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Finance Act 2004

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Part 4 E+W+S+N.I.Pension schemes etc

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Modifications etc. (not altering text)

Chapter 1E+W+S+N.I.Introduction

IntroductoryE+W+S+N.I.

149Overview of Part 4E+W+S+N.I.

(1)This Part contains tax provision about pension schemes and other similar schemes.

(2)This Chapter defines some basic concepts.

(3)As for the rest of this Part—

  • Chapter 2 is about the registration and de-registration of pension schemes,

  • Chapter 3 is about the payments that may be made by registered pension schemes and related matters,

  • Chapter 4 deals with tax reliefs and exemptions in connection with registered pension schemes,

  • Chapter 5 imposes tax charges in connection with registered pension schemes,

  • Chapter 6 is about some schemes that are not registered pension schemes,

  • Chapter 7 makes provision about compliance,and

  • Chapter 8 contains interpretation and other supplementary provisions.

Main conceptsE+W+S+N.I.

150Meaning of “pension scheme”E+W+S+N.I.

(1)In this Part “pension scheme” means a scheme or other arrangements, comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of persons—

(a)on retirement,

(b)on death,

(c)on having reached a particular age,

(d)on the onset of serious ill-health or incapacity, or

(e)in similar circumstances.

(2)A pension scheme is a registered pension scheme for the purposes of this Part at any time if it is at that time registered under Chapter 2.

(3)In this Part “public service pension scheme” means a pension scheme—

(a)established by or under any enactment,

(b)approved by a relevant governmental or Parliamentary person or body, or

(c)specified in an order made by the Treasury.

(4)In subsection (3) “a relevant governmental or Parliamentary person or body” means—

(a)a Minister of the Crown or a government department,

(b)the Scottish Parliament, the Scottish Parliamentary Corporate Body or a member of the Scottish Executive,

(c)the National Assembly for Wales, or

(d)the Northern Ireland Assembly, the Northern Ireland Assembly Commission, a Northern Ireland Minister, the head of a Northern Ireland department or a Northern Ireland department.

(5)In this Part “occupational pension scheme” means a pension scheme established by an employer or employers and having or capable of having effect so as to provide benefits to or in respect of any or all of the employees of—

(a)that employer or those employers, or

(b)any other employer,

(whether or not it also has or is capable of having effect so as to provide benefits to or in respect of other persons).

(6)In this Part “sponsoring employer”, in relation to an occupational pension scheme, means the employer, or any of the employers, to or in respect of any or all of whose employees the pension scheme has, or is capable of having, effect so as to provide benefits.

(7)In this Part “overseas pension scheme” means a pension scheme (other than a registered pension scheme) which—

(a)is established in a country or territory outside the United Kingdom, and

(b)satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Board of Inland Revenue.

(8)In this Part “recognised overseas pension scheme” means an overseas pension scheme which—

(a)is established in a country or territory prescribed, or of a description prescribed, for the purposes of this subsection by regulations made by the Board of Inland Revenue, or

(b)satisfies any requirements so prescribed.

151Meaning of “member”E+W+S+N.I.

(1)In this Part “member” in relation to a pension scheme, means any active member, pensioner member, deferred member or pension credit member of the pension scheme.

(2)For the purposes of this Part a person is an active member of a pension scheme if there are presently arrangements made under the pension scheme for the accrual of benefits to or in respect of the person.

(3)For the purposes of this Part a person is a pensioner member of a pension scheme if the person is entitled to the present payment of benefits under the pension scheme and is not an active member.

(4)A person is a deferred member of a pension scheme if the person has accrued rights under the pension scheme and is neither an active member nor a pensioner member.

(5)A person is a pension credit member of a pension scheme if the person has rights under the pension scheme which are attributable (directly or indirectly) to pension credits[F1; and, if a person dies having become entitled to pension credits but without having rights attributable to them, the person is to be treated as having acquired, immediately before death, the rights by virtue of which the liability in respect of the pension credits is subsequently discharged].

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Amendments (Textual)

F1Words in s. 151(5) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 2

Modifications etc. (not altering text)

C6S. 151 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 5

152Meaning of “arrangement”E+W+S+N.I.

(1)In this Part “arrangement”, in relation to a member of a pension scheme, means an arrangement relating to the member under the pension scheme.

(2)For the purposes of this Part an arrangement is a “money purchase arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits or other money purchase benefits.

(3)For the purposes of this Part a money purchase arrangement is a “cash balance arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits.

(4)In this Part “money purchase benefits”, in relation to a member of a pension scheme, means benefits the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made under the pension scheme by the member or any other person in respect of the member or any other factor).

(5)In this Part “cash balance benefits” means benefits the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member calculated otherwise than wholly by reference to payments made under the arrangement by the member or by any other person in respect of the member (or transfers or other credits).

(6)For the purposes of this Part an arrangement is a “defined benefits arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are defined benefits.

(7)In this Part “defined benefits”, in relation to a member of a pension scheme, means benefits which are not money purchase benefits (but which are calculated by reference to earnings or service of the member or any other factor other than an amount available for their provision).

(8)For the purposes of this Part an arrangement is a “hybrid arrangement” at any time if, at that time, all of the benefits that may be provided to or in respect of the member under the arrangement are, depending on the circumstances, to be of one of any two or three of the following varieties—

(a)cash balance benefits,

(b)other money purchase benefits, and

(c)defined benefits.

(9)Where not all of the benefits that may be provided under an arrangement to or in respect of the member are of the same one of those varieties of benefits, the arrangement is to be treated for the purposes of this Part as being two or three separate arrangements one of which relates to each of the two or three varieties of benefits that may be so provided.

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Modifications etc. (not altering text)

Chapter 2E+W+S+N.I.Registration of pension schemes

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Modifications etc. (not altering text)

RegistrationE+W+S+N.I.

153Registration of pension schemesE+W+S+N.I.

(1)An application may be made to the Inland Revenue for a pension scheme to be registered.

(2)The application—

(a)must contain any information which is reasonably required by the Inland Revenue in any form specified by the Board of Inland Revenue, and

(b)must be accompanied by a declaration that the application is made by the scheme administrator (see section 270) and any other declarations by the scheme administrator which are reasonably required by the Inland Revenue.

(3)The declarations which the Inland Revenue may require to accompany an application for the registration of a pension scheme include, in particular, a declaration that the instruments or agreements by which it is constituted do not entitle any person to unauthorised payments (see section 160(5)).

(4)On receipt of an application for a pension scheme to be registered the Inland Revenue must decide whether or not to register the pension scheme.

(5)The Inland Revenue’s decision must be to register the pension scheme unless it appears that—

(a)any information contained in the application is incorrect, or

(b)any declaration accompanying it is false.

(6)The Inland Revenue must notify the scheme administrator of the decision on the application.

(7)Unless the Inland Revenue’s decision is not to register the pension scheme, the notification must state the day on and after which the pension scheme will be a registered pension scheme.

(8)An annuity contract [F2made with an insurance company]

(a)by means of which benefits under a registered pension scheme have been secured, but

(b)which does not provide for the immediate payment of benefits,

is to be treated as having become a registered pension scheme on the day on which it is made.

[F3(8A)Where an order has been made under section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article 15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order 2005 (restitution by order of court or Pensions Regulator) that property or money be transferred, or a sum be paid, towards an annuity contract made with an insurance company, the annuity contract is to be treated as having become a registered pension scheme on the day on which it is made.]

(9)Schedule 36 contains (in Part 1) provisions treating certain pension schemes in existence immediately before 6th April 2006 as registered pension schemes (and related provisions).

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Amendments (Textual)

F2Words in s. 153(8) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 2, 64(1)

F3S. 153(8A) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 3, 64(1)

154Persons by whom registered pension scheme may be establishedE+W+S+N.I.

(1)An application to register a pension scheme may be made only if the pension scheme is an occupational pension scheme or has been established by—

(a)an insurance company (see section 275),

(b)a unit trust scheme manager,

(c)an operator, trustee or depositary of a recognised EEA collective investment scheme,

(d)an authorised open-ended investment company,

(e)a building society,

(f)a bank, or

(g)an EEA investment portfolio manager.

(2)But subsection (1) does not apply to a public service pension scheme.

(3)Section 155 defines terms used in subsection (1)(b) to (g).

(4)The Treasury may by order amend this section and section 155.

155Persons by whom scheme may be established: supplementaryE+W+S+N.I.

(1)This section has effect for defining terms used in section 154(1)(b) to (g).

(2)Unit trust scheme manager” means—

(a)a person who has permission under Part 4 of FISMA 2000 to manage unit trust schemes authorised under section 243 of FISMA 2000, or

(b)a firm which has permission under paragraph 4 of Schedule 4 to FISMA 2000 (as a result of qualifying for authorisation under paragraph 2 of that Schedule: Treaty firms) to manage unit trust schemes authorised under that section.

(3)Recognised EEA collective investment scheme” means a collective investment scheme (within the meaning given by section 235 of FISMA 2000) which is recognised by virtue of section 264 of FISMA 2000 (schemes constituted in other EEA States).

(4)Authorised open-ended investment company” has the meaning given by section 237(3) of FISMA 2000.

(5)Building society” means a building society within the Building Societies Act 1986 (c. 53).

(6)Bank” means—

(a)a person falling within section 840A(1)(b) of ICTA (persons, other than building societies etc. permitted to accept deposits), or

(b)a body corporate which is a subsidiary or holding company of a person falling within section 840A(1)(b) of ICTA or is a subsidiary of the holding company of such a person.

In paragraph (b) “subsidiary” and “holding company” are to be read in accordance with section 736 of the Companies Act 1985 (c. 6) or Article 4 of the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)).

(7)EEA investment portfolio manager” means an institution which—

(a)is an EEA firm of the kind mentioned in paragraph 5(a), (b) or (c) of Schedule 3 to FISMA 2000 (certain credit and financial institutions),

(b)qualifies for authorisation under paragraph 12(1) or (2) of that Schedule, and

(c)has permission under FISMA 2000 to manage portfolios of investments.

156Appeal against decision not to registerE+W+S+N.I.

(1)This section applies where, on an application for a pension scheme to be registered, the Inland Revenue’s decision is not to register the pension scheme.

(2)The scheme administrator may appeal against the decision.

(3)The appeal is to the General Commissioners, except that the scheme administrator may elect (in accordance with section 46(1) of TMA 1970) to bring the appeal before the Special Commissioners instead of the General Commissioners.

(4)Paragraphs 1, 2, 8 and 9 of Schedule 3 to TMA 1970 (rules for assigning proceedings to General Commissioners) have effect to identify the General Commissioners before whom an appeal under this section is to be brought, but subject to modifications specified in an order made by the Board of Inland Revenue.

(5)An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the scheme administrator was notified of the decision.

(6)The Commissioners before whom an appeal under this section is brought must consider whether the pension scheme ought to have been registered by the Inland Revenue.

(7)If they decide that the pension scheme ought not to have been registered by the Inland Revenue, they must dismiss the appeal.

(8)If they decide that the pension scheme ought to have been registered by the Inland Revenue, the pension scheme is to be treated as having been registered on such date as the Commissioners determine (but subject to any further appeal or any determination on, or in consequence of, a case stated).

De-registrationE+W+S+N.I.

157De-registrationE+W+S+N.I.

(1)The Inland Revenue may withdraw the registration of a pension scheme.

(2)If the Inland Revenue withdraws the registration of a pension scheme the Inland Revenue must notify the scheme administrator.

(3)If there is no-one who is the scheme administrator, the Inland Revenue must instead notify any person or persons—

(a)who has or have responsibility for the discharge of any obligation relating to the pension scheme under section 271(4) (continuation of liability where no scheme administrator), section 272 (trustees etc.) or section 273 (members), and

(b)whom it is reasonably practicable for the Inland Revenue to identify.

(4)The notification must state the date on and after which the pension scheme will not be a registered pension scheme.

158Grounds for de-registrationE+W+S+N.I.

(1)The registration of a pension scheme may be withdrawn under section 157 only if it appears to the Inland Revenue—

(a)that the amount of the scheme chargeable payments (see section 241) made by the pension scheme during any period of 12 months exceeds the de-registration threshold,

(b)that the scheme administrator fails to pay a substantial amount of tax (or interest on tax) due from the scheme administrator by virtue of this Part,

(c)that the scheme administrator fails to provide information required to be provided to the Inland Revenue by virtue of this Part and the failure is significant,

(d)that any information contained in the application to register the pension scheme or otherwise provided to the Inland Revenue is incorrect in a material particular,

(e)that any declaration accompanying that application or the provision of other information to the Inland Revenue is false in a material particular, or

(f)that there is no scheme administrator.

(2)The amount of the scheme chargeable payments made by a pension scheme during any period of 12 months exceeds the de-registration threshold if the scheme chargeable payments percentage is 25% or more.

(3)The scheme chargeable payments percentage is—

(a)if only one scheme chargeable payment is made during the period of 12 months, the percentage of the pension fund used up on the occasion of that scheme chargeable payment, and

(b)if two or more scheme chargeable payments are made during the period of 12 months, the aggregate of the percentages of the pension fund used up on the occasion of each of those scheme chargeable payments.

(4)The percentage of the pension fund used up on the occasion of a scheme chargeable payment is—

where—

SCP is the amount of the scheme chargeable payment, and

AA is an amount equal to the aggregate of the amount of the sums and the market value of the assets held for the purposes of the pension scheme at the time when the scheme chargeable payment is made.

(5)A failure by a scheme administrator to provide information required to be provided to the Inland Revenue by or under this Part is significant if—

(a)the amount of information which the scheme administrator fails to provide is substantial, or

(b)the failure to provide the information is likely to result in serious prejudice to the assessment or collection of tax.

159Appeal against decision to de-registerE+W+S+N.I.

(1)This section applies where the Inland Revenue decides to withdraw the registration of a pension scheme under section 157.

(2)The scheme administrator, or any person notified under that section of the withdrawal of registration, may appeal against the decision.

(3)The appeal is to the General Commissioners, except that the appellant may elect (in accordance with section 46(1) of TMA 1970) to bring the appeal before the Special Commissioners instead of the General Commissioners.

(4)Paragraphs 1, 2, 8 and 9 of Schedule 3 to TMA 1970 (rules for assigning proceedings to General Commissioners) have effect to identify the General Commissioners before whom an appeal under this section is to be brought, but subject to modifications specified in an order made by the Board of Inland Revenue.

(5)An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the appellant was notified of the decision.

(6)The Commissioners before whom an appeal under this section is brought must consider whether the registration of the pension scheme ought to have been withdrawn.

(7)If they decide that the registration of the pension scheme ought to have been withdrawn, they must dismiss the appeal.

(8)If they decide that the registration of the pension scheme ought not to have been withdrawn, the pension scheme is to be treated as having remained a registered pension scheme (but subject to any further appeal or any determination on, or in consequence of, a case stated).

Chapter 3E+W+S+N.I.Payments by registered pension schemes

IntroductoryE+W+S+N.I.

160Payments by registered pension schemesE+W+S+N.I.

(1)The only payments which a registered pension scheme is authorised to make to or in respect of a [F4person who is or has been a] member of the pension scheme are those specified in section 164.

(2)In this Part “unauthorised member payment” means—

(a)a payment by a registered pension scheme to or in respect of a [F5person who is or has been a] member of the pension scheme which is not authorised by section 164, and

(b)anything which is to be treated as an unauthorised payment to or in respect of a [F6person who is or has been a] member of the pension scheme under [F7this Part].

(3)The only payments which a registered pension scheme that is an occupational pension scheme is authorised to make to or in respect of a [F8person who is or has been a] sponsoring employer are those specified in section 175.

(4)In this Part “unauthorised employer payment” means—

(a)a payment by a registered pension scheme that is an occupational pension scheme, to or in respect of a [F9person who is or has been a] sponsoring employer, which is not authorised by section 175, and

(b)anything which is to be treated as an unauthorised payment to a [F10person who is or has been a] sponsoring employer under section 181.

(5)In this Part “unauthorised payment” means—

(a)an unauthorised member payment, or

(b)an unauthorised employer payment.

