Finance Act 2024

Part 6 Commencement and transitional provision etc

Commencement

124 The amendments made by section 14 and this Schedule have effect for the tax year 2024-25 and subsequent tax years.

Availability of individual’s lump sum allowance

125 (1) This paragraph applies where—

(a) one or more benefit crystallisation events within the meaning of Part 4 of FA 2004 occurred in relation to an individual before 6 April 2024, and

(b) a relevant benefit crystallisation event within the meaning of section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) occurs in relation to the individual on or after that date.

(2) Where the individual’s lifetime allowance previously-used amount is equal to or greater than the individual’s lifetime allowance, none of the individual’s lump sum allowance is available on the occurrence of the relevant benefit crystallisation event.

(3) Otherwise, the amount of the individual’s lump sum allowance that is available on the occurrence of the relevant benefit crystallisation event is—

(a) the amount of that allowance that is available in accordance with section 637Q of ITEPA 2003 on the occurrence of that event, less

(b) an amount equal to 25% of the individual’s lifetime allowance previously-used amount;

or, if that produces a negative result, nil.

(4) But sub-paragraphs (2) and (3) do not apply if, on the occurrence of the relevant benefit crystallisation event, a transitional tax-free amount certificate is in force in relation to the individual.

(5) In such a case, the amount of the individual’s lump sum allowance that is available on the occurrence of the relevant benefit crystallisation event is—

(a) the amount of that allowance that is available in accordance with section 637Q of ITEPA 2003 on the occurrence of that event, less

(b) the individual’s lump sum transitional tax-free amount;

or, if that produces a negative result, nil.

(6) For provision about the meaning of expressions used in this paragraph, see paragraph 129.

Availability of individual’s lump sum and death benefit allowance

126 (1) This paragraph applies where—

(a) one or more benefit crystallisation events within the meaning of Part 4 of FA 2004 occurred in relation to an individual before 6 April 2024, and

(b) a relevant benefit crystallisation event within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) occurs in relation to the individual on or after that date.

(2) Where the individual’s lifetime allowance previously-used amount is equal to or greater than the individual’s lifetime allowance, none of the individual’s lump sum and death benefit allowance is available on the occurrence of the relevant benefit crystallisation event.

(3) Otherwise, the amount of the individual’s lump sum and death benefit allowance that is available on the occurrence of the relevant benefit crystallisation event is—

(a) the amount of that allowance that is available in accordance with section 637S of ITEPA 2003 on the occurrence of that event, less

(b) an amount equal to the appropriate percentage of the individual’s lifetime allowance previously-used amount;

or, if that produces a negative result, nil.

(4) In sub-paragraph (3) “the appropriate percentage” means—

(a) 100% in a case in which—

(i) the individual becomes entitled to a serious ill-health lump sum before 6 April 2024 and is under the age of 75 at the time of the payment, or

(ii) the individual dies before 6 April 2024 under the age of 75 and before that date a person is paid a lump sum death benefit in respect of the individual;

(b) 25% in any other case.

(5) But sub-paragraphs (2) to (4) do not apply if, on the occurrence of the relevant benefit crystallisation event, a transitional tax-free amount certificate is in force in relation to the individual.

(6) In such a case, the amount of the individual’s lump sum and death benefit allowance that is available on the occurrence of the relevant benefit crystallisation event is—

(a) the amount of that allowance that is available in accordance with section 637S of ITEPA 2003 on the occurrence of that event, less

(b) the individual’s lump sum and death benefit transitional tax-free amount;

or, if that produces a negative result, nil.

(7) For provision about the meaning of expressions used in this paragraph, see paragraph 129.

Transitional tax-free amount certificates

127 (1) A “transitional tax-free amount certificate” is a certificate relating to an individual that—

(a) is issued by a registered pension scheme on an application made in accordance with this paragraph, and

(b) certifies that the scheme administrator of the scheme is satisfied as to—

(i) the amount of the individual’s lump sum transitional tax-free amount, and

(ii) the amount of the individual’s lump sum and death benefit transitional tax-free amount.

(2) An application for a certificate in relation to an individual—

(a) may be made by the individual or, if the individual is deceased, the individual’s personal representatives;

(b) may be made to any registered pension scheme of which the individual is a member or, if the individual is deceased, of which the individual was a member immediately before death;

(c) must be accompanied by complete evidence as to the amount of the individual’s lump sum and death benefit transitional tax-free amount;

(d) may not be made after the occurrence, in relation to the individual, of a relevant benefit crystallisation event within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

(3) The scheme administrator of a registered pension scheme to which an application is made must, before the end of the period of three months beginning with the date on which the scheme receives the application, determine the application by—

(a) issuing the applicant with a certificate, or

(b) notifying the applicant that the application is refused.

(4) A certificate must (in addition to certifying the matter mentioned in sub-paragraph (1)(b)) contain the following information—

(a) the individual’s name, address and national insurance number,

(b) the individual’s lifetime allowance previously-used amount expressed as a percentage of the standard lifetime allowance,

(c) the amount that the scheme administrator is satisfied is the individual’s lump sum transitional tax-free amount, and

(d) the amount that the scheme administrator is satisfied is the individual’s lump sum and death benefit transitional tax-free amount.

