(1)In Chapter IV of Part XIV of the Taxes Act 1988 (personal pension schemes) the following shall be inserted after section 648—
(1)Subject to subsection (2) below, where funds held for the purposes of an approved personal pension scheme are used to acquire an annuity—
(a)the annuity shall be charged to tax under Schedule E and section 203 shall apply accordingly;
(b)the annuity shall not be charged to tax under Case III of Schedule D.
(2)As respects any approved personal pension scheme the Board may direct that, until such date as the Board may specify, annuities acquired with funds held for the purposes of the scheme shall be charged to tax as annual payments under Case III of Schedule D, and tax shall be deductible under sections 348 and 349 accordingly.”
(2)This section shall apply in relation to payments which are made under annuities on or after 6th April 1995.
(1)In section 597 of the Taxes Act 1988 (pensions paid under retirement benefits schemes generally charged under Schedule E) the following subsection shall be inserted after subsection (2)—
“(3)Without prejudice to subsection (1) above, where funds held for the purposes of any scheme which is approved or is being considered for approval under this Chapter are used to acquire an annuity—
(a)the annuity shall be charged to tax under Schedule E and section 203 shall apply accordingly;
(b)the annuity shall not be charged to tax under Case III of Schedule D.”
(2)This section shall apply in relation to payments which are made under annuities on or after the day on which this Act is passed.