(6)As well as section 157 (de-registration), the following provisions—

(a)section 208 (unauthorised payments charge),

(b)section 209 (unauthorised payments surcharge),

(c)section 239 (scheme sanction charge), and

(d)section 242 (de-registration charge),

specify consequences of making unauthorised payments.

(7)Sections 182 to 185 contain provision about amounts that a registered pension scheme is not authorised to borrow.

[F11(7A)Sections 185A to 185I contain provision about the receipt of income and gains from taxable property.]

(8)As well as section 157, sections 239 and 242 specify consequences of unauthorised borrowing [F12and the receipt of income and gains from taxable property].

(9)Schedule 36 contains (in Parts 3 and 4) transitional provision about unauthorised payments.

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Amendments (Textual)

F4Words in s. 160(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(2)

F5Words in s. 160(2)(a) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(3)(a)

F6Words in s. 160(2)(b) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(3)(a)

F7Words in s. 160(2)(b) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(3)(b)

F8Words in s. 160(3) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(4)

F9Words in s. 160(4)(a) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(4)

F10Words in s. 160(4)(b) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(4)

F11S. 160(7A) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 3(2)

F12Words in s. 160(8) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 3(3)

Commencement Information

I1Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

161Meaning of “payment” etcE+W+S+N.I.

(1)This section applies for the interpretation of this Chapter.

(2)Payment” includes a transfer of assets and any other transfer of money’s worth.

(3)Subsection (4) applies to a payment made or benefit provided under or in connection with an investment (including an insurance contract or annuity) acquired using sums or assets held for the purposes of a registered pension scheme.

(4)The payment or benefit is to be treated as made or provided from sums or assets held for the purposes of the pension scheme, even if the pension scheme has been wound up since the investment was acquired.

(5)A payment made by a registered pension scheme to [F13or in respect of] a person who—

(a)is connected with a [F14person who is or has been a] member or sponsoring employer (or was connected with [F15such a person at the date of the person's] death), and

(b)is not a [F14person who is or has been a] member or sponsoring employer,

is to be treated as made in respect of the [F14person who is or has been a] member or sponsoring employer.

(6)Any asset held by a person connected with a [F16person who is or has been a] member or sponsoring employer (or who was connected with [F17such a person at the date of the person's] death) is to be treated as held for the benefit of the [F16person who is or has been a] member or sponsoring employer.

(7)Any increase in the value of an asset held by, or reduction in the liability of, a person connected with a [F18person who is or has been a] member or sponsoring employer (or who was connected with [F19such a person at the date of the person's] death) is to be treated as an increase or reduction for the benefit of the [F18person who is or has been a] member or sponsoring employer.

(8)Section 839 of ICTA (connected persons) applies for the purposes of this section.

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Amendments (Textual)

F13Words in s. 161(5) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 5, 64(1)

F14Words in s. 161(5) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(2)(a)

F15Words in s. 161(5) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(2)(b)

F16Words in s. 161(6) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(3)(a)

F17Words in s. 161(6) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(3)(b)

F18Words in s. 161(7) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(3)(a)

F19Words in s. 161(7) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 4(3)(b)

Modifications etc. (not altering text)

Commencement Information

I2Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

162Meaning of “loan”E+W+S+N.I.

(1)This section applies for the interpretation of this Chapter.

(2)Loan” does not include the purchase of or subscription to debentures, debenture stock, loan stock, bonds, certificates of deposit or other instruments creating or acknowledging indebtedness which are—

(a)listed or dealt in on a recognised stock exchange (within the meaning of section 841 of ICTA), or

(b)offered to the public.

(3)A guarantee of a loan made to or in respect of a [F20person who is or has been a] member or sponsoring employer of a registered pension scheme [F21, or to or in respect of a person who is connected with a [F20person who is or has been a] member or sponsoring employer of a registered pension scheme but is not [F22such a person],] is to be treated as a loan to or in respect of the [F20person who is or has been a] member or sponsoring employer of an amount equal to the amount guaranteed.

(4)If a [F23person who is or has been a] member or sponsoring employer of a registered pension scheme [F24or a person who is connected with a [F23person who is or has been a] member or sponsoring employer of a registered pension scheme but is not [F25such a person]]

(a)is liable to pay a debt, the right to payment of which constitutes an asset held for the purposes of the pension scheme, but

(b)is not required to pay it by the relevant date,

the debt is to be treated as a loan made by the pension scheme to the [F23person who is or has been a] member or sponsoring employer on that date.

(5)The relevant date is the date by which a person at arm’s length from the pension scheme might be expected to be required to pay the debt.

[F26(6)Section 839 of ICTA (connected persons) applies for the purposes of this section.]

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Amendments (Textual)

F20Words in s. 162(3) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(a)

F21Words in s. 162(3) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 6(2), 64(1)

F22Words in s. 162(3) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(b)

F23Words in s. 162(4) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(a)

F24Words in s. 162(4) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 6(3), 64(1)

F25Words in s. 162(4) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(b)

F26S. 162(6) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 6(4), 64(1)

Commencement Information

I3Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

163Meaning of “borrowing” etcE+W+S+N.I.

(1)This section applies for the interpretation of this Chapter.

(2)Borrowing is borrowing by a registered pension scheme if the amount borrowed is to be repaid from sums or assets held for the purposes of the pension scheme.

(3)A liability is a liability of a registered pension scheme if the liability is to be met from sums or assets held for the purposes of the pension scheme.

(4)Borrowing by a registered pension scheme is in respect of an arrangement if it is properly attributable to the arrangement in accordance with the provisions of the pension scheme and any just and reasonable apportionment.

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Commencement Information

I4Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Authorised member paymentsE+W+S+N.I.

164Authorised member paymentsE+W+S+N.I.

The only payments a registered pension scheme is authorised to make to or in respect of a [F27person who is or has been a] member of the pension scheme are—

(a)pensions permitted by the pension rules or the pension death benefit rules [F28to be paid to or in respect of a member] (see sections 165 and 167),

(b)lump sums permitted by the lump sum rule or the lump sum death benefit rule [F29to be paid to or in respect of a member] (see sections 166 and 168),

(c)recognised transfers (see section 169),

(d)scheme administration member payments (see section 171),

(e)payments pursuant to a pension sharing order or provision, and

(f)payments of a description prescribed by regulations made by the Board of Inland Revenue.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F27Words in s. 164 inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(a)

F28Words in s. 164(a) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(b)

F29Words in s. 164(b) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(c)

Modifications etc. (not altering text)

C11S. 164 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 8

Commencement Information

I5Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

165Pension rulesE+W+S+N.I.

(1)These are the rules relating to the payment of pensions by a registered pension scheme to a member of the pension scheme (“the pension rules”).

Pension rule 1

No payment of pension may be made before the day on which the member reaches normal minimum pension age, unless the ill-health condition was met immediately before the member became entitled to a pension under the pension scheme.

Pension rule 2

If the member dies before the end of the period of ten years beginning with the day on which the member became entitled to a scheme pension, an annuity or alternatively secured pension, payment of the scheme pension, annuity or alternatively secured pension may continue to be made (to any person) until the end of that period.

But no other payment of the member’s pension may be made after the member’s death.

Pension rule 3

No payment of pension other than a scheme pension may be made in respect of a defined benefits arrangement.

Pension rule 4

If the member has not reached the age of 75, no payment of pension other than—

(a)a scheme pension,

(b)a lifetime annuity, or

(c)unsecured pension,

may be made in respect of a money purchase arrangement; but a scheme pension may only be paid if the member had an opportunity to select a lifetime annuity instead.

Pension rule 5

The total amount of unsecured pension paid in each unsecured pension year in respect of a money purchase arrangement must not exceed 120% of the basis amount for the unsecured pension year.

Pension rule 6

If the member has reached the age of 75, no payment of pension other than—

(a)a scheme pension,

(b)a lifetime annuity, or

(c)alternatively secured pension,

may be made in respect of a money purchase arrangement; but a scheme pension may only be paid if the member had an opportunity to select a lifetime annuity instead.

Pension rule 7

The total amount of alternatively secured pension paid in each alternatively secured pension year in respect of a money purchase arrangement must not exceed 70% of the basis amount for the alternatively secured pension year.

(2)In this Part “pension”, in relation to a registered pension scheme, includes—

(a)an annuity, and

(b)income withdrawal.

(3)For the purposes of this Part, a person becomes entitled to a pension under a registered pension scheme—

(a)in the case of income withdrawal under the pension scheme, whenever sums or assets held for the purposes of an arrangement under the pension scheme are designated as available for the payment of unsecured pension, and

(b)in any other case, when the person first acquires an actual (rather than a prospective) right to receive the pension

[F30and, for this purpose, the abatement of a scheme pension under a public service pension scheme is not to be taken to affect the right to receive it].

(4)Part 1 of Schedule 28 gives the meaning of expressions used in the pension rules.

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Amendments (Textual)

F30Words in s. 165(3) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 7, 64(1)

Modifications etc. (not altering text)

Commencement Information

I6Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

166Lump sum ruleE+W+S+N.I.

(1)This is the rule relating to the payment of lump sums by a registered pension scheme to a member of the pension scheme (“the lump sum rule”).

Lump sum rule

No lump sum may be paid other than—

(a)a pension commencement lump sum,

(b)a serious ill-health lump sum,

(c)a short service refund lump sum,

(d)a refund of excess contributions lump sum,

(e)a trivial commutation lump sum,

(f)a winding-up lump sum, or

(g)a lifetime allowance excess lump sum.

(2)For the purposes of this Part, a person becomes entitled to a lump sum under a registered pension scheme—

(a)in the case of a pension commencement lump sum, immediately before the person becomes entitled to the pension in connection with which it is paid [F31(or, if the person dies before becoming entitled to the pension in connection with which it was anticipated it would be paid, immediately before death)], and

(b)in any other case, when the person acquires an actual (rather than a prospective) right to receive the lump sum.

(3)Part 1 of Schedule 29 gives the meaning of expressions used in the lump sum rule.

(4)Schedule 36 contains (in Part 3) transitional provisions about lump sums.

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Amendments (Textual)

F31Words in s. 166(2)(a) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 9, 24(3)

Modifications etc. (not altering text)

C14S. 166 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 11

Commencement Information

I7Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

167Pension death benefit rulesE+W+S+N.I.

(1)These are the rules relating to the payment of pension death benefits by a registered pension scheme in respect of a member of the pension scheme (“the pension death benefit rules”).

Pension death benefit rule 1

No payment of pension death benefit may be made otherwise than to a dependant of the member.

Pension death benefit rule 2

No payment of pension death benefit other than a dependants' scheme pension may be made in respect of a defined benefits arrangement.

Pension death benefit rule 3

If a dependant has not reached the age of 75, no payment of pension death benefit to the dependant other than—

(a)a dependants' scheme pension,

(b)a dependants' annuity, or

(c)dependants' unsecured pension,

may be made to the dependant in respect of a money purchase arrangement; but a dependants' scheme pension may only be paid if the member or dependant had an opportunity to select a dependants' annuity instead.

Pension death benefit rule 4

The total amount of dependants' unsecured pension paid to a dependant in each unsecured pension year in respect of a money purchase arrangement must not exceed 120% of the basis amount for the unsecured pension year.

Pension death benefit rule 5

If a dependant has reached the age of 75, no payment of pension other than—

(a)a dependants' scheme pension,

(b)a dependants' annuity, or

(c)dependants' alternatively secured pension,

may be made to the dependant in respect of a money purchase arrangement; but a dependants' scheme pension may only be paid if the member or dependant had an opportunity to select a dependants' annuity instead.

Pension death benefit rule 6

The total amount of dependants' alternatively secured pension paid to a dependant in each alternatively secured pension year in respect of a money purchase arrangement must not exceed 70% of the basis amount for the alternatively secured pension year.

(2)[F32In this part “pension] death benefit” means a pension payable on the death of the member (other than a member’s pension payable after the member’s death under pension rule 2: see section 165).

(3)Part 2 of Schedule 28 gives the meaning of expressions used in the pension death benefit rules.

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Amendments (Textual)

F32Words in s. 167(2) substituted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 22(1), 24(3)

Modifications etc. (not altering text)

Commencement Information

I8Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

168Lump sum death benefit ruleE+W+S+N.I.

(1)This is the rule relating to the payment of lump sum death benefits by a registered pension scheme in respect of a member of the pension scheme (“the lump sum death benefit rule”).

Lump sum death benefit rule

No lump sum death benefit may be paid other than—

(a)a defined benefits lump sum death benefit,

(b)a pension protection lump sum death benefit,

(c)an uncrystallised funds lump sum death benefit,

(d)an annuity protection lump sum death benefit,

(e)an unsecured pension fund lump sum death benefit,

(f)a charity lump sum death benefit,

(g)a transfer lump sum death benefit,

(h)a trivial commutation lump sum death benefit, or

(i)a winding-up lump sum death benefit.

(2)In this Part “lump sum death benefit” means a lump sum payable on the death of the member.

(3)Part 2 of Schedule 29 gives the meaning of expressions used in the lump sum death benefit rule.

(4)Schedule 36 contains (in Part 3) transitional provision about lump sum death benefits.

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Modifications etc. (not altering text)

C18S. 168 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 14

Commencement Information

I9Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

169Recognised transfersE+W+S+N.I.

(1)A “recognised transfer” is a transfer of sums or assets held for the purposes of, or representing accrued rights under, a registered pension scheme so as to become held for the purposes of, or to represent rights under—

(a)another registered pension scheme, or

(b)a qualifying recognised overseas pension scheme,

in connection with a member of that pension scheme.

[F33(1A)A transfer of sums or assets held for the purposes of, or representing accrued rights under, a registered pension scheme to an insurance company is to be treated as a recognised transfer if the sums or assets had been applied by the pension scheme towards the provision of a scheme pension or a dependants' scheme pension (but subject to regulations under subsections (1B) and (1C)).

(1B)The Board of Inland Revenue may by regulations provide that, where any of the sums or assets transferred represent rights in respect of a scheme pension to which a member of a registered pension scheme has become entitled (“the original scheme pension”)—

(a)the transfer is not a recognised transfer unless those sums and assets are, after the transfer, applied towards the provision of a scheme pension (a “new scheme pension”), and

(b)if they are so applied, the new scheme pension is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original scheme pension.

(1C)The Board of Inland Revenue may by regulations provide that, where any of the sums or assets transferred represent rights in respect of a dependants' scheme pension to which a dependant of a member of a registered pension scheme has become entitled in respect of the member (“the original dependants' scheme pension”)—

(a)the transfer is not a recognised transfer unless those sums and assets are, after the transfer, applied towards the provision of a dependants' scheme pension (a “new dependants' scheme pension”), and

(b)if they are so applied, the new dependants' scheme pension is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original dependants' scheme pension.

(1D)The Board of Inland Revenue may by regulations provide that, where any of the sums or assets transferred represent—

(a)a person's unsecured pension fund or dependant's unsecured pension fund, or

(b)a person's alternatively secured pension fund or dependant's alternatively secured pension fund,

under an arrangement (“the old arrangement”), the transfer is not a recognised transfer unless all of those sums and assets become held under an arrangement under which no other sums or assets are held (“the new arrangement”).

(1E)If regulations so provide they may make in relation to cases in which the sums and assets become so held provision as to the treatment for the purposes of any provision of this Part of—

(a)the sums and assets transferred, and

(b)the new arrangement,

including provision for treating the sums and assets transferred as remaining, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, sums and assets held under the old arrangement.]

(2)For the purposes of this Part a recognised overseas pension scheme is a qualifying recognised overseas pension scheme if—

(a)the scheme manager has given to the Inland Revenue notification that it is a recognised overseas pension scheme and has provided any such evidence that it is a recognised overseas pension scheme as the Inland Revenue may require,

(b)the scheme manager has undertaken to the Inland Revenue to inform the Inland Revenue if it ceases to be a recognised overseas pension scheme,

(c)the scheme manager has undertaken to the Inland Revenue to comply with any prescribed information requirements imposed on the scheme manager, and

(d)the recognised overseas pension scheme is not excluded from being a qualifying recognised overseas pension scheme by subsection (5).

