The Taxation of Pension Schemes (Transitional Provisions) (Amendment) (No.2) Order 2011

Made: 20th July 2011

Laid before the House of Commons: 21st July 2011

Coming into force: 11th August 2011

The Treasury make the following Order in exercise of the powers conferred upon them by sections 282(A1), 283(2) and 283(3A) of the Finance Act 2004[^f00001].

Citation, commencement and effect

1

• (1) This Order may be cited as the Taxation of Pension Schemes (Transitional Provisions) (Amendment) (No.2) Order 2011 and comes into force on 11th August 2011.

• (2) Article 2(2)(a)(i) and (b) has effect for the tax year 2012-13 and subsequent tax years.

• (3) Article 2(3), (4) and (5) has effect in relation to lump sums paid on or after 6th April 2011.

Amendment of the Taxation of Pension Schemes (Transitional Provisions) Order 2006

2

• (1) The Taxation of Pension Schemes (Transitional Provisions) Order 2006[^f00002] is amended as follows.

• (2) In article 23(2) (modification of paragraph 34 of Schedule 36 to the Finance Act 2004)—

• (a) in the sub-paragraph (5) treated as substituted—

• (i) for “CLSA” substitute “ULA”, and

• (ii) for “FLSA” substitute “FSLA”;

• (b) in the sub-paragraph (7) treated as substituted, for the definition of “CSLA” substitute—

• ULA is the underpinned lifetime allowance,

• (3) In article 23C(4) (modification of Schedule 29 to the Finance Act 2004), in the paragraph 7A treated as inserted, in sub-paragraph (1)(b) omit “, but has not reached the age of 75”.

• (4) In article 25(3)(a) (stand-alone lump sums: introductory and definition), for “D” substitute “C”.

• (5) In article 25A (conditions to be met by stand-alone lump sums), omit paragraph (5).

Signed

Angela Watkinson — Jeremy Wright — Two of the Lords Commissioners of Her Majesty’s Treasury — 20th July 2011

Explanatory note

(This note is not part of the Order)

EXPLANATORY NOTE

This Order amends the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), in consequence of the amendments made to the Finance Act 2004 (“FA 2004”) by the Finance Act 2011 (“FA 2011”).

Schedule 18 to FA 2011 reduces the standard lifetime allowance from £1.8M to £1.5M with effect from 6 April 2012. The amendments contained in article 2(2) are consequential on this provision and have effect from 6 April 2012. The opportunity is also taken to rectify a typographical error contained in article 23(2).

Schedule 16 to FA 2011 amends FA 2004 so as to remove the requirement to purchase an annuity at age 75 with effect from 6 April 2011. The amendments contained in article 2(3), (4) and (5) are consequential on this provision and have retrospective effect from 6 April 2011 pursuant to the powers contained in sections 282(A1) of FA 2004.

A Tax Information and Impact Note covering this instrument was published on 9 December 2010 alongside draft legislation for the Finance (No.3) Bill 2011 concerning the restriction of pensions tax relief. This was updated on 3 March 2011 to reflect further decisions relating to the restriction of pensions tax relief. A separate Tax Information and Impact Note covering the removal of the effective requirement to annuitise by age 75 was published on 9 December 2010. Both TIINs are available on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm. They each remain an accurate summary of the impacts of this instrument.

Footnotes

[^f00001]: 2004 c.12. Section 282(A1) was inserted by section 75(1) of the Finance Act 2009 (c.10); section 283(3A) was inserted by paragraph 35 of Schedule 23 to the Finance Act 2006 (c.25).

[^f00002]: SI 2006/572; article 23(2) was amended by SI 2008/2990 with effect from 6 April 2006; article 23C was inserted by SI 2009/1172 with effect from 1 June 2009; article 25 was substituted, together with articles 25A to 25D, for article 25 as originally enacted, by SI 2006/2004 with effect from 25 July 2006. There are other amendments but none is relevant.