duties performed outside the United Kingdom in respect of which earnings would not be relevant earnings, or (b) if a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings). (3) This subsection applies to service in or after the tax year 2003–04 but before the tax year 2013–14 such that— (a) any earnings from the employment would not be relevant earnings, or (b) a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings). (4) In subsection (2) “relevant earnings” means earnings for a tax year that are earnings to which section 15 applies and to which that section would apply even if the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year. (5) In subsection (3) “relevant earnings” means— (a) for service in or after the tax year 2008–09, earnings— (i) which are for a tax year in which the employee is ordinarily UK resident, (ii) to which section 15 applies, and (iii) to which that section would apply even if the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year, and (b) for service before the tax year 2008–09, general earnings to which section 15 or 21 as originally enacted applies. (6) This subsection applies to service before the tax year 2003–04 and after the tax year 1973–74 such that— (a) the emoluments from the employment were not chargeable under Case I of Schedule E, or would not have been so chargeable had there been any, or (b) a deduction equal to the whole amount of the emoluments from the employment was or would have been allowable under a foreign earnings deduction provision. (7) In subsection (6) “foreign earnings deduction provision” means— (a) paragraph 1 of Schedule 2 to FA 1974, (b) paragraph 1 of Schedule 7 to FA 1977, or (c) section 192A or 193(1) of ICTA. (8) This subsection applies to service before the tax year 1974-75 such that tax was not chargeable in respect of the emoluments of the employment— (a) in the tax year 1956–57 or later, under Case I of Schedule E, or (b) in earlier tax years, under Schedule E, or it would not have been so chargeable had there been any such emoluments.

7

In section 554Z4 (treatment of relevant step: residence issues), after subsection (6) insert—

(7) Subsections (8) and (9) apply if— (a) the relevant step is the payment of a lump sum, (b) the payment of the lump sum is the provision of a relevant benefit under an employer-financed retirement benefits scheme, and (c) the person by whom the lump sum is received is resident in the United Kingdom in the tax year in which the lump sum is received. (8) If the lump sum is wholly in respect of rights which have accrued on or after 6 April 2017, there is no reduction under subsection (4). (9) If the lump sum is wholly or partly in respect of rights which accrued before 6 April 2017, the amount of any reduction under subsection (4) is given by— $$R × A LS$where—A is so much of the lump sum as is in respect of rights which accrued before 6 April 2017,LS is the amount of the lump sum, andR is the amount which (ignoring this subsection) is given by subsection (4) as the amount of the reduction.$ (10) In subsection (7)— - “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 (see section 393A), and - “relevant benefit” has the same meaning as in that Chapter (see section 393B).

Lump sums under other foreign schemes

8

In section 573 (foreign pensions), after subsection (3) insert—

(4) This section also applies to a pension paid by or on behalf of a person who is outside the United Kingdom to a person who is not resident in the United Kingdom if— (a) the pension is a relevant lump sum paid under a pension scheme to that person in respect of a member of the scheme, and (b) the member is, or immediately before the member's death was, resident in the United Kingdom.

9

In section 574(1) (foreign pensions: meaning of “pension”), after paragraph (a) insert—

(aa) a relevant lump sum (see section 574A),

.