(3)In this Part “scheme manager”, in relation to a pension scheme, means the person or persons administering, or responsible for the management of, the pension scheme.

(4)In this section “prescribed information requirements” means—

(a)requirements imposed by or under regulations made by the Board of Inland Revenue to provide to the Inland Revenue any information of a description prescribed by regulations so made, and

(b)requirements specified by regulations so made to provide information to an authority so specified in circumstances so specified.

(5)A recognised overseas pension scheme is excluded from being a qualifying recognised overseas pension scheme by this subsection if the Inland Revenue has decided that—

(a)there has been a failure to comply with any prescribed information requirements imposed on the scheme manager and the failure is significant, and

(b)by reason of the failure it is not appropriate that transfers of sums or assets held for the purposes of, or representing accrued rights under, registered pension schemes so as to become held for the purposes of, or to represent rights under, the recognised overseas pension scheme should be recognised transfers,

and has notified the person or persons appearing to be the scheme manager of that decision (but subject to subsection (7) and section 170).

(6)A failure to comply with prescribed information requirements imposed on the scheme manager is significant if—

(a)the amount of the information which has not been provided is substantial, or

(b)the failure to provide the information is likely to result in serious prejudice to the assessment or collection of tax.

(7)The Inland Revenue—

(a)may at any time after a recognised overseas pension scheme becomes excluded from being a qualifying recognised overseas pension scheme decide that the pension scheme is to cease to be so excluded, and

(b)must notify the scheme manager of the decision.

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Amendments (Textual)

F33S. 169(1A)-(1E) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 36, 64(1)

Commencement Information

I10Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

170Appeal against decision to exclude recognised overseas pension schemeE+W+S+N.I.

(1)This section applies where a recognised overseas pension scheme is excluded from being a qualifying recognised overseas pension scheme by a decision of the Inland Revenue under section 169(5).

(2)The scheme manager may appeal against the decision.

(3)The appeal is to the General Commissioners, except that the scheme manager may elect (in accordance with section 46(1) of TMA 1970) to bring the appeal before the Special Commissioners instead of the General Commissioners.

(4)Paragraphs 1, 2, 8 and 9 of Schedule 3 to TMA 1970 (rules for assigning proceedings to General Commissioners) have effect to identify the General Commissioners before whom an appeal under this section is to be brought, but subject to modifications specified in an order made by the Board of Inland Revenue.

(5)An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the notification of the decision was given.

(6)The Commissioners before whom an appeal under this section is brought must consider whether the recognised overseas pension scheme ought to have been excluded from being a qualifying recognised overseas pension scheme.

(7)If they decide that the recognised overseas pension scheme ought to have been excluded from being a qualifying recognised overseas pension scheme, they must dismiss the appeal.

(8)If they decide that the recognised overseas pension scheme ought not to have been excluded from being a qualifying recognised overseas pension scheme, the recognised overseas pension scheme is to be treated as having remained a qualifying recognised overseas pension scheme (but subject to any further appeal or any determination on, or in consequence of, a case stated).

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Commencement Information

I11Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

171Scheme administration member paymentsE+W+S+N.I.

(1)A “scheme administration member payment” is a payment by a registered pension scheme to or in respect of a [F34person who is or has been a] member of the pension scheme which is made for the purposes of the administration or management of the pension scheme.

(2)But if a payment falling within subsection (1) exceeds the amount which might be expected to be paid to a person who was at arm’s length, the excess is not a scheme administration member payment.

(3)Scheme administration member payments include in particular—

(a)the payment of wages, salaries or fees to persons engaged in administering the pension scheme, and

(b)payments made for the purchase of assets to be held for the purposes of the pension scheme.

(4)A loan to or in respect of a [F35person who is or has been a] member of the pension scheme is not a scheme administration member payment.

(5)Regulations made by the Board of Inland Revenue may provide that payments of a description specified in the regulations are, or are not, scheme administration member payments.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F34Words in s. 171(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 7

F35Words in s. 171(4) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 7

Commencement Information

I12Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Unauthorised member paymentsE+W+S+N.I.

172AssignmentE+W+S+N.I.

(1)Subsection (2) applies if a member of a registered pension scheme (or the member’s personal representatives) assigns or agrees to assign

[F36(a)any benefit, other than an excluded pension, to which the member (or any dependant of the member) has an actual or prospective entitlement under the pension scheme, or

(b)any right in respect of any sums or assets held for the purposes of any arrangement under the pension scheme].

(2)Unless the assignment or agreement is pursuant to a pension sharing order or provision, the pension scheme is to be treated as making an unauthorised payment to the member (or to the member’s personal representatives in respect of the member).

(3)Subsection (4) applies if a person (or a person’s personal representatives) assigns or agrees to assign

[F37(a)any benefit, other than an excluded pension, to which the person has an actual or prospective entitlement under the pension scheme in respect of a member of the pension scheme, or

(b)any right in respect of any sums or assets held for the purposes of any arrangement relating to the member under the pension scheme].

(4)Unless the assignment or agreement is pursuant to a pension sharing order or provision, the pension scheme is to be treated as making an unauthorised payment to the person (or the person’s personal representatives) in respect of the member.

(5)The amount of the unauthorised payment is the greater of—

(a)the consideration received in respect of the assignment or agreement, and

(b)the consideration which might be expected to be received in respect of the assignment or agreement if the parties to the transaction were at arm’s length [F38 and any power to reduce the entitlement to the benefit or right did not exist].

(6)Where a pension scheme is treated by this section as having made an unauthorised payment in relation to an assignment (or an agreement to assign), payments by the pension scheme of the benefit [F39or right] assigned (or agreed to be assigned) are not unauthorised payments.

[F40(7)An excluded pension is so much of any pension which under pension rule 2 may continue to be paid after the member's death as may be so paid.]

(8)Assignment” includes assignation and related expressions are to be read accordingly.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F36S. 172(1)(a)(b) substituted for words (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(2), 64(1)

F37S. 172(3)(a)(b) substituted for words (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(3), 64(1)

F38Words in s. 172(5)(b) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(4), 64(1)

F39Words in s. 172(6) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(5), 64(1)

F40S. 172(7) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(6), 64(1)

Commencement Information

I13Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

[F41172ASurrenderE+W+S+N.I.

(1)Subsection (2) applies if a member of a registered pension scheme surrenders or agrees to surrender—

(a)any benefit, other than an excluded pension, to which the member (or any dependant of the member) has a prospective entitlement under an arrangement under the pension scheme, or

(b)any right in respect of any sums or assets held for the purposes of any arrangement under the pension scheme.

(2)The pension scheme is to be treated as making an unauthorised payment to the member.

(3)Subsection (4) applies if a person surrenders or agrees to surrender—

(a)any benefit, other than an excluded pension, to which the person has a prospective entitlement under an arrangement under the pension scheme relating to a member of a pension scheme, or

(b)any right in respect of any sums or assets held for the purposes of any arrangement relating to a member of the pension scheme under the pension scheme.

(4)The pension scheme is to be treated as making an unauthorised payment to the person in respect of the member.

(5)Subsections (2) and (4) do not apply to—

(a)a surrender pursuant to a pension sharing order or provision,

(b)a surrender (or agreement to surrender) by the member in return for the conferring on a dependant of an entitlement to benefits after the member's death,

(c)a transfer of (or agreement to transfer) benefits or rights so as to become benefits or rights under another arrangement under the pension scheme relating to the member or dependant,

(d)a surrender of (or agreement to surrender) benefits or rights in order to fund the making of an authorised surplus payment,

[F42(da)a surrender made as part of a retirement-benefit activities compliance exercise,

(db)a surrender of a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both) made in order to comply with the Employment Equality (Age) Regulations 2006 or Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing them),]

(e)a surrender (or agreement to surrender) which constitutes an assignment (or agreement to assign) within section 172, or

(f)any surrender (or agreement to surrender) of a description prescribed by regulations made by the Board of Inland Revenue.

(6)Regulations under subsection (5)(f) may include provision having effect in relation to times before they are made.

(7)Subsections (2) and (4) do not apply to the surrender of a benefit to which the member (or a dependant of the member) has a prospective entitlement, or to which the person has a prospective entitlement in respect of a member, under an arrangement that is a defined benefits arrangement or cash balance arrangement unless—

(a)in consequence of the surrender, the actual or prospective entitlement of another member (or dependant of another member) of the pension scheme, or of another person in respect of another member, to benefits under the scheme is increased, and

(b)the two members are or have been connected persons.

(8)The amount of the unauthorised payment is the consideration that might be expected to be received if what is surrendered were assigned by a transaction between parties at arm's length and any power to reduce the entitlement to the benefit or right did not exist.

(9)In this section “surrender”, in relation to any benefit or right of a member (or dependant of a member) of a pension scheme or other person, includes any schemes, arrangements or understandings of any kind (whether or not legally enforceable) the main purpose, or one of the main purposes, of which is to reduce the member's (or dependant's), or person's, entitlement to the benefit or right.

(10)[F43For the purposes of this section an] excluded pension is so much of any pension which under pension rule 2 may continue to be paid after the member's death as may be so paid.

[F44(10A)For the purposes of this section a surrender relating to an arrangement under the pension scheme (“the old arrangement”) is made as part of a retirement-benefit activities compliance exercise if—

(a)it is made in connection with the making of an arrangement under another pension scheme relating to the member (“the new arrangement”),

(b)the old arrangement and the new arrangement relate to the same employment,

(c)both the rights surrendered and the rights conferred under the new arrangement consist of or include a prospective entitlement to pension death benefits within section 167(1) or lump sum death benefits within section 168(1) (or both),

(d)the surrender and the making of the new arrangement constitute or form part of a transaction the purpose of which is to secure that the activities of the pension scheme are limited to retirement-benefit activities within the meaning of section 255 of the Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005, and

(e)the rights surrendered and the rights conferred under the new arrangement are not significantly different.]

(11)Section 839 of ICTA (connected persons) applies for the purposes of this section.

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Amendments (Textual)

F41Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

F43Words in s. 172A(10) substituted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 6(3), 24(3)

F44S. 172A(10A) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 6(4), 24(3)

172BIncrease in rights of connected person on deathE+W+S+N.I.

(1)This section applies if—

(a)at any time after the death of a relevant member of a registered pension scheme, there is an increase in the pension rights of another member of the pension scheme which is attributable to the death, and

(b)the dead member and other member were connected persons immediately before the death.

(2)A member of a registered pension scheme is a relevant member if, immediately before his death, any of his rights under the pension scheme are—

(a)rights to benefit to which the member (or any dependant of the member) has a prospective entitlement under an arrangement under the pension scheme, or

(b)rights representing the member's unsecured pension fund, alternatively secured pension fund, dependant's unsecured pension fund or dependant's alternatively secured pension fund in respect of an arrangement under the pension scheme.

(3)There is at any time an increase in the pension rights of the other member of the pension scheme which is attributable to the death if—

(a)the consideration which might be expected to be received in respect of an assignment (or assignation) of the benefits to which he is actually or prospectively entitled under the pension scheme at that time, exceeds

(b)the consideration which might be expected to be received in respect of such an assignment (or assignation) immediately before that time,

in consequence of the death (ignoring for the purposes of paragraphs (a) and (b) any power to reduce the entitlement to the benefits).

(4)The pension scheme is to be treated as making an unauthorised payment to the other member (or to the other member's personal representatives) of an amount equal to the excess (but subject to subsection (6)).

(5)The amount which would (apart from this subsection) constitute the unauthorised payment is to be reduced by so much of the excess as arises—

(a)from the payment of any transfer lump sum death benefit in respect of the dead member so as to become held for the purposes of, or to represent accrued rights under, an arrangement relating to the other member,

(b)from the other member becoming entitled to pension death benefits or lump sum death benefits in respect of the dead member, or

(c)in any manner prescribed by regulations made by the Board of Inland Revenue.

(6)Regulations under subsection (5)(c) may include provision having effect in relation to times before they are made.

(7)This section does not apply if—

(a)at the time of the increase mentioned in subsection (1)(a) there at least 20 members of the pension scheme, and

(b)the benefits to which each of them is actually or prospectively entitled under the pension scheme are increased at the same rate in consequence of the death.

(8)This section does not apply if the increase in the pension rights of the other member is brought about by an assignment (or agreement to assign) within section 172.

[F45(8A)Nothing in this section applies in relation to the rights representing the member's unsecured pension fund if those rights would represent the member's alternatively secured pension fund but for paragraph 11(6) and (7) of Schedule 28.]

(9)Section 839 of ICTA (connected persons) applies for the purposes of this section.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F41Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

F45S. 172B(8A) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 19 paras. 12(5), 29(4)

172CAllocation of unallocated employer contributionsE+W+S+N.I.

(1)This section applies if—

(a)contributions are paid under a registered pension scheme by an employer otherwise than in respect of any individual,

(b)in any tax year any of the contributions become held for the purposes of the provision of benefits to or in respect of a member of the pension scheme under any relevant arrangement or arrangements (“the allocated contributions”),

(c)the amount of the allocated contributions exceeds the permitted maximum, and

(d)the member and the employer, or the member and any person connected with the employer at any time during the tax year, are connected persons at any time during the tax year.

(2)An arrangement is a relevant arrangement if it is—

(a)a money purchase arrangement that is not a cash balance arrangement, or

(b)a hybrid arrangement under which the benefits that may be provided to or in respect of the member are, or include, money purchase benefits other than cash balance benefits.

(3)The permitted maximum” is—

(a)the maximum amount of relief to which the member is entitled under section 188 (relief for contributions) in respect of relievable pension contributions paid during the tax year (see section 190), less

(b)the amount of any contributions paid by employers under any registered pension scheme in respect of the member in the tax year.

(4)But if the member is a also a member of one or more other registered pension schemes, the permitted maximum in relation to each of the registered pension schemes of which he is a member is—

where—

PM is the amount arrived at under subsection (3), and

N is the number of registered pension schemes of which he is a member.

(5)The pension scheme is to be treated as making an unauthorised payment to the member (or to the member's personal representatives).

(6)The amount of the unauthorised payment is the amount by which the amount of the allocated contributions exceeds the permitted maximum.

(7)Section 839 of ICTA (connected persons) applies for the purposes of this section.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F41Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

172DLimit on increase in benefitsE+W+S+N.I.

(1)This section applies where, at any time during any pension input period in respect of a relevant arrangement relating to a member of an occupational pension scheme that is a registered pension scheme, the member and—

(a)a sponsoring employer, or

(b)a person connected with a sponsoring employer.

are connected persons.

(2)If—

(a)the pension input amount for the pension input period in respect of the relevant arrangement, exceeds

(b)the notional unconnected person input amount for the pension input period in respect of the relevant arrangement,

the pension scheme is to be treated as making an unauthorised payment to the member (or to the member's personal representatives) of an amount equal to the excess.

(3)A relevant arrangement is an arrangement under the pension scheme that is—

(a)a defined benefits arrangement,

(b)a cash balance arrangement, or

(c)a hybrid arrangement under which the benefits that may be provided to or in respect of the member are, or include, defined benefits or cash balance benefits.

(4)The pension input amount for a pension input period in respect of the relevant arrangement is to be determined in accordance with—

(a)sections 230 to 232 if the relevant arrangement is a cash balance arrangement,

(b)sections 234 to 236 if it is a defined benefits arrangement, and

(c)section 237 if it is a hybrid arrangement,

treating references in those sections to the individual as to the member and treating section 237 as if the references to input amount B were omitted.

(5)The notional unconnected person input amount for the pension input period in respect of the relevant arrangement is what the pension input amount, as so determined, would have been if the member were connected with—

(a)a sponsoring employer, or

(b)a person connected with a sponsoring employer,

at no time during the pension input period.

(6)Section 839 of ICTA (connected persons) applies for the purposes of this section.]

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F41Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

173BenefitsE+W+S+N.I.

