Finance Act 2004

[F1 34 (1) Sub-paragraphs (2) and (3) specify the modifications of the provisions of Schedule 29 relating to pension commencement lump sums that apply in accordance with paragraph 31(1) (entitlement to lump sums exceeding 25% of uncrystallised rights). U.K.

(2) Schedule 29 has effect as if, in paragraph 1(1)(b) (pension commencement lump sum), the words “all or part of the member’s lump sum allowance is available, and” were omitted.

(3) Subject to sub-paragraph (4), Schedule 29 has effect as if, for paragraph 2 (definition of “the permitted maximum”), there were substituted—

“2 (1) In paragraph 1 “the permitted maximum”, in relation to a lump sum, means—

where—

• A is the value of the member’s uncrystallised lump sum rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 32 of Schedule 36;

• B is the additional lump sum amount (see sub-paragraphs (2) to (6) below).

(2) In sub-paragraph (1), “the additional lump sum amount” means—

where—

• C is the lump sum paid;

• D is the relevant capital amount in relation to the relevant pension (see sub-paragraph (6));

• E is the value of the member’s uncrystallised rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 33 of Schedule 36;

• F is the member’s lump sum and death benefit allowance.

(3) For the purposes of sub-paragraph (2), any part of what would otherwise be C which represents rights attributable to a disqualifying pension credit is to be disregarded.

(4) In a case in which the lump sum is paid in connection with the member becoming entitled to more than one relevant pension (within the meaning given by paragraph 1(3)), the reference in the definition of D in sub-paragraph (2) to the relevant capital amount in relation to the relevant pension is to the sum of the relevant capital amounts in relation to each of the relevant pensions.

(5) If the amount given by the formula in sub-paragraph (2) is negative, the additional lump sum amount is nil.

(6) In sub-paragraph (2) “the relevant capital amount” means—

(a) in a case in which the relevant pension is income withdrawal, the scheme pension capital value, as determined under paragraph 2A(3) and (4);

(b) in a case in which the relevant pension is a lifetime annuity, the annuity purchase price, as determined under paragraph 2B(3) and (4);

(c) in a case in which the relevant pension is a scheme pension under a defined benefits arrangement or a collective money purchase scheme, the amount given by the formula—

where B and C have the same meaning as they have for the purposes of paragraph 2C(2);

(d) in a case in which the relevant pension is a scheme pension under a money purchase arrangement that is not a collective money purchase arrangement, the scheme pension purchase price, as determined under paragraph 2D(3) and (4).”.

(4) If, in any case, the permitted maximum of a lump sum that is determined under paragraph 2 of Schedule 29 as modified by sub-paragraph (3) of this paragraph is lower than it would have been disregarding the modification, the modification is to be disregarded.]

Textual Amendments

F1 Sch. 36 para. 34 substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 3) Regulations 2024 (S.I. 2024/1167), regs. 1(2)(3), 3(8) (with reg. 6)

Modifications etc. (not altering text)

C3 Sch. 36 Pt. 3 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 31(1)

C4 Sch. 36 para. 34 modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 21, 23 (as amended (1.1.2009) by S.I. 2008/2990, arts. 1(1), 4; (with effect in accordance with art. 1(2) of the amending S.I.) by S.I. 2011/1782, arts. 1(1), 2(2); and (18.11.2024 for the tax year 2024-25 and subsequent tax years) by S.I. 2024/1167, regs. 1(2)(3), 4(4) (with reg. 6))