10

• (1) After section 574 insert—

(574A) (1) A lump sum paid under a pension scheme to a member of the scheme, or to a person in respect of a member of the scheme, is “a relevant lump sum” for the purposes of this Chapter if— (a) the scheme is none of the following— (i) a registered pension scheme, (ii) a relevant non-UK scheme, and (iii) an employer-financed retirement benefits scheme established in the United Kingdom, and (b) the payment of the lump sum is not a relevant step by reason of which Chapter 2 of Part 7A applies. (2) A lump sum paid under a relevant non-UK scheme to a member of the scheme, or to a person in respect of a member of the scheme, is “a relevant lump sum” for the purposes of this Chapter if the effect of paragraphs 1 to 7 of Schedule 34 to FA 2004 is that the member payment provisions (see paragraph 1(4) of that Schedule) do not apply in relation to the payment of the lump sum. (3) If section 573 applies to a relevant lump sum then, for the purposes of section 575, the full amount of the pension income arising by reason of the payment of the lump sum is the amount of the lump sum, reduced as follows— - Step 1 Deduct so much of the lump sum as is payable by reason of commutation of rights to receive pension income on which no liability to tax arises as a result of any provision of Chapter 17 of this Part. - Step 2 Where the lump sum is paid under a pension scheme that was an employer-financed retirement benefits scheme immediately before 6 April 2017, deduct so much of the lump sum left after Step 1 as is deductible in accordance with subsection (6). Where the lump sum is paid otherwise than under such a scheme, deduct so much of the lump sum left after Step 1 as is paid in respect of the value immediately before 6 April 2017 of rights, accrued by then, specifically to receive benefits by way of lump sum payments. - Step 3 If the lump sum is paid under an overseas pension scheme, deduct so much of the lump sum left after Step 2 as would, if the scheme were a registered pension scheme, not be liable to income tax under this Part. For the purposes of this Step— 1. treat amounts not included in taxable pension income because of section 636B(3) as being not liable to tax; 2. assume that all or part of the member's lifetime allowance is available. (4) The amount given by subsection (3) is treated for the purposes of section 575 as arising when the lump sum is paid. (5) The Commissioners may by regulations make provision (including provision amending this section) as to the assumptions to be made for the purposes of Step 3. (6) These rules apply for the purposes of the first sentence of Step 2— (a) “the post-Step 1 amount” means so much of the lump sum as is left after Step 1; (b) “the relevant amount” means so much of the post-Step 1 amount as is paid in respect of rights specifically to receive benefits by way of lump sum payments; (c) “reckonable service” means service in respect of which the rights to receive the relevant amount accrued (whether or not service in the same employment or with the same employer, and even if the rights originally accrued under a different employer-financed retirement benefits scheme established in or outside the United Kingdom); (d) “pre-6 April 2017 reckonable service” means reckonable service that is service before 6 April 2017; (e) “pre-6 April 2017 reckonable foreign service” means pre-6 April 2017 reckonable service that is foreign service; (f) the deductible amount is the value immediately before 6 April 2017 of the rights then accrued to payment of so much of the relevant amount as is paid in respect of pre-6 April 2017 reckonable service if— (i) at least 75% of pre-6 April 2017 reckonable service is made up of foreign service, or (ii) the period of pre-6 April 2017 reckonable service exceeds 10 years and the whole of the last 10 years of that period is made up of foreign service, or (iii) the period of pre-6 April 2017 reckonable service exceeds 20 years and at least 50% of that period, including any 10 of the last 20 years, is made up of foreign service; (g) otherwise, the deductible amount is the appropriate fraction of the value immediately before 6 April 2017 of the rights then accrued to payment of so much of the relevant amount as is paid in respect of pre-6 April 2017 reckonable service; (h) “the appropriate fraction” is given by— $$F R$where—F is the period of pre-6 April 2017 reckonable foreign service, andR is the period of pre-6 April 2017 reckonable service.$ (7) In this section— - “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 (see section 393A), - “foreign service” has the meaning given by section 395C, - “member”, in relation to a pension scheme, has the meaning given by section 151 of FA 2004, - “overseas pension scheme” has the same meaning as in Part 4 of FA 2004 (see section 150(7) of that Act), - “payment” includes a transfer of assets and any other transfer of money's worth, - “pension scheme” has the meaning given by section 150(1) of FA 2004, and - “relevant non-UK scheme” is to be read in accordance with paragraph 1(5) of Schedule 34 to FA 2004.

• (2) The amendment made by this paragraph has effect in relation to lump sums paid on or after 6 April 2017.

11

• (1) In section 576A (temporary non-residents), as it applies where the year of departure is the tax year 2013-14 or a later tax year, after subsection (4) insert—

(4ZA) Payment of a relevant lump sum is also a “relevant withdrawal

.

• (2) The amendment made by this paragraph applies in relation to relevant withdrawals on or after 6 April 2017.

12

• (1) In section 576A, as it applies where the year of departure is the tax year 2012-13 or an earlier tax year, after subsection (4A) insert—

(4AA) Payment of a relevant lump sum is also a “relevant withdrawal”.

• (2) The amendment made by this paragraph applies in relation to relevant withdrawals on or after 6 April 2017.

Relief from tax under Part 9 of ITEPA 2003 not to give rise to tax under other provisions

13

• (1) In section 393B(2)(a) (tax on benefits under employer-financed retirement benefit schemes: “relevant benefits” do not include benefits charged to tax under Part 9), after “646E” insert “ or any deductions under section 574A(3) ”.