(1)A registered pension scheme is to be treated as having made an unauthorised payment to a [F46person who is or has been a] member of the pension scheme if an asset held for the purposes of the pension scheme is used to provide a benefit (other than a payment) to—

(a)the [F47person], or

(b)a member of the [F48person's] family or household.

(2)If the benefit is received by reason of an employment which is not an excluded employment, subsection (1) does not apply.

(3)If the benefit is received by reason of an excluded employment, subsection (1) only applies if—

(a)it is a benefit to which Chapter 6 or 10 of the benefits code (cars and vans, and benefits not dealt with elsewhere in benefits code) would apply if the employment were not an excluded employment,

(b)the pension scheme is an occupational pension scheme, and

(c)the [F49person], or a member of the [F50person's] family or household, is a director of, and has a material interest in, a sponsoring employer.

(4)A registered pension scheme is to be treated as having made an unauthorised payment in respect of a [F51person who is or has been a] member of the pension scheme if, after the [F52person's] death, an asset held for the purposes of the pension scheme is used to provide a benefit (other than a payment) to a person who, at the date of the [F52person's] death, was a member of the [F52person's] family or household.

(5)The person who receives the benefit is to be treated as having received the unauthorised payment.

(6)If the benefit is received by reason of an employment which is not an excluded employment, subsections (4) and (5) do not apply.

(7)If the benefit is received by reason of an excluded employment, subsections (4) and (5) only apply if—

(a)paragraphs (a) and (b) of subsection (3) apply, and

(b)at the date of the [F53person's] death the [F54person], or a member of the [F53person's] family or household, was a director of, and had a material interest in, a sponsoring employer.

[F55(7A)This section does not apply if—

(a)the pension scheme is an investment-regulated pension scheme, and

(b)the asset consists of taxable property.]

(8)The amount of an unauthorised payment treated as having been made by this section—

(a)in relation to such benefits, and in such circumstances, as may be prescribed by regulations made by the Board of Inland Revenue, is an amount determined in accordance with the regulations, and

(b)otherwise, is the amount which would be the cash equivalent of the benefit under the benefits code if the benefit were received by reason of an employment and the benefits code applied to it.

(9)For the purposes of subsection (8)—

(a)references in the benefits code to the employee are to be treated as references to the [F56person who is or has been a] member, and

(b)references in the benefits code to the employer are to be treated as references to the pension scheme.

(10)In this section—

  • the benefits code” has the meaning given by section 63(1) of ITEPA 2003,

  • director” has the meaning given by section 67 of that Act,

  • excluded employment” has the meaning given by section 63(4) of that Act, and

  • material interest” has the meaning given by section 68 of that Act.

(11)Section 721 of ITEPA 2003 applies for the purposes of determining the members of a person’s family or household.

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Amendments (Textual)

F46Words in s. 173(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(2)(a)

F47Word in s. 173(1) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(2)(b)

F48Word in s. 173(1) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(2)(c)

F49Word in s. 173(3) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(3)(a)

F50Word in s. 173(3) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(3)(b)

F51Words in s. 173(4) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(4)(a)

F52Word in s. 173(4) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(4)(b)

F53Word in s. 173(7)(b) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(5)(a)

F54Word in s. 173(7)(b) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(5)(b)

F55S. 173(7A) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 4

F56Words in s. 173(9)(a) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 8(6)

Commencement Information

I14Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

174Value shiftingE+W+S+N.I.

(1)A registered pension scheme is to be treated as having made an unauthorised payment to a [F57person who is or has been a] member of the pension scheme if, in connection with any of the events mentioned in subsection (3) or a change in the value of a currency—

(a)the value of an asset held for the purposes of the pension scheme is reduced or a liability of the pension scheme is increased, and

(b)the value of an asset held by or for the benefit of the [F58person] is increased, a liability of the [F58person] is reduced, or a liability of another person is reduced for the benefit of the [F58person].

(2)But if the event or the change in the value of the currency occurs after the [F59person's] death—

(a)the pension scheme is to be treated as having made an unauthorised payment in respect of the [F60person] (rather than to the [F60person]), and

(b)the person who holds the asset or is subject to the liability in relation to which subsection (1)(b) is satisfied is to be treated as having received the unauthorised payment.

(3)The events are—

(a)the creation, alteration, release or extinction of any power, right, option or liability relating to assets held for the purposes of the pension scheme (whether or not provided for in the terms on which the asset is acquired or held),

(b)the creation, alteration, release or extinction of any power, right or option relating to a liability of the pension scheme (whether or not provided for in the terms on which the liability is incurred),

(c)the exercise of, or failure to exercise, any power, right or option in relation to assets held for the purposes of the pension scheme or a liability of the pension scheme, or

(d)the exercise of, or failure to exercise, any power, right or option which constitutes an asset held for the purposes of the pension scheme,

in a way which differs from that which might be expected if the parties to the transaction were at arm’s length.

(4)The amount of the unauthorised payment is the amount by which the reduction in value of the asset held for the purposes of the pension scheme, or the increase in the liability of the pension scheme, exceeds that which might be expected if the parties to the transaction were at arm’s length.

(5)Regulations made by the Board of Inland Revenue may make provision as to how the excess is to be calculated in relation to events of a description specified in the regulations (including provision as to the times at which the asset or liability is to be valued).

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Amendments (Textual)

F57Words in s. 174(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 9(2)(a)

F58Word in s. 174(1) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 9(2)(b)

F59Word in s. 174(2) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 9(3)(a)

F60Word in s. 174(2) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 9(3)(b)

Commencement Information

I15Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

[F61174ATaxable property held by investment-regulated pension schemesE+W+S+N.I.

(1)An investment-regulated pension scheme is to be treated as making an unauthorised payment to a member of the pension scheme if—

(a)the pension scheme acquires an interest in taxable property, and

(b)the interest is held by the pension scheme for the purposes of an arrangement under the pension scheme relating to the member.

(2)An investment-regulated pension scheme is to be treated as making an unauthorised payment to a member of the pension scheme if—

(a)an interest in taxable property is held by the pension scheme for the purposes of an arrangement under the pension scheme relating to the member, and

(b)the property is improved.

(3)An investment-regulated pension scheme is to be treated as making an unauthorised payment to a member of the pension scheme if—

(a)an interest in property which is not residential property is held by the pension scheme for the purposes of an arrangement under the pension scheme relating to the member, and

(b)the property is converted or adapted to become residential property.

(4)Schedule 29A makes provision supplementing this section; and in that Schedule—

(a)Part 1 defines “investment-regulated pension scheme”,

(b)Part 2 defines “taxable property” (and “residential property”),

(c)Part 3 explains what it means to acquire, and to hold, an interest in taxable property, and

(d)Part 4 contains provision for calculating the amounts of unauthorised payments treated as made by this section and explains when the unauthorised payments are treated as made.]

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F61S. 174A inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 5

Authorised employer paymentsE+W+S+N.I.

175Authorised employer paymentsE+W+S+N.I.

The only payments which a registered pension scheme that is an occupational pension scheme is authorised to make to or in respect of a [F62person who is or has been a] sponsoring employer are—

(a)public service scheme payments (see section 176),

(b)authorised surplus payments (see section 177),

(c)compensation payments (see section 178),

(d)authorised employer loans (see section 179),

(e)scheme administration employer payments (see section 180), and

(f)payments of a description prescribed by regulations made by the Board of Inland Revenue.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F62Words in s. 175 inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 10

Modifications etc. (not altering text)

Commencement Information

I16Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

176Public service scheme paymentE+W+S+N.I.

A payment is a public service scheme payment if—

(a)it is made by a public service pension scheme, and

(b)it is not of a description prescribed by regulations made by the Board of Inland Revenue.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I17Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

177Authorised surplus paymentE+W+S+N.I.

For the purposes of this Part a payment is an authorised surplus payment if it is of a description prescribed by regulations made by the Board of Inland Revenue.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I18Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

178Compensation paymentsE+W+S+N.I.

A payment is a compensation payment if it is made in respect of a member’s liability to a sponsoring employer in respect of a criminal, fraudulent or negligent act or omission by the member.

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I19Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

179Authorised employer loanE+W+S+N.I.

(1)A loan made to or in respect of a [F63person who is or has been a] sponsoring employer is an authorised employer loan if—

(a)the amount loaned does not exceed an amount equal to 50% of the aggregate of the amount of the sums, and the market value of the assets, held for the purposes of the pension scheme immediately before the loan is made,

(b)the loan is secured by a charge which is of adequate value, and

(c)the repayment terms comply with subsection (2).

(2)The repayment terms comply with this subsection if—

(a)the rate of interest payable on the loan is not less than the rate prescribed by regulations made by the Board of Inland Revenue,

(b)the loan repayment date is before the end of the period of five years beginning with the date on which the loan is made, or has been postponed to a date after the end of that period under subsection (3), and

(c)the amount payable in each period beginning with the date on which the loan is made, and ending with the last day of a loan year, is not less than the required amount.

(3)If on a standard loan repayment date any amount (including interest) is owing, the loan repayment date may be postponed to a date before the end of the period of five years beginning with the standard loan repayment date.

(4)The loan repayment date may be postponed under subsection (3) only once.

(5)If the amount of a loan to or in respect of a [F64person who is or has been a] sponsoring employer is increased, the amount of the increase is to be treated as a loan made on the date of the increase.

(6)Schedule 30 gives the meaning of expressions used in this section and explains how to calculate the amount of the unauthorised payment when a loan to or in respect of a [F65person who is or has been a] sponsoring employer does not comply with subsection (1).

(7)In this section and that Schedule “charge” includes a right in security or an agreement to create a right in security; and any reference to assets subject to a charge or assets charged includes a reference to the property over which such a right is granted.

(8)Schedule 36 contains (in Part 4) transitional provision about loans to sponsoring employers.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F63Words in s. 179(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 11

F64Words in s. 179(5) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 11

F65Words in s. 179(6) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 11

Modifications etc. (not altering text)

Commencement Information

I20Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

180Scheme administration employer paymentsE+W+S+N.I.

(1)A “scheme administration employer payment” is a payment made—

(a)by a registered pension scheme that is an occupational pension scheme, and

(b)to or in respect of a [F66person who is or has been a] sponsoring employer,

for the purposes of the administration or management of the pension scheme.

(2)But if a payment falling within subsection (1) exceeds the amount which might be expected to be paid to a person who was at arm’s length, the excess is not a scheme administration employer payment.

(3)Scheme administration employer payments include in particular—

(a)the payment of wages, salaries or fees to persons engaged in administering the pension scheme, and

(b)payments made for the purchase of assets to be held for the purposes of the pension scheme.

(4)A loan to or in respect of a [F67person who is or has been a] sponsoring employer is not a scheme administration employer payment.

(5)Payments made to acquire shares in a sponsoring employer are not scheme administration employer payments if, when the payment is made—

(a)the market value of shares in the sponsoring employer held for the purposes of the pension scheme is equal to or greater than 5% of the aggregate of the amount of the sums, and the market value of the assets, held for the purposes of the pension scheme, or

(b)the total market value of shares in sponsoring employers held for the purposes of the pension scheme is equal to or greater than 20% of the aggregate of the amount of the sums, and the market value of the assets, held for the purposes of the pension scheme.

(6)Regulations made by the Board of Inland Revenue may provide that payments of a description specified in the regulations are, or are not, scheme administration employer payments.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F66Words in s. 180(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 12

F67Words in s. 180(4) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 12

Modifications etc. (not altering text)

Commencement Information

I21Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Unauthorised employer paymentsE+W+S+N.I.

181Value shiftingE+W+S+N.I.

(1)A registered pension scheme that is an occupational pension scheme is to be treated as having made an unauthorised payment to a [F68person who is or has been a] sponsoring employer if, in connection with any of the events mentioned in subsection (2) or a change in the value of a currency—

(a)the value of an asset held for the purposes of the pension scheme is reduced or a liability of the pension scheme is increased, and

(b)the value of an asset held by or for the benefit of the [F69person] is increased, a liability of the [F69person] is reduced, or a liability of another person is reduced for the benefit of the [F69person].

(2)The events are—

(a)the creation, alteration, release or extinction of any power, right, option or liability relating to assets held for the purposes of the pension scheme (whether or not provided for in the terms on which the asset is acquired or held),

(b)the creation, alteration, release or extinction of any power, right or option relating to a liability of the pension scheme (whether or not provided for in the terms on which the liability is incurred),

(c)the exercise of, or failure to exercise, any power, right or option in relation to assets held for the purposes of the pension scheme or a liability of the pension scheme, or

(d)the exercise of, or failure to exercise, any power, right or option which constitutes an asset held for the purposes of the pension scheme,

in a way which differs from that which might be expected if the parties to the transaction were at arm’s length.

(3)The amount of the unauthorised payment is the amount by which the reduction in value of the asset held for the purposes of the pension scheme, or the increase in the liability of the pension scheme, exceeds that which might be expected if the parties to the transaction were at arm’s length.

(4)Regulations made by the Board of Inland Revenue may make provision as to how the excess is to be calculated in relation to events of a description specified in the regulations (including provision as to the times at which the asset or liability is to be valued).

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F68Words in s. 181(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 13(a)

F69Word in s. 181(1) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 13(b)

Modifications etc. (not altering text)

Commencement Information

I22Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

BorrowingE+W+S+N.I.

182Unauthorised borrowing: money purchase arrangementsE+W+S+N.I.

(1)A registered pension scheme is not authorised to borrow an amount in respect of a money purchase arrangement unless the arrangement borrowing condition is met.

(2)The arrangement borrowing condition is met if—

where—

APB is the aggregate of the amounts previously borrowed in respect of the arrangement (excluding any amounts which have been repaid),

PB is the amount proposed to be borrowed in respect of the arrangement, and

VA is the value of the arrangement.

(3)The value of the arrangement is the aggregate of—

(a)the amount of such of the sums and the market value of such of the assets as represent the member’s unsecured pension fund or alternatively secured pension fund in respect of the arrangement (if any),

(b)the amount of such of the sums and the market value of such of the assets as represent dependants' unsecured pension funds or alternatively secured pension funds in respect of the arrangement (if any),

(c)the aggregate of the value of each scheme pension or dependants' scheme pension payable in respect of the arrangement, and

(d)the value of the uncrystallised rights under the arrangement.

(4)The value of a scheme pension or dependants' scheme pension payable in respect of the arrangement is—

where—

RVF is the relevant valuation factor (see section 276), and

ARP is the annual rate at which the pension is payable.

(5)Rights are uncrystallised if no-one has become entitled to the present payment of benefits in respect of the rights; and a person is to be treated as entitled to the present payment of benefits in respect of the sums and assets representing the person’s unsecured pension fund or alternatively secured pension fund.

(6)If the arrangement is a cash balance arrangement, the value of the uncrystallised rights under the arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits in respect of those rights if a person became entitled to benefits in respect of those rights.

(7)If the arrangement is a money purchase arrangement other than a cash balance arrangement, the value of the uncrystallised rights under the arrangement is the aggregate of the amount of such of the sums, and the market value of such of the assets, held for the purposes of the arrangement as represent those rights.

(8)If the arrangement is a hybrid arrangement under which either cash balance benefits or other money purchase benefits (but not defined benefits) may be provided, the value of the uncrystallised rights under the arrangement is the greater of—

(a)their value calculated under subsection (6) (on the assumption that cash balance benefits are provided), and

(b)their value calculated under subsection (7) (on the assumption that other money purchase benefits are provided).

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I23Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

183Effect of unauthorised borrowing: money purchase arrangementsE+W+S+N.I.

(1)Subsection (2) applies if a registered pension scheme borrows in respect of a money purchase arrangement an amount which it is not authorised to borrow under section 182.

(2)The pension scheme is to be treated as having made a scheme chargeable payment—

(a)if subsection (3) applies, of an amount calculated in accordance with subsection (4), and

(b)otherwise, of the amount borrowed.

(3)This subsection applies if, immediately before the amount is borrowed—

(4)If subsection (3) applies, the amount of the scheme chargeable payment is—

(5)In subsections (3) and (4)—

  • APB is the aggregate of the amounts previously borrowed in respect of the arrangement (excluding any amounts which have been repaid),

  • AB is the amount borrowed, and

  • VA is the value of the arrangement, calculated in accordance with section 182(3), immediately before the amount is borrowed.