(5) A certificate may be in such form as the scheme administrator may determine and may, in particular, be incorporated into any other document that is given to the applicant by the scheme.

(6) If at any time it appears to the scheme administrator of a registered pension scheme that the amount specified on a certificate under sub-paragraph (4)(c) or (d) does not accurately reflect the individual’s lump sum transitional tax-free amount or (as the case may be) lump sum and death benefit transitional tax-free amount, they must cancel the certificate by giving notice of the cancellation to the applicant or, if the applicant is deceased, the applicant’s personal representatives.

(7) A certificate—

(a) comes into force when it is issued, and

(b) ceases to be in force on the giving of a notice under sub-paragraph (6).

(8) The Commissioners for His Majesty’s Revenue and Customs may by regulations—

(a) amend sub-paragraph (3) by substituting a different period for that for the time being specified there, or

(b) make further provision about transitional tax-free certificates.

(9) For provision about the meaning of expressions used in this paragraph, see paragraph 129.

(10) In the second column of the Table in section 98 of TMA 1970 (penalty for failure to give certificates etc), at the appropriate place insert—

“Paragraph 127 of Schedule 9 to the Finance Act 2024”.

Provision of information by scheme administrators to members

128 (1) A reference in the Provision of Information Regulations to a relevant benefit crystallisation event is, in relation to times before 6 April 2024, a reference to a benefit crystallisation event within the meaning of Part 4 of FA 2004.

(2) Sub-paragraph (3) applies where—

(a) one or more benefit crystallisation events within the meaning of Part 4 of FA 2004 occurred in relation to a member of a registered pension scheme before 6 April 2024, and

(b) it is necessary to determine, for the purposes of any provision of the Provision of Information Regulations as that provision has effect for the tax year 2024-25 or a subsequent tax year, the amount of the member’s lump sum allowance that has been expended by the events mentioned in paragraph (a).

(3) For those purposes, the amount of the member’s lump sum allowance that has been expended by the events mentioned in sub-paragraph (2)(a) is—

(a) if a transitional tax-free amount certificate is in force in relation to the member, so much of the member’s lump sum transitional tax-free amount as is referable to those events;

(b) otherwise, an amount equal to 25% of so much of the member’s lifetime allowance previously-used amount as is referable to those events.

(4) Sub-paragraph (5) applies where—

(a) one or more benefit crystallisation events within the meaning of Part 4 of FA 2004 occurred in relation to a member of a registered pension scheme before 6 April 2024, and

(b) it is necessary to determine, for the purposes of any provision of the Provision of Information Regulations as it has effect for the tax year 2024-25 or a later tax year, the amount of the member’s lump sum and death benefit allowance that has been expended by the events mentioned in paragraph (a).

(5) For those purposes, the amount of the member’s lump sum and death benefit allowance that has been expended by the events mentioned in sub-paragraph (4)(a) is—

(a) if a transitional tax-free amount certificate is in force in relation to the member, so much of the member’s lump sum and death benefit transitional tax-free amount as is referable to those events;

(b) otherwise, an amount equal to the appropriate percentage of so much of the member’s lifetime allowance previously-used amount as is referable to those events.

(6) In sub-paragraph (5)(b) “the appropriate percentage” means—

(a) 100% in a case in which—

(i) the member becomes entitled to a serious ill-health lump sum under the scheme before 6 April 2024 and is under the age of 75 at the time of the payment, or

(ii) the member dies before 6 April 2024 under the age of 75 and before that date a person is paid a lump sum death benefit under the scheme in respect of the individual;

(b) 25% in any other case.

(7) In this paragraph “the Provision of Information Regulations” means the Registered Pension Schemes (Provision of Information) Regulations (S.I. 2006/567).

(8) For further provision about the meaning of expressions used in this paragraph, see paragraph 129.

Paragraphs 125 to 128: interpretation

129 (1) “Lump sum transitional tax-free amount”, in relation to an individual, means the total of—

(a) each pension commencement lump sum (if any) to which the individual has, before 6 April 2024, become entitled under a registered pension scheme, and

(b) each uncrystallised funds pension lump sum (if any) to which the individual has, before 6 April 2024, become entitled under a registered pension scheme, so far as no charge to income tax under Part 9 of ITEPA 2003 or Part 4 of FA 2004 arises in respect of it.

(2) “Lump sum and death benefit transitional tax-free amount”, in relation to an individual, means the total of—

(a) each relevant lump sum (if any) to which the individual has, before 6 April 2024, become entitled under a registered pension scheme, so far as no charge to income tax under Part 9 of ITEPA 2003 or Part 4 of FA 2004 arises in respect of it, and

(b) each relevant lump sum death benefit (if any) paid before 6 April 2024 by a registered pension scheme in respect of the individual so far as no charge to income tax under Part 9 of ITEPA 2003 or Part 4 of FA 2004 arises in respect of it.

(3) For the purposes of sub-paragraph (2)—

(a) a lump sum is “relevant” if the individual becoming entitled to it constituted a benefit crystallisation event within the meaning of Part 4 of FA 2004;

(b) a lump sum death benefit is “relevant” if its payment constituted a benefit crystallisation event within the meaning of Part 4 of FA 2004.