• (2) The amendment made by this paragraph has effect in relation to benefits by way of lump sums paid on or after 6 April 2017.

SCHEDULE 4

Part 1 — Charges where payments made in respect of overseas pensions

Amendments of Schedule 34 to FA 2004

1

Schedule 34 to FA 2004 (non-UK pension schemes: application of certain charges) is amended as follows.

2

• (1) Paragraph 1 (application of member payment charges to relevant non-UK schemes) is amended as follows.

• (2) After sub-paragraph (6) insert—

(6A) There are three types of relevant transfer— (a) an original relevant transfer, (b) a subsequent relevant transfer, and (c) any other (including, in particular, all relevant transfers before 9 March 2017). (6B) “An original relevant transfer” is— (a) a relevant transfer within sub-paragraph (6)(a) made on or after 9 March 2017, (b) a relevant transfer within sub-paragraph (6)(b), made on or after 9 March 2017, of the whole or part of the UK tax-relieved fund of a relieved member of a qualifying recognised overseas pension scheme, or (c) a relevant transfer within sub-paragraph (6)(b), made on or after 6 April 2017, of the whole or part of the UK tax-relieved fund of a relieved member of a relevant non-UK scheme that is not a qualifying recognised overseas pension scheme. (6C) The sums or assets transferred as a result of an original relevant transfer constitute a ring-fenced transfer fund, and the key date for that fund is the date of the transfer. (6D) Where in the case of a ring-fenced transfer fund (“the source fund”) there is a relevant transfer of the whole or part of the fund— (a) the sums or assets transferred as a result of the transfer constitute a ring-fenced transfer fund, (b) that fund has the same key date as the source fund, and (c) the transfer is “a subsequent relevant transfer”, and is not an original relevant transfer. (6E) Sub-paragraph (6D) applies whether the source fund is a ring-fenced transfer fund as a result of sub-paragraph (6C) or as a result of sub-paragraph (6D). (6F) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that sums or assets identified in accordance with the regulations are not included in a ring-fenced transfer fund as a result of sub-paragraph (6C) or (6D)(a).

3

• (1) Paragraph 2 (member payment provisions apply to payments out of non-UK schemes if member is UK resident or has been UK resident in any of the preceding 5 tax years) is amended as follows.

• (2) The existing text becomes sub-paragraph (1).

• (3) In that sub-paragraph, after “scheme” insert “ so far as it is referable to 5-year rule funds ”.

• (4) After that sub-paragraph insert—

(2) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a relieved member of a relevant non-UK scheme so far as it is referable to 10-year rule funds unless the member— (a) is resident in the United Kingdom when the payment is made (or treated as made), or (b) although not resident in the United Kingdom at that time, has been resident in the United Kingdom earlier in the tax year in which the payment is made (or treated as made) or in any of the 10 tax years immediately preceding that year. (3) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a transfer member of a relevant non-UK scheme, so far as it is referable to any particular ring-fenced transfer fund of the member's under the scheme which has a key date of 6 April 2017 or later, unless— (a) the member is resident in the United Kingdom when the payment is made (or treated as made), or (b) although the member is not resident in the United Kingdom at that time— (i) the member has been resident in the United Kingdom earlier in the tax year containing that time, or (ii) the member has been resident in the United Kingdom in any of the 10 tax years immediately preceding the tax year containing that time, or (iii) that time is no later than the end of 5 years beginning with the key date for the particular fund. (4) In this paragraph— - “5-year rule funds”, in relation to a payment to or in respect of a relieved member of a relevant non-UK scheme, means so much of the member's UK tax-relieved fund under the scheme as represents tax-relieved contributions, or tax-exempt provision, made under the scheme before 6 April 2017; - “5-year rule funds”, in relation to a payment to or in respect of a transfer member of a relevant non-UK scheme, means— 1. the member's relevant transfer fund under the scheme, and 2. any of the member's ring-fenced transfer funds under the scheme that has a key date earlier than 6 April 2017; - “10-year rule funds”, in relation to a payment to or in respect of a relieved member of a relevant non-UK scheme, means so much of the member's UK tax-relieved fund under the scheme as represents tax-relieved contributions, or tax-exempt provision, made under the scheme on or after 6 April 2017. (5) See also— - paragraph 1(6C), (6D) and (6F) (meaning of “ring-fenced transfer fund”), - paragraph 3 (meaning of “UK tax-relieved fund”, “tax-relieved contributions” and “tax-exempt provision” etc), and - paragraph 4 (meaning of “relevant transfer fund” etc).