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I24Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

184Unauthorised borrowing: other arrangementsE+W+S+N.I.

(1)A registered pension scheme is not authorised to borrow an amount in respect of any arrangement which is not a money purchase arrangement unless the scheme borrowing condition is met.

(2)The scheme borrowing condition is met if—

where—

APB is the aggregate of the amounts previously borrowed by the pension scheme in respect of arrangements which are not money purchase arrangements (excluding any amounts which have been repaid),

PB is the amount proposed to be borrowed by the pension scheme, and

AARA is the aggregate amount of the relevant sums and assets.

(3)The aggregate amount of the relevant sums and assets is the aggregate of—

(a)the amount of the sums held for the purposes of such of the arrangements under the pension scheme as are not money purchase arrangements, and

(b)the market value of the assets held for the purposes of such of the arrangements under the pension scheme as are not money purchase arrangements.

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I25Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

185Effect of unauthorised borrowing: other arrangementsE+W+S+N.I.

(1)Subsection (2) applies if a registered pension scheme borrows, in respect of an arrangement which is not a money purchase arrangement, an amount which it is not authorised to borrow under section 184.

(2)The pension scheme is to be treated as having made a scheme chargeable payment—

(a)if subsection (3) applies, of an amount calculated in accordance with subsection (4), and

(b)otherwise, of the amount borrowed.

(3)This subsection applies if, immediately before the amount is borrowed—

(4)If subsection (3) applies, the amount of the scheme chargeable payment is—

(5)In subsections (3) and (4)—

  • APB is the aggregate of the amounts previously borrowed by the pension scheme in respect of arrangements which are not money purchase arrangements (excluding any amounts which have been repaid),

  • AB is the amount borrowed, and

  • AARA is the aggregate amount of the relevant sums and assets, calculated in accordance with section 184(3), immediately before the amount is borrowed.

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I26Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

[F70Income and gains from taxable propertyE+W+S+N.I.

Annotations: Help about Annotation
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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F70Ss. 185A-185I and cross-heading inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 6

185AIncome from taxable propertyE+W+S+N.I.

(1)An investment-regulated pension scheme is to be treated as having made a scheme chargeable payment if the pension scheme holds an interest in taxable property in a tax year.

(2)The amount of the scheme chargeable payment depends on whether a person who holds the interest in the property directly receives profits arising from the interest in the tax year.

(3)If a person who holds the interest in the property directly receives such profits in the tax year, the amount of the scheme chargeable payment is the greater of—

(a)an amount equal to the amount of the annual profits from the interest in the property (see section 185B(1)), and

(b)the amount of the deemed profits from the interest in the property for the year (see sections 185B(2) and 185C).

(4)If no person who holds the interest in the property directly receives such profits in the tax year, the amount of the scheme chargeable payment is the amount of the deemed profits from the interest in the property for the year (see sections 185B(2) and 185C).

(5)But where section 185D applies, the amount of the scheme chargeable payment is the amount found under subsection (3) or (4) as apportioned to the pension scheme in accordance with that section.

(6)Section 185E makes provision for credits against income tax charged under section 239 (scheme sanction charge) in respect of a scheme chargeable payment treated as made by virtue of this section.

185BAnnual profits and deemed profitsE+W+S+N.I.

(1)For the purposes of section 185A(3) the amount of the annual profits from the interest in the property is the total amount of profits received from the interest in the tax year—

(a)by each person who holds the interest directly, and

(b)at a time when the property is scheme-held taxable property.

(2)For the purposes of section 185A(3) and (4) the amount of the deemed profits from the interest in the property for the tax year is—

where—

DMV is the deemed market value of the interest in the property for the year (see section 185C),

DTP is the number of days in the year for which the property is scheme-held taxable property, and

DY is the number of days in the year.

(3)In this Part “scheme-held taxable property” means property—

(a)which is taxable property, and

(b)an interest in which is held by the pension scheme.

185CDeemed market valueE+W+S+N.I.

(1)For the purposes of section 185B(2), where no person who holds the interest in the property directly during the tax year does so by virtue of a lease of residential property, the deemed market value of the interest for the year is—

where—

MV is the opening market value (see subsection (2)),

UP is the total of any unauthorised payments treated as made by the pension scheme under section 174A in relation to the property in the tax year, other than any such payment treated as made by virtue of the property becoming scheme-held taxable property in the year, and

RPI is the figure expressed as a decimal which represents the percentage increase in the retail prices index between the first day in the tax year on which the property is scheme-held taxable property and the last such day (or, if there is no such increase, is nil).

(2)In subsection (1) “the opening market value” means—

(a)if the property is not scheme-held taxable property immediately before the beginning of the tax year, the market value of the interest in the property immediately after the time during the year when the property first becomes scheme-held taxable property, and

(b)otherwise, the deemed market value of the interest for the previous tax year.

(3)For the purposes of section 185B(2), where a person who holds the interest in the property directly during the tax year does so by virtue of a lease of residential property, the deemed market value of the interest for the year is the relevant rental value of the property calculated in accordance with paragraph 34 of Schedule 29A on the following assumptions—

(a)that the lease was granted when the property first became scheme-held taxable property;

(b)that the term of the lease is 50 years;

(c)that a fully commercial rent is payable for the first five years of that term;

(d)that afterwards the rent is reviewed on an upwards-only basis.

185DApportionment to pension schemeE+W+S+N.I.

(1)This section applies where the pension scheme holds the interest in the property indirectly for the whole of the period in the tax year for which the property is scheme-held taxable property.

(2)The amount that would otherwise be the amount of the scheme chargeable payment is to be apportioned to the pension scheme by applying paragraphs 41 to 43 of Schedule 29A to it as if it were the total taxable amount in relation to an unauthorised payment treated as made—

(a)by the pension scheme,

(b)in connection with the acquisition of the interest in the property, and

(c)at the end of the last day in the tax year on which the property is scheme-held taxable property.

(3)But where—

(a)the amount found in relation to the pension scheme on the day mentioned in paragraph (c) of subsection (2), differs from

(b)the amount that would be found in relation to the pension scheme under that subsection on another day in the tax year on which the property is scheme-held taxable property,

the amount to be apportioned to the pension scheme under this section is the average of the amounts produced by applying subsection (2) in relation to the pension scheme on each day in the tax year on which the property is scheme-held taxable property.

185ECredit for tax paidE+W+S+N.I.

(1)This section applies where—

(a)the pension scheme holds the interest in the property indirectly in the tax year,

(b)a person who holds the interest directly receives profits arising from the interest at a time in the tax year when the property is scheme-held taxable property,

(c)tax is payable on those profits by that person (assuming them to be the highest part of the person's income for the tax year in which they are received), and

(d)that tax has been paid.

(2)The amount determined under subsection (3) is to be allowed as a credit against any income tax charged under section 239 in respect of the scheme chargeable payment treated as made by virtue of the pension scheme holding the interest in the property in the tax year.

(3)That amount is a proportion of the tax payable and paid determined by reference to the proportion of the amount that would otherwise be the amount of the scheme chargeable payment that is apportioned to the pension scheme under section 185D.

(4)Where—

(a)by virtue of this section an amount is allowed as a credit against income tax charged under section 239, and

(b)the amount of tax payable and paid by reference to which the amount of the credit was calculated is subsequently varied,

the amount of the credit is to be varied accordingly, and any necessary adjustments are to be made to give effect to the variation (whether by making assessments or otherwise).

185FGains from taxable propertyE+W+S+N.I.

(1)An investment-regulated pension scheme is to be treated as having made a scheme chargeable payment where—

(a)in a tax year the pension scheme holds an interest in property which is taxable property or which has been taxable property at any time whilst the interest has been held by the pension scheme (a “taxable interest”),

(b)a gain is treated as accruing to the pension scheme in respect of the taxable interest in the tax year, and

(c)the total amount of gains treated as accruing to the pension scheme in respect of taxable interests in the tax year exceeds the total amount of losses treated as accruing to the pension scheme in respect of taxable interests in the tax year.

(2)The amount of the scheme chargeable payment is an amount equal to the difference between—

(a)the total amount of gains treated as accruing to the pension scheme in respect of taxable interests in the tax year, and

(b)the total amount of losses treated as accruing to the pension scheme in respect of taxable interests in the tax year,

(but this is subject to section 185G(10)).

(3)A gain or loss is treated as accruing to a pension scheme in respect of a taxable interest in a tax year if—

(a)by virtue of section 185G a chargeable gain or allowable loss is treated for the purposes of this section as accruing in the tax year to the person who holds the taxable interest directly, or

(b)in the tax year the pension scheme or another vehicle ceases to hold all or part of an interest in a vehicle through which the pension scheme holds the taxable interest indirectly (see section 185H).

185GDisposal by person holding directlyE+W+S+N.I.

(1)For the purposes of this section the person (“the transferor”) who holds the taxable interest directly is to be treated as holding an asset (a “taxable asset”) consisting of the interest.

(2)For the purpose of determining—

(a)whether the transferor disposes of the taxable asset,

(b)when such a disposal takes place, and

(c)whether a chargeable gain or allowable loss is treated for the purposes of section 185F as accruing to the transferor on a disposal of the taxable asset in a tax year and, if so, the amount of the chargeable gain or allowable loss,

TCGA 1992 is to be treated as applying to the transferor and the taxable asset, but subject as follows.

(3)TCGA 1992 is to be treated as applying as if—

(a)throughout the tax year the transferor were resident, ordinarily resident and domiciled in the United Kingdom,

(b)no allowable losses accrued to the transferor in any previous tax year,

(c)for the purposes of section 2A (taper relief) of that Act the transferor were not chargeable to corporation tax in respect of any chargeable gain accruing to the transferor from a disposal of the taxable asset and the taxable asset were at all relevant times a non-business asset,

(d)notice under section 16(2A) (losses) of that Act were given by the transferor in relation to the year in respect of any loss treated as accruing to the transferor in the year from a disposal of the taxable asset,

(e)section 45(1) (wasting assets) of that Act did not apply to a disposal of the taxable asset,

(f)for the purposes of section 53 (indexation allowance) of that Act the transferor were not chargeable to corporation tax in respect of any chargeable gain accruing to the transferor from a disposal of the taxable asset,

(g)section 171(1) (transfers within a group) of that Act did not apply to a disposal of the taxable asset (so that no election could be made in relation to such a disposal under section 171A (notional transfers within a group) of that Act), and

(h)sections 222 to 224 (relief on disposal of private residence) of that Act did not apply to a gain on a disposal of the taxable asset by virtue of section 225 (private residence occupied under terms of settlement) of that Act.

(4)Where the taxable asset became taxable property whilst held directly by the pension scheme, TCGA 1992 is to be treated as applying to a disposal of the asset as if—

(a)the asset had been acquired by the transferor at the time it became taxable property, and

(b)the amount deductible under section 38(1)(a) (consideration for acquisition of asset) of that Act in respect of the disposal were the amount of the unauthorised payment treated as made by the pension scheme at that time.

(5)Subsections (6) to (8) apply where the pension scheme holds the taxable asset indirectly.

(6)TCGA 1992 is to be treated as applying to a disposal of the asset as if the amount deductible under section 38(1) of that Act in respect of the disposal were—

(a)the total amount of unauthorised payments treated as made by the pension scheme in respect of the taxable asset up to the time of the disposal, less

(b)the amount found under paragraph (a) to the extent that it has already been taken into account in calculating the gains or losses accruing to the pension scheme in respect of the taxable asset by virtue of this section or section 185H.

(7)The amount that would otherwise be the amount of the consideration for which the disposal is made (or treated as made) is to be scaled down by applying paragraphs 41 to 43 of Schedule 29A to it as if it were the total taxable amount in relation to an unauthorised payment treated as made—

(a)by the pension scheme,

(b)in connection with the acquisition of the interest in the property which constitutes the taxable asset, and

(c)at the time of the disposal.

(8)Subsection (6) is subject to section 42 of TCGA 1992 (part disposals); but in the application of that section in relation to the taxable asset the amount of the consideration for the disposal is to be taken to be that amount apart from subsection (7).

(9)Where the taxable asset was not taxable property for the whole period beginning with—

(a)the time when the pension scheme acquired the asset, or

(b)if later, the time when the asset first became taxable property,

and ending with the disposal, the amount that would otherwise be the amount of any chargeable gain or allowable loss treated as accruing on a disposal of the asset is to be reduced by reference to the proportion of the period for which the asset was not taxable property.

(10)Where—

(a)the taxable asset is a wasting asset consisting of tangible moveable property, and

(b)by virtue of section 185F, a loss is treated as accruing to the pension scheme from a disposal of the asset in a tax year,

the loss is only to be allowed as a deduction from any gains treated as accruing to the pension scheme by virtue of that section from other disposals in the year of taxable assets which are wasting assets consisting of tangible moveable property.

185HDisposal of interest in vehicleE+W+S+N.I.

(1)This section applies for the purposes of section 185F where the pension scheme or another vehicle ceases to hold all or part of an interest in a vehicle through which the pension scheme holds the taxable interest indirectly.

(2)The pension scheme is to be treated as disposing of the interest in the vehicle through which the pension scheme holds the taxable interest indirectly.

(3)The amount of the gain or loss treated as accruing to the pension scheme on the disposal of the interest in the vehicle is the difference between—

(a)the deemed consideration received for the disposal of the interest, and

(b)the deemed consideration given for the interest.

(4)The deemed consideration received for the disposal of the interest in the vehicle is the difference between—

(a)the market value of the taxable interest at the time of the disposal, apportioned to the pension scheme in accordance with subsection (5) immediately before that time, and

(b)the market value of the taxable interest at the time of the disposal, apportioned to the pension scheme in accordance with subsection (5) immediately after that time.

(5)An amount mentioned in subsection (4) is to be apportioned to the pension scheme by applying paragraphs 41 to 43 of Schedule 29A to it as if it were the total taxable amount in relation to an unauthorised payment treated as made—

(a)by the pension scheme,

(b)in connection with the acquisition of the taxable interest, and

(c)at the time at which the amount is to be apportioned to the pension scheme in accordance with that subsection.

(6)The deemed consideration given for the interest in the vehicle is—

(a)the total amount of unauthorised payments treated as made by the pension scheme in respect of the taxable interest up to the time of the disposal, less

(b)the amount found under paragraph (a) to the extent that it has already been taken into account in calculating the gains or losses accruing to the pension scheme in respect of the taxable interest by virtue of section 185G or this section.

185ICredit for tax paidE+W+S+N.I.

(1)This section applies where by virtue of section 185F a pension scheme is to be treated as making a scheme chargeable payment which is to any extent attributable—

(a)to a chargeable gain treated by virtue of section 185G as accruing to another person on a disposal of a taxable asset, or

(b)to a gain treated by virtue of section 185H as accruing to the pension scheme as a result of another person disposing of an interest in a vehicle through which the pension scheme holds a taxable interest indirectly.

(2)Where—

(a)tax is payable in respect of the disposal by the person who makes the disposal, and

(b)that tax has been paid,

the amount determined under subsection (3) or (4) (as appropriate) is to be allowed as a credit against any income tax charged under section 239 in respect of the scheme chargeable payment.

(3)In a case within paragraph (a) of subsection (1), that amount is a proportion of the amount of tax paid and payable determined by reference to the proportion of the amount of consideration for the disposal that is apportioned under section 185G(7).

(4)In a case within paragraph (b) of subsection (1), that amount is the amount of tax paid and payable apportioned to the pension scheme by applying paragraphs 41 to 43 of Schedule 29A to it as if it were the total taxable amount in relation to an unauthorised payment treated as made—

(a)by the pension scheme,

(b)in connection with an acquisition of the taxable interest by the person disposing of the interest in the vehicle, and

(c)at the time of the disposal.