(4) “Complete evidence”, in relation to an individual’s lump sum and death benefit transitional tax-free amount, means evidence of—

(a) each lump sum (if any) to which the individual has become entitled, and

(b) each lump sum death benefit (if any) that has been paid in respect of the individual,

that is comprised, or any part of which is comprised, in the individual’s lump sum and death benefit transitional tax-free amount.

(5) In paragraphs 125 to 128 and this paragraph—

• “complete evidence” has the meaning given by sub-paragraph (4);

• “lifetime allowance” has the same meaning as in Part 4 of FA 2004;

• “lifetime allowance previously-used amount” means the amount that would have been the previously-used amount for the purposes of section 219 of FA 2004 (availability of individual’s lifetime allowance) if a benefit crystallisation event (within the meaning of that section) had occurred immediately before 6 April 2024;

• “lump sum and death benefit transitional tax-free amount” has the meaning given by sub-paragraphs (2) and (3);

• “lump sum death benefit” has the same meaning as in Part 4 of FA 2004;

• “lump sum transitional tax-free amount” has the meaning given by sub-paragraph (1);

• “pension commencement lump sum” has the same meaning as in Part 4 of FA 2004;

• “the Provision of Information Regulations” means the Registered Pension Schemes (Provision of Information) Regulations (S.I. 2006/567);

• “scheme administrator” has the same meaning as in Part 4 of FA 2004;

• “serious ill-health lump sum” has the same meaning as in Part 4 of FA 2004;

• “standard lifetime allowance”, in relation to an individual, has the same meaning as in Part 4 of FA 2004 as that Part has effect in relation to the individual;

• “transitional tax-free amount certificate” means a certificate under paragraph 127;

• “uncrystallised funds pension lump” has the same meaning as in Part 4 of FA 2004.

(6) A reference in any of paragraphs 125 to 128 or this paragraph to a provision of FA 2004 is to that provision as it had effect immediately before 6 April 2024.

Statements for certain members who would not otherwise receive one in the tax year 2024-25

130 (1) The scheme administrator of a registered pension scheme must provide a statement to each relevant person before the end of the tax year 2024-25.

(2) In sub-paragraph (1) “relevant person” means—

(a) any member of the scheme—

(i) in relation to whom one or more benefit crystallisation events occurred before 6 April 2024, and

(ii) who on that date does not have an actual (as opposed to prospective) entitlement to be paid a pension, or

(b) the personal representatives of a member within paragraph (a) who has died.

(3) The statement must contain the information that would have been required to be provided under regulation 14(1) of the Provision of Information Regulations (information provided by scheme administrators about benefit crystallisation events) if such a requirement had arisen in relation to a benefit crystallisation event occurring immediately before 6 April 2024.

(4) In this paragraph—

• “benefit crystallisation event” means a benefit crystallisation event within the meaning of Part 4 of FA 2004, as that Part had effect immediately before 6 April 2024;

• “the Provision of Information Regulations” means the Registered Pension Schemes (Provision of Information) Regulations (S.I. 2006/567);

• “scheme administrator” has the same meaning as in Part 4 of FA 2004.

Lump sum death benefits paid on or after 6 April 2024 that crystallised before that date

131 In section 637S (availability of individual’s lump sum and death benefit allowance) “relevant lump sum death benefit” does not include a lump sum death benefit if and to the extent that it is paid in respect of rights that, before 6 April 2024, crystallised under section 216 of FA 2004.

References in scheme rules to lifetime allowance excess lump sums

132 A rule of a registered pension scheme relating to a member’s entitlement to a lifetime allowance excess lump sum has effect, in relation to entitlements arising on or after 6 April 2024, and so far as possible, as a rule relating to the member’s entitlement to a pension commencement excess lump sum.

Power to make further transitional provision

133 (1) The Treasury may make transitional, transitory or saving provision (in addition to that contained in paragraphs 126 to 132) in connection with the coming into force of any amendment made by section 14 or this Schedule.

(2) Regulations under this paragraph may—

(a) insert provision into this Part of this Schedule;

(b) amend any provision of paragraphs 126 to 132;

(c) make different provision for different purposes.

Power to make further provision in connection with the abolition of lifetime allowance charge

134 (1) The Treasury may by regulations make further provision (in addition to that contained in Parts 1 to 5 of this Schedule) in consequence of, or otherwise in connection with, the provision made by sections 18, 19 and 23 of F(No.2)A 2023.

(2) Regulations under this paragraph may—

(a) amend any provision of the Income Tax Acts (including any provision of, or amendment made by, this Schedule);

(b) if made after 5 April 2024, be made so as to have effect for the tax year in which they are made;

(c) make different provision for different purposes;

(d) include transitional, transitory or saving provision.

(3) Regulations under this paragraph that increase any person’s liability to tax may not be made unless a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, the House of Commons.

(4) No regulations under this paragraph may be made after 5 April 2026.

(5) In sub-paragraph (2) “amend” includes repeal or revoke.