Finance Act 2000

Tax relief on member’s contributions E+W+S+N.I.

15 (1) Amend section 639 as follows. E+W+S+N.I.

(2) For subsections (1) and (2) substitute—

“(1) An individual who pays a contribution under approved personal pension arrangements made by him shall be entitled to relief under this section in respect of the contribution.

(1A) Subsection (1) above is subject to the other provisions of this Chapter.

(1B) The total amount of contributions in respect of which relief may be given to an individual under this section for any year of assessment must not exceed—

(a) the permitted maximum for the year, as defined in section 638(4), or

(b) the earnings threshold for the year,

whichever is the greater.

(2) Any relief under this section shall be given in accordance with—

(a) subsections (3) and (4) below, and

(b) where applicable, subsection (5A) below.

(2A) Relief in accordance with subsections (3) and (4) below shall be subject to such conditions as the Board may prescribe in regulations.”.

(3) For subsection (3) substitute—

“(3) An individual who is entitled to relief under this section in respect of a contribution shall be entitled, on making the payment, to deduct and retain out of it a sum equal to income tax on the contribution at the basic rate for the year of assessment in which the payment is made.”.

(4) For subsection (4) substitute—

“(4) Where a sum is deducted under subsection (3) above from a contribution—

(a) the scheme administrator shall allow the deduction on receipt of the residue;

(b) the individual paying the contribution shall be acquitted and discharged of so much money as is represented by the deduction as if the sum had been actually paid; and

(c) the sum deducted shall be treated as income tax paid by the scheme administrator.”.

(5) After subsection (4) insert—

“(4A) Where payment of a contribution under approved personal pension arrangements is received—

(a) the scheme administrator shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (4)(c) above is treated as income tax paid by him; and

(b) any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the payment of the contribution to which it relates.”.

(6) In subsection (5) (regulations for carrying subsections (3) and (4) into effect)—

(a) for “(3) and (4)" substitute “ (3) to (4A) ”; and

(b) in paragraph (a), for “(4)(b)" substitute “ (4A)(a) ”.

(7) After subsection (5) insert—

“(5A) Where—

(a) an individual is entitled to relief under this section in respect of contributions paid in any year of assessment, and

(b) apart from this subsection, income tax at the higher rate is chargeable in respect of any part of his total income for the year,

the basic rate limit for that year shall in his case be increased by the addition of the amount of the contributions in respect of which he is entitled to relief under this section.

(5B) Relief in accordance with subsection (5A) above shall be given only on a claim made for the purpose.”.

(8) In subsection (7) (relief not to be given under section 639 and any other provision of the Income Tax Acts in respect of same contribution) for “under this section is claimed and allowed" substitute “ is given under this section ”.

(9) This paragraph has effect in relation to contributions paid in the year 2001-02 or any subsequent year of assessment.