(5)Where—

(a)by virtue of this section an amount is allowed as a credit against income tax charged under section 239, and

(b)the amount of tax payable and paid by reference to which the amount of the credit was calculated is subsequently varied,

the amount of the credit is to be varied accordingly, and any necessary adjustments are to be made to give effect to the variation (whether by making assessments or otherwise).]

Chapter 4E+W+S+N.I.Registered pension schemes: tax reliefs and exemptions

Scheme investmentsE+W+S+N.I.

186IncomeE+W+S+N.I.

(1)No liability to income tax arises in respect of—

(a)income derived from investments or deposits held for the purposes of a registered pension scheme, or

(b)underwriting commissions applied for the purposes of a registered pension scheme [F71which are not relevant foreign income and which would otherwise be chargeable to income tax under Chapter 8 of Part 5 of ITTOIA 2005 (income not otherwise charged).]

(2)The exemption provided by subsection (1) does not apply to income derived from investments or deposits held as a member of a property investment LLP; and for this purpose “income” includes relevant stock lending fees, in relation to any investments, to which subsection (1) would apply by virtue of section 129B of ICTA (inclusion of relevant stock lending fees in income).

[F72(2A)The exemption provided by subsection (1) does not prevent the income from being charged to tax by virtue of section 185A.]

(3)In this Part “investments”, in relation to a registered pension scheme, includes futures contracts and options contracts; and income derived from transactions relating to futures contracts or options contracts is to be treated as derived from the contracts.

(4)For that purpose a contract is not prevented from being a futures contract or an options contract by the fact that a party is or may be entitled to receive or liable to make, or entitled to receive and liable to make, only a payment of a sum (as opposed to a transfer of assets) in full settlement of all obligations.

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Amendments (Textual)

F72S. 186(2A) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 7

Modifications etc. (not altering text)

C22S. 186 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 17

Commencement Information

I27Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

187Chargeable gainsE+W+S+N.I.

(1)Section 271 of TCGA 1992 (exemptions) is amended as follows.

(2)In paragraph (b) of subsection (1), for the words after “part of” substitute “ the Fund mentioned in section 613(4) of the Taxes Act (House of Commons Members' Fund); ”.

(3)In subsection (1), omit—

(a)paragraph (d) (retirement annuity contracts),

(b)paragraph (g) (exempt approved schemes),

(c)paragraph (h) (approved personal pension schemes), and

(d)paragraph (j) (authorised unit trusts which are also approved personal pension schemes or exempt approved schemes),

and the second sentence.

(4)After that subsection insert—

(1A)A gain accruing to a person on a disposal of investments held for the purposes of a registered pension scheme is not a chargeable gain.

(5)Omit subsection (2) (superannuation funds approved before 6th April 1980).

(6)In subsection (10)—

(a)for “subsections (1)(g) and (h) and (2)” substitute “ subsection (1A) ”, and

(b)omit the words after “options contracts”.

(7)In subsection (12), for “Subsection (1)(b), (c), (d), (g) and (h) and subsection (2)” substitute “ Subsections (1)(b) and (c) and (1A) ”.

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Commencement Information

I28Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Members' contributionsE+W+S+N.I.

188Relief for contributionsE+W+S+N.I.

(1)An individual who is an active member of a registered pension scheme is entitled to relief under this section in respect of relievable pension contributions paid during a tax year if the individual is a relevant UK individual for that year.

(2)In this Part “relievable pension contributions”, in relation to an individual and a pension scheme, means contributions by or on behalf of the individual under the pension scheme other than contributions to which subsection (3) applies.

(3)This subsection applies to—

(a)any contributions paid after the individual has reached the age of 75,

(b)any contributions paid by an employer of the individual (as to which see sections 196 to 201), and

(c)any amounts paid by the Board of Inland Revenue under section 42A(3) or 43 of the Pension Schemes Act 1993 (c. 48) or section 38A(3) or 39 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49) (rebates and minimum contributions).

(4)For the purposes of this Part a pension credit which increases the rights of the individual under the pension scheme is only to be treated as a contribution on behalf of the individual if it derives from a pension scheme that is not a registered pension scheme.

(5)For the purposes of this Part—

(a)any other transfer of any sum held for the purposes of, or representing accrued rights under, a pension scheme so as to become held for the purposes of, or to represent rights under, another pension scheme, and

(b)any transfer lump sum death benefit,

is not to be treated as a contribution.

(6)Any amount recovered by the individual’s employer under regulations made under—

(a)section 8(3) of the Pension Schemes Act 1993 (recovery of minimum payments), or

(b)section 4(3) of the Pension Schemes (Northern Ireland) Act 1993, (corresponding provision for Northern Ireland),

in respect of minimum payments made to a registered pension scheme is to be treated for the purposes of this section (and sections 191 to 194) as a contribution paid by the individual under the pension scheme.

(7)References in the Income Tax Acts to relief in respect of life assurance premiums do not include relief under this section.

(8)The following sections make further provision about relief under this section—

  • section 189 (relevant UK individual),

  • section 190 (annual limit for relief),

  • sections 191 to 194 (methods of giving relief), and

  • section 195 (transfer of certain shares to be treated as payment of contribution).

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Commencement Information

I29Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

189Relevant UK individualE+W+S+N.I.

(1)For the purposes of this Part an individual is a relevant UK individual for a tax year if—

(a)the individual has relevant UK earnings chargeable to income tax for that year,

(b)the individual is resident in the United Kingdom at some time during that year,

(c)the individual was resident in the United Kingdom both at some time during the five tax years immediately before that year and when the individual became a member of the pension scheme, or

(d)the individual, or the individual’s spouse [F73or civil partner], has for the tax year general earnings from overseas Crown employment subject to UK tax.

(2)In this Part “relevant UK earnings” means—

(a)employment income,

(b)income which is chargeable under [F74Part 2 of ITTOIA 2005] and is immediately derived from the carrying on or exercise of a trade, profession or vocation (whether individually or as a partner acting personally in a partnership), and

[F75(c)income to which section 833(5B) of ICTA (patent income) applies.]

(3)For the purposes of this section and section 190 relevant UK earnings are to be treated as not being chargeable to income tax if, in accordance with arrangements having effect by virtue of section 788 of ICTA (double taxation agreements), they are not taxable in the United Kingdom.

(4)General earnings from overseas Crown employment subject to UK tax” has the meaning given by section 28 of ITEPA 2003.

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Amendments (Textual)

F73Words in s. 189(1)(d) inserted (with effect in accordance with reg. 1(7) of the amending S.I.) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 176

Commencement Information

I30Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

190Annual limit for reliefE+W+S+N.I.

(1)The maximum amount of relief to which an individual is entitled under section 188 (relief for contributions) for a tax year is (subject as follows) the amount of the individual’s relevant UK earnings which are chargeable to income tax for the tax year.

(2)If the amount of the individual’s relevant UK earnings which are chargeable to income tax for the tax year is less than the basic amount, the maximum amount of relief to which the individual is entitled under section 188 for the tax year is increased by the difference between—

(a)the amount of the individual’s relevant UK earnings which are so chargeable, and

(b)the basic amount,

(so that, if the individual has no relevant UK earnings which are so chargeable, the maximum amount of such relief is the basic amount).

(3)Subsection (2) is subject to section 191(7) (limit on methods of giving relief to which individual is entitled by virtue of subsection (2)).

(4)“The basic amount” is £3,600 or such greater amount as the Treasury may by order specify.

(5)Subsections (1) and (2) do not apply in relation to any amount of relief to which an individual is entitled under section 188 in respect of any amount recovered by the individual’s employer under regulations made under—

(a)section 8(3) of the Pension Schemes Act 1993 (c. 48) (recovery of minimum payments), or

(b)section 4(3) of the Pension Schemes (Northern Ireland) Act 1993 (c. 49) (corresponding provision for Northern Ireland).

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Commencement Information

I31Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

191Methods of giving reliefE+W+S+N.I.

(1)Relief to which an individual is entitled under section 188 (relief for contributions) in respect of contributions is to be given as provided by this section.

(2)Subject as follows, the relief is to be given in accordance with section 192 (relief at source).

(3)Subject to subsection (7), relief in respect of contributions under a pension scheme made by a member of the pension scheme may (instead of being given in accordance with section 192) be given in accordance with section 193 (relief under net pay arrangements) if—

(a)the pension scheme is an occupational pension scheme,

(b)the member is an employee of a sponsoring employer, and

(c)relief in respect of contributions made under the pension scheme by all of the other members of the pension scheme who are employees of the sponsoring employer is given in accordance with that section.

(4)Subject to subsection (7), relief in respect of contributions under a pension scheme made by a member of the pension scheme may (instead of being given in accordance with section 192) be given in accordance with section 193 if—

(a)the pension scheme is a public service pension scheme or marine pilots' benefits fund, and

(b)the member is an employee.

(5)Subject to subsection (7), subsection (6) applies where—

(a)contributions are made under a public service pension scheme or marine pilots' benefit fund by a member who is not an employee, or

(b)contributions are made otherwise than by a member of the pension scheme under a net pay pension scheme.

(6)Relief in respect of the contributions—

(a)may (but need not) be given in accordance with section 192, but

(b)where not so given, is to be given in accordance with section 194 (relief on making of claim).

(7)Relief to which an individual is entitled by virtue of section 190(2)—

(a)may only be given in accordance with section 192, and

(b)is not required to be given in respect of contributions under a net pay pension scheme.

(8)In this section “marine pilots' benefits fund” means—

(a)a fund established under section 15(1)(i) of the Pilotage Act 1983 (c. 21), or

(b)any scheme supplementing or replacing such a fund.

(9)In this Part “net pay pension scheme” means a pension scheme in the case of which some or all of the members of the pension scheme are entitled to be given relief in accordance with section 193 in respect of the payment of contributions by them under the pension scheme.

(10)Schedule 36 contains (in Part 4) transitional provision about relief in respect of contributions to pre-commencement retirement annuity contracts.

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Commencement Information

I32Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

192Relief at sourceE+W+S+N.I.

(1)Where an individual is entitled to be given relief in accordance with this section in respect of the payment of a contribution under a pension scheme, the individual or other person by whom the contribution is paid is 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 tax year in which the payment is made.

(2)If a sum is deducted from the payment of the contribution—

(a)the scheme administrator must allow the deduction on receipt of the residue,

(b)the individual or other person is acquitted and discharged of so much money as is represented by the deduction as if the sum had actually been paid, and

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

(3)When the payment of the contribution is received—

(a)the scheme administrator is entitled to recover from the Board of Inland Revenue the amount which is treated as income tax paid by the scheme administrator in relation to the contribution, and

(b)any amount so recovered is to be treated for the purposes of the Tax Acts in the same manner as the payment of the contribution.

(4)If (apart from this subsection) income tax or capital gains tax at the higher rate is chargeable in respect of any part of the individual’s total income or chargeable gains for the tax year, on the making of a claim the basic rate limit for that year in the individual’s case is increased by the amount of the contribution.

(5)For the purposes of sections 257(5)[F76, 257A(5) and 257AB(4)] of ICTA (age related allowances), the individual’s total income for the tax year is to be treated as reduced by the amount of the contribution.

(6)Subsections (1) and (2) have effect subject to such conditions as the Board of Inland Revenue may prescribe by regulations.

(7)The Board of Inland Revenue may by regulations make provision for carrying subsections (1) to (3) into effect, in particular by making provision—

(a)about how a sum is to be recovered under subsection (3)(a) (including the manner in which a claim for the recovery of a sum is to be made),

(b)for the giving of such information, in such form, as may be prescribed by or under the regulations,

(c)for the inspection of documents by persons authorised by the Board of Inland Revenue, and

(d)specifying the consequences of failure to comply with conditions prescribed by virtue of subsection (6).

(8)Regulations under this section may, in particular—

(a)modify the operation of any provision of the Tax Acts, or

(b)provide for the application of any provision of the Tax Acts (with or without modification).

(9)Where, after relief is given to an individual in accordance with this section for a tax year, an assessment, alteration of an assessment or other adjustment of the individual’s liability to tax is made, any appropriate consequential adjustments are to be made in relief given to the individual in accordance with this section.

(10)Where relief is given to an individual in accordance with this section for a tax year in respect of a contribution, relief is not to be given—

(a)in respect of the contribution under any other provision of the Income Tax Acts, or

(b)(in the case of a contribution under an annuity contract) in respect of any other premium or consideration for an annuity under the same contract.

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Amendments (Textual)

F76Words in s. 192(5) substituted (with effect in accordance with reg. 1(7) of the amending S.I.) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 177

Commencement Information

I33Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

193Relief under net pay arrangementsE+W+S+N.I.

(1)This section applies where an individual is entitled to be given relief in accordance with this section in respect of the payment of a contribution under a pension scheme.

(2)The amount of the contribution is to be allowed to be deducted by the sponsoring employer from the employment income from the individual’s employment with the employer for the tax year in which the payment is made.

(3)A deduction may be made only once in respect of the same contribution.

(4)A claim for excess relief may be made if—

(a)the amount of the contributions paid by an individual under one or more relevant net pay pension schemes in a tax year exceeds the employment income from the individual’s employment or employments with the sponsoring employer or employers for the tax year, or

(b)it is not possible for the sponsoring employer or employers for any other reason to deduct the whole amount of the contribution from the individual’s employment income.

(5)A net pay pension scheme is a relevant net pay pension scheme if the members of the pension scheme entitled to be given relief in accordance with this section in respect of the payment of contributions by them under the pension scheme include the individual.

(6)On the making of the claim for excess relief the amount of the excess may be deducted from the total income of the individual for the tax year.

(7)Where, after relief is given to an individual in accordance with this section for a tax year, an assessment, alteration of an assessment or other adjustment of the individual’s liability to tax is made, any appropriate consequential adjustments are to be made in relief given to the individual in accordance with this section.

(8)Where relief is given to an individual in accordance with this section for a tax year in respect of a contribution, relief is not to be given in respect of it under any other provision of the Income Tax Acts.

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Modifications etc. (not altering text)

Commencement Information

I34Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

194Relief on making of claimE+W+S+N.I.

(1)Where an individual is entitled to be given relief in accordance with this section in respect of the payment of a contribution, on the making of a claim the amount of the contribution may be deducted from the total income of the individual for the tax year in which the payment is made.

(2)Where, after relief is given to an individual in accordance with this section for a tax year, an assessment, alteration of an assessment or other adjustment of the individual’s liability to tax is made, any appropriate consequential adjustments are to be made in relief given to the individual in accordance with this section.

(3)Where relief is given to an individual in accordance with this section for a tax year in respect of a contribution, relief is not to be given—

(a)in respect of the contribution under any other provision of the Income Tax Acts, or

(b)(in the case of a contribution under an annuity contract) in respect of any other premium or consideration for an annuity under the same contract.

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Commencement Information

I35Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

195Transfer of certain shares to be treated as payment of contributionE+W+S+N.I.

(1)For the purposes of sections 188 to 194 (relief for contributions) references to contributions paid by an individual include contributions made in the form of the transfer by the individual of eligible shares in a company within the permitted period.

(2)For the purposes of those sections the amount of a contribution made by way of a transfer of shares is the market value of the shares at the date of the transfer.

(3)Eligible shares”, in relation to a contribution made by an individual, means shares—

(a)which the individual has exercised a right to acquire in accordance with the provisions of an SAYE option scheme, or

(b)which have been appropriated to the individual in accordance with the provisions of a share incentive plan.

(4)“The permitted period”—

(a)in relation to shares which the individual has exercised a right to acquire in accordance with the provisions of an SAYE option scheme, is the period of 90 days following the exercise of that right, and

(b)in relation to shares which have been appropriated to the individual in accordance with the provisions of a share incentive plan, is the period of 90 days following the date when the individual directed the trustees of the share incentive plan to transfer the ownership of the shares to the individual.

(5)In this section—

  • SAYE option scheme” has the same meaning as in the SAYE code (see section 516 of ITEPA 2003 (approved SAYE option schemes)), and

  • share incentive plan” has the same meaning as in the SIP code (see section 488 of ITEPA 2003 (approved share incentive plans)).

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Commencement Information

I36Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Employers' contributionsE+W+S+N.I.

