The Taxation of Pension Schemes (Transitional Provisions) Order 2006

[F1 23C.— (1) Schedule 29 (registered pension schemes: authorised lump sums - supplementary) is modified as follows.

(2) For paragraph (aa) of paragraph 1(1) (pension commencement lump sum) substitute—

“(aa) the member becomes entitled to it either—

(i) in connection with becoming entitled to a relevant pension (or dies after becoming entitled to it, but before becoming entitled to the relevant pension in connection with which it was anticipated that the member would become entitled to it), or

(ii) in connection with a trivial commutation lump sum within paragraph 7A,”.

(3) In paragraph 7(1) (trivial commutation lump sum), after the words “trivial commutation lump sum if” insert “it is a lump sum within paragraph 7A or”.

(4) After paragraph 7 insert—

“7A.— (1) A lump sum is within this paragraph if—

(a) it does not exceed [F2 £10,000];

(b) the member has reached [F3 normal minimum pension age (or the ill-health condition is met)] F4 ...;

(c) it is paid when all or part of the member’s [F5 lump sum allowance] is available;

(d) except for any pension to which the member had an actual entitlement on or before 5th April 2006, it extinguishes the member’s entitlement to benefits under the pension scheme;

(e) the PCLS conditions are satisfied.

(2) The PCLS conditions are that—

(a) the lump sum is paid in connection with a pension commencement lump sum (“PCLS”);

(b) that PCLS would not have been a PCLS had the modifications in paragraph 34 of Schedule 36 not applied;

(c) the lump sum is paid no later than one month after the PCLS;

(d) since the payment of the PCLS—

(i) no contribution in respect of the member has been made into the scheme,

(ii) no recognised transfer in respect of the member has been made into or out of the scheme, and

(iii) no annuity or scheme pension has been purchased by the application of the sums or assets held by the scheme for the benefit of the member. ”.

(5) After paragraph 9 insert—

“9A.   If a lump sum is a trivial commutation lump sum by virtue of its being within paragraph 7A, the member shall be treated as not having any uncrystallised rights under an arrangement under the pension scheme immediately before it was paid.”.]

Textual Amendments

F1 Arts. 23A-23D inserted (1.6.2009) by The Taxation of Pension Schemes (Transitional Provisions) (Amendment) Order 2009 (S.I. 2009/1172), arts. 1, 3

F2 Word in art. 23C(4) substituted (with effect in accordance with s. 42(9) of the amending Act) by Finance Act 2014 (c. 26), s. 42(5)(9)

F3 Words in art. 23C substituted (with effect in accordance with Sch. 1 para. 72(2) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 72(1)(2)

F4 Words in art. 23C(4) omitted (11.8.2011 with effect in relation to lump sums paid on or after 6.4.2011) by virtue of The Taxation of Pension Schemes (Transitional Provisions) (Amendment) (No.2) Order 2011 (S.I. 2011/1782), arts. 1(1)(3), 2(3)

F5 Words in art. 23C(4) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 25(14)