4

• (1) Paragraph 3 (payments to or in respect of relieved members of schemes) is amended as follows.

• (2) After sub-paragraph (5) insert—

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

• (3) In sub-paragraph (6) (power to specify whether payments by scheme are referable to UK tax-relieved fund), after “payments made (or treated as made) by” insert “ , or other things done by or to or under or in respect of or in the case of, ”.

• (4) After sub-paragraph (7) insert—

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

5

• (1) Paragraph 4 (payments to or in respect of transfer members of schemes) is amended as follows.

• (2) In sub-paragraph (1), after “relevant transfer fund” insert “ , or ring-fenced transfer funds, ”.

• (3) In sub-paragraph (2) (meaning of “relevant transfer fund”), before “so much of” insert “ , subject to sub-paragraph (3A), ”.

• (4) After sub-paragraph (3) insert—

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

• (5) In sub-paragraph (4) (power to specify whether payments by scheme are referable to relevant transfer fund), after “payments or transfers made (or treated as made) by” insert “ , or other things done by or to or under or in respect of or in the case of, ”.

• (6) After sub-paragraph (4) insert—

(5) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that, in circumstances specified in the regulations, something specified in the regulations is to be treated as done by, to, in respect of or in the case of a transfer member of a relevant non-UK scheme. (6) Regulations made by the Commissioners for Her Majesty's Revenue and Customs may make provision for determining whether payments or transfers made (or treated as made) by, or other things done by or to or under or in respect of or in the case of, a relevant non-UK scheme are to be treated as referable to a member's ring-fenced transfer funds under the scheme (and so whether or not they reduce the funds or any of them). (7) Where regulations under sub-paragraph (6) make provision for a payment or transfer or something else to be treated as referable to a member's ring-fenced transfer funds under a scheme, regulations under that sub-paragraph may make provision for the payment or transfer or other thing, or any part or aspect of the payment or transfer or thing, also to be treated as referable to a particular one of those funds.

6

In paragraph 7(2)(c) (regulations about application of member payment provisions), after “relevant transfer fund” insert “ or ring-fenced transfer funds ”.

7

• (1) Paragraph 9ZB (application of section 227G) is amended as follows.

• (2) In sub-paragraph (2), after “relevant transfer fund” insert “ or ring-fenced transfer funds ”.

• (3) After sub-paragraph (3) insert—

(4) The reference in sub-paragraph (2) to the individual's ring-fenced transfer funds under the relevant non-UK scheme is to be read in accordance with paragraph 1.

8

The amendments made by paragraph 3 apply in relation to payments made (or treated as made) on or after 6 April 2017, and the amendments made by paragraphs 2 and 4 to 7 come into force on 9 March 2017.

Consequential amendments in ITEPA 2003

9

• (1) Section 576A of ITEPA 2003, as it applies where the year of departure is the tax year 2013-14 or a later tax year, is amended as follows.

• (2) In subsection (6)(b) (pension income: temporary non-residents: non-application where payment not referable to relevant transfer fund)—

• (a) for “not referable” substitute “ referable neither ”, and

• (b) after “relevant transfer fund” insert “ , nor to the member's ring-fenced transfer funds, ”.

• (3) In subsection (10) (interpretation), at the end insert—

“member's ring-fenced transfer fund” (see paragraph 1(6C) and (6D)).

• (4) The amendments made by this paragraph apply in relation to relevant withdrawals on or after 6 April 2017.

10

• (1) Section 576A of ITEPA 2003, as it applies where the year of departure is the tax year 2012-13 or an earlier tax year, is amended as follows.

• (2) In subsection (6) (pension income: temporary non-residents: non-application unless payment referable to relevant transfer fund), after “member's relevant transfer fund” insert “ , or the member's ring-fenced transfer funds, ”.

• (3) In subsection (8) (interpretation), before the definition of “scheme pension” insert—

“member's ring-fenced transfer funds” has the same meaning as in that Schedule (see paragraph 1(6C) and (6D));

.

• (4) The amendments made by this paragraph apply in relation to relevant withdrawals on or after 6 April 2017.

Part 2 — Income tax on pension transfers: overseas transfer charge

Tax charge on transfers to qualifying recognised overseas pension schemes

11

In Part 4 of FA 2004 (pension schemes etc), after section 244 insert—