196Relief for employers in respect of contributions paidE+W+S+N.I.

(1)This section makes provision about an employer’s entitlement to relief in respect of contributions paid by the employer under a registered pension scheme in respect of any individual.

(2)For the purposes of [F77Part 2 of ITTOIA 2005 (trading income) or] Case I or II of Schedule D—

(a)the contributions are to be treated as not being payments of a capital nature to the extent that they otherwise would be, and

(b)if they are allowed to be deducted in computing the amount of the profits of the employer, they are deductible in computing the amount of the profits for the period of account in which they are paid.

(3)For the purposes of section 75 of ICTA (expenses of management: companies with investment business), the contributions—

(a)are to be treated as being expenses of management to the extent that they otherwise would not be, and

(b)are referable to the accounting period in which they are paid.

(4)For the purposes of section 76 of ICTA (expenses of insurance companies), the contributions—

(a)are to be brought into account at Step 1 in subsection (7) of that section to the extent that they otherwise would not be, and

(b)are referable to the accounting period in which they are paid.

(5)The references in this section to contributions include minimum payments under—

(a)section 8 of the Pension Schemes Act 1993 (c. 48), or

(b)section 4 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

other than any part recovered from a member of the pension scheme under regulations made under subsection (3) of either of those sections.

(6)This section is subject to sections 197 and 198 (spreading of relief) (and to transitional provision contained in Part 4 of Schedule 36).

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

Commencement Information

I37Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

[F78196APower to restrict reliefE+W+S+N.I.

(1)The Board of Inland Revenue may make regulations for restricting the extent to which contributions paid by an employer under a registered pension scheme in respect of an individual are subject to relief in circumstances in which subsection (2) or (3) applies (or both do).

(2)This subsection applies where any of the benefits which will or may be payable to or in respect of the individual under the registered pension scheme will be payable only if relevant benefits expected to be so paid under an employer-financed retirement benefits scheme are not so paid.

(3)This subsection applies where, because relevant benefits are or may be payable to or in respect of the individual under an employer-financed retirement benefits scheme, the aggregate of the amount of any sums and the market value of any assets—

(a)held for the purposes of, or

(b)representing accrued rights under,

the registered pension scheme which may be transferred by way of a recognised transfer in respect of the individual will or may be less than it otherwise would be.

(4)The reference in subsection (1) to contributions paid by an employer being subject to relief is to—

(a)their being deductible in computing the amount of the profits of the employer for the purposes of Part 2 of ITTOIA 2005 (trading income) or Case I or II of Schedule D,

(b)their being expenses of management of the employer for the purposes of section 75 of ICTA (expenses of management: companies with investment business), or

(c)their being brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies) in respect of the employer,

(depending on which is appropriate in relation to the employer).

(5)In this section—

  • employer-financed retirement benefits scheme”, and

  • relevant benefits”,

have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).]

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

197Spreading of reliefE+W+S+N.I.

(1)This section applies where—

(a)contributions are paid by an employer under a registered pension scheme in two consecutive chargeable periods (“the previous chargeable period” and “the current chargeable period”), and

(b)the amount of the contributions paid in the current chargeable period otherwise than for an excepted purpose (“CCCP”) exceeds 210% of the amount of the contributions paid in the previous chargeable period (“CPCP”).

(2)Relief under section 196 (relief for employers in respect of contributions paid) is to be given in respect of so much of CCCP as exceeds 110% of CPCP (“the amount of the relevant excess contributions”) in accordance with subsections (4) and (5).

(3)But subsection (2)—

(a)does not apply if the amount of the relevant excess contributions is less than £500,000, and

(b)has effect subject to section 198 (cessation of business).

(4)A fraction of the whole of the amount of the relevant excess contributions is to be treated for the purposes of section 196 as if it had been paid in the chargeable period, or in each of the two or three chargeable periods, immediately after the current chargeable period (leaving only the remainder to be treated as paid in the current chargeable period).

(5)The following table specifies (by reference to the amount of the relevant excess contributions)—

(a)the fraction of the whole of the amount of the relevant excess contributions which is to be treated as paid in the chargeable period, or in each of the two or three chargeable periods, immediately after the current chargeable period, and

(b)the chargeable period or periods in which it is to be treated as paid.

AMOUNT OF THE RELEVANT EXCESS CONTRIBUTIONSFRACTION AND CHARGEABLE PERIOD OR PERIODS
500,000 or more but less than 1,000,000One-half of the whole of the amount of the relevant excess contributions is to be treated as paid in the chargeable period immediately after the current chargeable period
1,000,000 or more but less than 2,000,000One-third of the whole of the amount of the relevant excess contributions is to be treated as paid in each of the two chargeable periods immediately after the current chargeable period
2,000,000 or moreOne-quarter of the whole of the amount of the relevant excess contributions is to be treated as paid in each of the three chargeable periods immediately after the current chargeable period

(6)Subsection (7) specifies for the purposes of subsection (1) when contributions paid by the employer in the current chargeable period are paid for an excepted purpose.

(7)They are paid for an excepted purpose if paid with a view to funding—

(a)an increase in the amount of pensions paid to pensioner members of the pension scheme to reflect increases in the cost of living, or

(b)benefits which may accrue under the pension scheme to or in respect of individuals who become members of the pension scheme in the current chargeable period as a result of future service as employees of the employer.

(8)Where the previous chargeable period and the current chargeable period are not of equal length, this section has effect as if CPCP were the amount it would otherwise be as adjusted by being multiplied by the appropriate factor.

(9)The appropriate factor is—

where—

DCCP is the number of days in the current chargeable period, and

DPCP is the number of days in the previous chargeable period.

(10)In this section “chargeable period” means—

(a)in a case where the contributions are deducted in computing profits to be charged under [F79Part 2 of ITTOIA 2005 (trading income) or] Case I or II of Schedule D, a period of account, and

(b)in a case where relief in respect of the contributions is given under section 75 or 76 of ICTA (expenses of management: companies with investment business and expenses of insurance companies), an accounting period.

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Amendments (Textual)

Modifications etc. (not altering text)

Commencement Information

I38Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

198Spreading of relief: cessation of businessE+W+S+N.I.

(1)This section applies if—

(a)the employer ceases to carry on business in the current chargeable period or a later chargeable period in which section 197(4) would require a fraction of the amount of the relevant excess contributions to be treated as paid, and

(b)were section 197(4) to apply, relief in relation to the whole of the amount of the relevant excess contributions would not be given pre-cessation.

(2)Relief is given pre-cessation if it is given for the chargeable period in which the employer ceases to carry on business or any earlier chargeable period.

(3)The portion of the amount of the relevant excess contributions in relation to which relief would not have been given pre-cessation (“the unrelieved portion”) is be treated as paid (at the option of the employer) either—

(a)in the chargeable period in which the employer ceases to carry on business, or

(b)as provided by subsection (4).

(4)This subsection provides that the amount determined under subsection (5) is to be treated as paid on each day in the period—

(a)beginning with the current chargeable period, and

(b)ending with the day on which the employer ceases to carry on business,

(“the relevant period”).

(5)The amount referred to in subsection (4) is—

where—

UP is the amount of the unrelieved portion, and

DRP is the number of days in the relevant period.

(6)Expressions used in this section and section 197 have the same meaning in this section as in that section.

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Modifications etc. (not altering text)

Commencement Information

I39Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

199Deemed contributionsE+W+S+N.I.

(1)This section applies where a sum is paid to the trustees or managers of a registered pension scheme by an employer in or towards the discharge of any liability of the employer under—

(a)section 75 of the Pensions Act 1995 (c. 26)(deficiencies in the assets of a pension scheme), or

(b)Article 75 of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (corresponding provision for Northern Ireland).

(2)The making of the payment is to be treated for the purposes of—

(a)[F80Part 2 of ITTOIA 2005 (trading income) or] Case I and II of Schedule D,

(b)section 75 of ICTA (expenses of management: companies with investment business), and

(c)section 76 of ICTA (expenses of insurance companies),

as if it were the payment of a contribution by the employer under the pension scheme.

(3)Subsections (4) and (5) apply if the employer’s trade, profession, vocation or business is discontinued before the making of the payment.

(4)The payment is to be relieved—

(a)to the same extent as it would have been but for the discontinuance, and

(b)as if it had been made on the last day on which the trade, profession, vocation or business was carried on.

(5)And for the purposes of section 76 of ICTA it is to be treated (to the extent that it would not otherwise be) as part of expenses payable falling to be brought into account at Step 1 in subsection (7) of that section.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

Modifications etc. (not altering text)

Commencement Information

I40Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

200No other relief for employers in connection with contributionsE+W+S+N.I.

No sums other than contributions paid by an employer under a registered pension scheme—

(a)are deductible in computing the amount of the profits of the employer for the purposes of [F81Part 2 of ITTOIA 2005 (trading income) or] Case I or II of Schedule D,

(b)are expenses of management for the purposes of section 75 of ICTA (expenses of management: companies with investment business), or

(c)are to be brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies),

in connection with the cost of providing benefits under the pension scheme.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

Commencement Information

I41Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

201Relief for employeesE+W+S+N.I.

(1)In section 307(1) of ITEPA 2003 (exemption for provision made by employer for retirement or death benefit), after “employer” insert “ under a registered pension scheme or otherwise ”.

(2)For section 308 of ITEPA 2003 (exemption of contributions to approved personal pension arrangements) substitute—

308Exemption of contributions to registered pension scheme

No liability to income tax arises in respect of earnings where an employee’s employer makes contributions under a registered pension scheme.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Commencement Information

I42Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Inland Revenue contributionsE+W+S+N.I.

202Minimum contributions under pensions legislationE+W+S+N.I.

(1)This section applies where under—

(a)section 43 of the Pension Schemes Act 1993 (c. 48), or

(b)section 39 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

the Board of Inland Revenue pays minimum contributions for the purposes of a registered pension scheme.

(2)The amount of the minimum contributions is to be increased by the difference between—

(a)the amount of the employee’s share of the minimum contributions, and

(b)the grossed-up equivalent of that amount.

(3)The amount of the employee’s share of the minimum contributions is the amount that would be the amount of the minimum contributions if—

(a)for the reference to the age-related percentage in section 45(1) of the Pension Schemes Act 1993 (amount of minimum contributions) there were substituted a reference to the percentage mentioned in section 41(1A) of that Act (percentage used to reduce primary Class 1 contribution), or

(b)for the reference to the age-related percentage in section 41(1) of the Pension Schemes (Northern Ireland) Act 1993 there were substituted a reference to the percentage mentioned in section 37(1A) of that Act (corresponding provisions for Northern Ireland).

(4)The “grossed-up equivalent” of the amount of the employee’s share of the minimum contributions is the sum which, after deduction of income tax at the basic rate in force for the tax year for which the minimum contributions are paid, is equal to that amount.

(5)The Board of Inland Revenue may by regulations—

(a)prescribe circumstances in which this section does not apply, or

(b)make provision supplementing this section.

(6)The Board of Inland Revenue must—

(a)pay into the National Insurance Fund out of money provided by Parliament the amount of any increase attributable to this section in the sums paid out of that Fund under the Pension Schemes Act 1993, and

(b)pay into the Northern Ireland National Insurance Fund out of money provided by Parliament the amount of any increase attributable to this section in the sums paid out of that Fund under the Pension Schemes (Northern Ireland) Act 1993.

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Commencement Information

I43Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Inheritance tax exemptionsE+W+S+N.I.

203Inheritance tax exemptionsE+W+S+N.I.

(1)The Inheritance Tax Act 1984 (c. 51) is amended as follows.

(2)In section 12 (dispositions that are not transfers of value)—

(a)in subsection (2), for the words following “if” substitute “ it is a contribution under a registered pension scheme or section 615(3) scheme in respect of an employee of the person making the disposition. ”, and

(b)omit subsections (3) and (4).

(3)In section 58(1) (settled property in which no qualifying interest in possession subsists but which is not “relevant property”), for paragraph (d) substitute—

(d)property which is held for the purposes of a registered pension scheme or section 615(3) scheme;.

(4)In section 151 (treatment of pension rights etc.)—

(a)omit subsections (1) and (1A),

(b)in subsections (2), (4) and (5), for “fund or scheme to which this section applies” substitute “ registered pension scheme or section 615(3) scheme ”, and

(c)in subsection (2)(b), for the “fund or scheme” (in both places) substitute “ scheme ”.

(5)In section 152 (cash options), for the words from the beginning to “or scheme” substitute “ Where on a person’s death an annuity becomes payable under a registered pension scheme or section 615(3) scheme to a widow, widower[F82, surviving civil partner] or dependant of that person and under the terms of the scheme ”.

(6)In section 272 (general interpretation), insert at the appropriate places—

registered pension scheme” has the same meaning as in Part 4 of the Finance Act 2004;, and

section 615(3) scheme” means a superannuation fund to which section 615(3)of the Taxes Act 1988 applies;.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F82Words in s. 203(5) inserted (with effect in accordance with reg. 1(7) of the amending S.I.) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 178

Commencement Information

I44Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Chapter 5E+W+S+N.I.Registered pension schemes: tax charges

Charges on authorised paymentsE+W+S+N.I.

204Authorised pensions and lump sumsE+W+S+N.I.

(1)Schedule 31 contains provision about the taxation of pensions and lump sums which are authorised to be paid by this Part.

(2)Schedule 36 contains (in Part 4) transitional provision about the taxation of annuities under existing retirement annuity contracts and other relevant transitional provision.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Commencement Information

I45Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

205Short service refund lump sum chargeE+W+S+N.I.

(1)A charge to income tax, to be known as the short service refund lump sum charge, arises where a short service refund lump sum is paid by a registered pension scheme.

(2)The person liable to the short service refund lump sum charge is the scheme administrator.

(3)The scheme administrator is liable to the short service refund lump sum charge whether or not—

(a)the scheme administrator, and

(b)the person to whom the short service refund lump sum is paid,

are resident, ordinarily resident or domiciled in the United Kingdom.

(4)The rate of the charge is—

(a)20% in respect of so much of the lump sum as does not exceed £10,800, and

(b)40% in respect of so much (if any) of it as exceeds that limit.

(5)The Treasury may by order amend subsection (4) so as to—

(a)increase or decrease either or both of the rates for the time being specified in that subsection, or

(b)increase the limit for the time being specified in paragraph (a) of that subsection.

(6)Tax under this section is to be charged on the amount of the lump sum paid or, if the rules of the pension scheme permit the scheme administrator to deduct the tax before payment, on the amount of the lump sum before deduction of tax.

(7)A short service refund lump sum is not to be treated as income for any purpose of the Tax Acts.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C28S. 205 applied by 2003 c. 1, s. 636A(3) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I46Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

206Special lump sum death benefits chargeE+W+S+N.I.

(1)A charge to income tax, to be known as the special lump sum death benefits charge, arises where—

(a)a pension protection lump sum death benefit,

(b)an annuity protection lump sum death benefit, or

(c)an unsecured pension fund lump sum death benefit,

is paid by a registered pension scheme.

(2)The person liable to the special lump sum death benefits charge is the scheme administrator.

(3)The scheme administrator is liable to the special lump sum death benefits charge whether or not—

(a)the scheme administrator, and

(b)the person to whom the lump sum death benefit is paid,

are resident, ordinarily resident or domiciled in the United Kingdom.

(4)The rate of the charge is 35% in respect of the lump sum death benefit.

(5)The Treasury may by order increase or decrease the rate for the time being specified in subsection (4).

(6)Tax under this section is to be charged on the amount of the lump sum paid or, if the rules of the pension scheme permit the scheme administrator to deduct the tax before payment, on the amount of the lump sum before deduction of tax.

(7)No pension protection lump sum death benefit, annuity protection lump sum death benefit or unsecured pension fund lump sum death benefit is to be treated as income for any purpose of the Tax Acts.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I47Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

207Authorised surplus payments chargeE+W+S+N.I.

(1)A charge to income tax, to be known as the authorised surplus payments charge, arises where an authorised surplus payment is made to a sponsoring employer by an occupational pension scheme that is a registered pension scheme.

(2)The person liable to the authorised surplus payments charge is the scheme administrator.

(3)The scheme administrator is liable to the authorised surplus payments charge whether or not—

(a)the scheme administrator, and

(b)the sponsoring employer,

are resident, ordinarily resident or domiciled in the United Kingdom.

(4)The rate of the charge is 35% in respect of the authorised surplus payment.

(5)The Treasury may by order increase or decrease the rate for the time being specified in subsection (4).

(6)Subsection (1) does not apply to any authorised surplus payment—

(a)to the extent that (if this section had not been enacted) the sponsoring employer would have been exempt, or entitled to claim exemption, from income tax or corporation tax in respect of it, or

(b)if the sponsoring employer is a charity.

(7)An authorised surplus payment in respect of which income tax is charged under this section is not to be treated as income for any purpose of the Tax Acts.

(8)Schedule 36 contains (in Part 4) transitional provisions about the authorised surplus payments charge.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I48Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Unauthorised payments chargeE+W+S+N.I.

208Unauthorised payments chargeE+W+S+N.I.

(1)A charge to income tax, to be known as the unauthorised payments charge, arises where an unauthorised payment is made by a registered pension scheme.

(2)The person liable to the charge—

(a)in the case of an unauthorised member payment [F83made to or in respect of a person before the person's death, is the person,]

(b)in the case of an unauthorised member payment made [F84in respect of a person after the person's] death, is the recipient, and

(c)in the case of an unauthorised employer payment, is the [F85person] to or in respect of whom the payment is made.

(3)If more than one person is liable to the unauthorised payments charge in respect of an unauthorised payment, those persons are jointly and severally liable to the charge in respect of the payment.

(4)A person is liable to the unauthorised payments charge whether or not—

(a)that person,

(b)any other person who is liable to the unauthorised payments charge, and

(c)the scheme administrator,

are resident, ordinarily resident or domiciled in the United Kingdom.

(5)The rate of the charge is 40% in respect of the unauthorised payment.

(6)The Treasury may by order increase or decrease the rate for the time being specified in subsection (5).

(7)An unauthorised payment may also be subject to—

(a)the unauthorised payments surcharge under section 209, and

(b)the scheme sanction charge under section 239.

(8)An unauthorised payment is not to be treated as income for any purpose of the Tax Acts.

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Amendments (Textual)

F83Words in s. 208(2)(a) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 14(a)

F84Words in s. 208(2)(b) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 14(b)

F85Word in s. 208(2)(c) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 14(c)

Commencement Information

I49Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

209Unauthorised payments surchargeE+W+S+N.I.

(1)A charge to income tax, to be known as the unauthorised payments surcharge, arises where a surchargeable unauthorised payment is made by a registered pension scheme.

(2)Surchargeable unauthorised payments” means—

(a)surchargeable unauthorised member payments (see section 210), and

(b)surchargeable unauthorised employer payments (see section 213).

(3)The person liable to the charge—

(a)in the case of a surchargeable unauthorised member payment [F86made to or in respect of a person before the person's death, is the person,]

(b)in the case of a surchargeable unauthorised member payment made [F87in respect of a person after the person's] death, is the recipient, and

(c)in the case of a surchargeable unauthorised employer payment, is the [F88person] to or in respect of whom the payment was made.

(4)If more than one person is liable to the unauthorised payments surcharge in respect of a surchargeable unauthorised payment, those persons are jointly and severally liable to the surcharge in respect of the payment.

(5)A person is liable to the unauthorised payments surcharge whether or not—

(a)that person,

(b)any other person who is liable to the unauthorised payments surcharge, F89...

(c)the scheme administrator, [F90and]

[F91(d)the sub-scheme administrator,]

are resident, ordinarily resident or domiciled in the United Kingdom.

(6)The rate of the charge is 15% in respect of the surchargeable unauthorised payment.

(7)The Treasury may by order increase or decrease the rate for the time being specified in subsection (6).

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Amendments (Textual)

F86Words in s. 209(3)(a) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 15(a)

F87Words in s. 209(3)(b) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 15(b)

F88Word in s. 209(3)(c) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 15(c)

Commencement Information

I50Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

210Surchargeable unauthorised member paymentsE+W+S+N.I.

(1)This section identifies which unauthorised member payments made by a registered pension scheme [F92to or in respect of a person who is or has been a member of] the pension scheme are surchargeable.

(2)If the surcharge threshold is reached before the end of the period of 12 months beginning with a reference date, each unauthorised member payment made [F93to or in respect of the person] in the surcharge period is surchargeable.

(3)The surcharge period is the period—

(a)beginning with the reference date, and

(b)ending with the day on which the surcharge threshold is reached.

(4)The first reference date is the date on which the pension scheme first makes an unauthorised member payment [F94to or in respect of the person].

(5)Each subsequent reference date is the date, after the end of the previous reference period, on which the pension scheme next makes an unauthorised member payment [F95to or in respect of the person].

(6)The previous reference period is the period of 12 months beginning with the previous reference date or, if the surcharge threshold is reached in that period, is the surcharge period ending with the date on which it was reached.

(7)The surcharge threshold is reached if the unauthorised payments percentage reaches 25%.

(8)The unauthorised payments percentage is the aggregate of the percentages of the pension fund used up by each unauthorised member payment made by the pension scheme [F96to or in respect of the person] on or after the reference date.

(9)The percentage of the pension fund used up on the occasion of an unauthorised member payment is—

where—

UMP is the amount of the unauthorised member payment, and

VR is an amount equal to the [F97aggregate of the value of the member's rights under arrangements relating to the member under the pension scheme when the unauthorised payment is made (or, if the unauthorised member payment is made after the member has died or has otherwise ceased to be a member of the pension scheme, at the date when the member died or otherwise ceased to be a member).]

(10)The value of the member’s rights under [F98an arrangement on any] date is the aggregate of—

(a)the value of the member’s crystallised rights under the arrangement on that date, calculated in accordance with section 211, and

(b)the value of the member’s uncrystallised rights under the arrangement on that date, calculated in accordance with section 212.

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Amendments (Textual)

F92Words in s. 210(1) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 16(2)

F93Words in s. 210(2) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 16(3)

F94Words in s. 210(4) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 16(3)

F95Words in s. 210(5) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 16(3)

F96Words in s. 210(8) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 16(3)

F97Words in s. 210(9) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 16(4)

F98Words in s. 210(10) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 16(5)

Commencement Information

I51Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

211Valuation of crystallised rights for purposes of section 210E+W+S+N.I.

(1)The value of the member’s crystallised rights under [F99an arrangement] on any date is the aggregate of—

(a)the value of each scheme pension or lifetime annuity to which the member has an actual (rather than a prospective) entitlement under the arrangement on that date, and

(b)the aggregate of the amount of the sums, and the market value of the assets, representing the member’s unsecured pension fund or alternatively secured pension fund in respect of the arrangement on that date (if any).

(2)The value of a scheme pension or lifetime annuity is—

where—

RVF is the relevant valuation factor (see section 276), and

ARP is an amount equal to the annual rate of the pension or annuity on the date.

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Amendments (Textual)

F99Words in s. 211(1) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 17

Commencement Information

I52Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

212Valuation of uncrystallised rights for purposes of section 210E+W+S+N.I.

(1)Rights are uncrystallised if the member is not entitled to the present payment of benefits in respect of the rights.

(2)The member is to be treated as entitled to the present payment of benefits in respect of the sums and assets representing the member’s unsecured pension fund or alternatively secured pension fund.

(3)The value of the member’s uncrystallised rights under [F100an arrangement] on any date is to be calculated—

(a)in accordance with subsection (4) if the arrangement is a cash balance arrangement,

(b)in accordance with subsection (5) if the arrangement is a money purchase arrangement other than a cash balance arrangement,

(c)in accordance with subsection (6) if the arrangement is a defined benefits arrangement, and

(d)in accordance with subsection (7) if the arrangement is a hybrid arrangement.

(4)If this subsection applies, the value of the member’s uncrystallised rights under the arrangement on the date is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits in respect of those rights if the member became entitled to benefits in respect of those rights on the date.

(5)If this subsection applies, the value of the member’s uncrystallised rights under the arrangement on the date is the aggregate of—

(a)the amount of such of the sums held for the purposes of the arrangement on the date as represent those rights, and

(b)the market value of such of the assets held for the purposes of the arrangement on the date as represent those rights.

(6)If this subsection applies, the value of the member’s uncrystallised rights under the arrangement on the date is—

where—

RVF is the relevant valuation factor (see section 276),

ARP is the annual rate of pension to which the member would, on the valuation assumptions, be entitled under the arrangement on the date if, on the date, the member acquired an actual (rather than a prospective) right to receive a pension in respect of the rights, and

LS is the amount of any lump sum to which the member would, on the valuation assumptions, be entitled under the arrangement on the date (otherwise than by way of commutation of pension) if, on the date, the member acquired an actual (rather than a prospective) right to payment of a lump sum in respect of the rights.

(7)If this subsection applies, the value of the member’s uncrystallised rights under the arrangement on the date is—

(a)if each of subsections (4), (5) and (6) is relevant, the greatest of the values of the rights calculated in accordance with each of those subsections, or

(b)if only two of those subsections are relevant, the greater of the values of the rights calculated in accordance with each of the two subsections.

(8)Subsection (4) is relevant if, in any circumstances, cash balance benefits may be provided to or in respect of the member under the arrangement.

(9)Subsection (5) is relevant if, in any circumstances, money purchase benefits other than cash balance benefits may be provided to or in respect of the member under the arrangement.

(10)Subsection (6) is relevant if, in any circumstances, defined benefits may be provided to or in respect of the member under the arrangement.

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Amendments (Textual)

F100Words in s. 212(3) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 18

Modifications etc. (not altering text)

Commencement Information

I53Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

213Surchargeable unauthorised employer paymentsE+W+S+N.I.

(1)This section identifies which unauthorised employer payments made by a registered pension scheme to or in respect of a [F101person who is or has been a] sponsoring employer are surchargeable.

(2)If the surcharge threshold is reached before the end of the period of 12 months beginning with a reference date, each unauthorised employer payment made to or in respect of the [F102person] in the surcharge period is surchargeable.

(3)The surcharge period is the period—

(a)beginning with the reference date, and

(b)ending with the day on which the surcharge threshold is reached.

(4)The first reference date is the date on which the pension scheme first makes an unauthorised employer payment to or in respect of the [F103person].

(5)Each subsequent reference date is the date, after the end of the previous reference period, on which the pension scheme next makes an unauthorised employer payment to or in respect of the [F104person].

(6)The previous reference period is the period of 12 months beginning with the previous reference date or, if the surcharge threshold is reached in that period, is the surcharge period ending with the date on which it was reached.

(7)The surcharge threshold is reached if the unauthorised payments percentage reaches 25%.

(8)The unauthorised payments percentage is the aggregate of the percentages of the pension fund used up by each unauthorised employer payment made by the pension scheme to or in respect of the [F105person] on or after the reference date.

(9)The percentage of the pension fund used up on the occasion of an unauthorised employer payment is—

where—

UEP is the amount of the unauthorised employer payment, and

AA is an amount equal to the aggregate of the amount of the sums and the market value of the assets held for the purposes of the pension scheme at the time when the unauthorised employer payment is made.

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Amendments (Textual)

F101Words in s. 213(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 19(2)

F102Word in s. 213(2) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 19(3)

F103Word in s. 213(4) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 19(3)

F104Word in s. 213(5) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 19(3)

F105Word in s. 213(8) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 19(3)

Modifications etc. (not altering text)

Commencement Information

I54Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Lifetime allowance chargeE+W+S+N.I.

214Lifetime allowance chargeE+W+S+N.I.

(1)A charge to income tax, to be known as the lifetime allowance charge, arises where—

(a)a benefit crystallisation event occurs in relation to an individual who is a member of one or more registered pension schemes, and

(b)either the first lifetime allowance charge condition or the second lifetime allowance charge condition is met.

(2)The first lifetime allowance charge condition is that—

(a)the whole or any part of the individual’s lifetime allowance is available on the benefit crystallisation event, but

(b)the amount crystallised by the benefit crystallisation event exceeds the amount of the individual’s lifetime allowance which is available on the benefit crystallisation event.

(3)The second lifetime allowance charge condition is that none of the individual’s lifetime allowance is available on the benefit crystallisation event.

(4)The following sections make further provision about the lifetime allowance charge—

  • section 215 (amount of charge),

  • section 216 and Schedule 32 (benefit crystallisation events and amounts crystallised),

  • section 217 (persons liable to charge),

  • section 218 (individual’s lifetime allowance and standard lifetime allowance),

  • section 219 (availability of individual’s lifetime allowance), and

  • sections 220 to 226 (lifetime allowance enhancement factors).

(5)In sections 215 to 219—

(a)references to “the individual”, in relation to the lifetime allowance charge, are to the individual in relation to whom the benefit crystallisation event giving rise to the charge occurs, and

(b)references to “the pension scheme”, in relation to the lifetime allowance charge, are to the pension scheme to which the benefit crystallisation event giving rise to the charge, or the amount crystallised by it, relates.

(6)Schedule 36 contains (in Part 2) transitional provision about the lifetime allowance charge.

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Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I55Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

215Amount of chargeE+W+S+N.I.

(1)The lifetime allowance charge is a charge in respect of the chargeable amount.

(2)The lifetime allowance charge is a charge—

(a)at the rate of 55% in respect of so much (if any) of the chargeable amount as constitutes the lump-sum amount, and

(b)at the rate of 25% in respect of so much (if any) of the chargeable amount as constitutes the retained amount.

(3)The “chargeable amount” is the aggregate of—

(a)the basic amount, and

(b)any amount which is treated as forming part of the lump-sum amount under subsection (6) or of the retained amount under subsection (8).

(4)The “basic amount”—

(a)if the first lifetime allowance condition is met, is the amount by which the amount crystallised by the benefit crystallisation event exceeds the amount of the individual’s lifetime allowance available on it, and

(b)if the second lifetime allowance charge condition is met, is the amount crystallised by the benefit crystallisation event.

(5)The “lump-sum amount” is the aggregate of—

(a)so much of the basic amount as is paid as a lump sum to the individual or a lump sum death benefit in respect of the individual, and

(b)any amount which is treated as forming part of the lump-sum amount under subsection (6).

(6)If and to the extent that the tax payable under this section on any of the lump-sum amount is covered by a scheme-funded tax payment, it is to be treated as itself forming part of the lump-sum amount.

(7)The “retained amount” is the aggregate of—

(a)so much of the basic amount as is not paid as a lump sum to the individual or a lump sum death benefit in respect of the individual, and

(b)any amount which is treated as forming part of the retained amount under subsection (8).

(8)If and to the extent that the tax payable under this section on any of the retained amount is covered by a scheme-funded tax payment, it is to be treated as itself forming part of the retained amount.

(9)An amount of tax payable under this section is “covered by a scheme-funded tax payment” if—

(a)the tax is paid by the scheme administrator, F106...

F106(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F107(10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11)The chargeable amount is not to be treated as income for any purpose of the Tax Acts.

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Amendments (Textual)

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I56Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

216Benefit crystallisation events and amounts crystallisedE+W+S+N.I.

(1)This table sets out—

(a)the events which are benefit crystallisation events in relation to the individual, and

(b)the amount which is crystallised by each of those events.

BENEFIT CRYSTALLISATION EVENTSAMOUNT CRYSTALLISED
1. The designation of sums or assets held for the purposes of a money purchase arrangement under any of the relevant pension schemes as available for the payment of unsecured pension to the individualThe aggregate of the amount of the sums and the market value of the assets designated
2. The individual becoming entitled to a scheme pension under any of the relevant pension schemesRVF × P
3. The individual, having become so entitled, becoming entitled to payment of the scheme pension, otherwise than in excepted circumstances, at an increased annual rate which[F108

(a)exceeds the threshold annual rate, and

(b)]exceeds by more than the permitted margin the rate at which it was payable on the day on which the individual became entitled to it

RVF × XP
4. The individual becoming entitled to a lifetime annuity purchased under a money purchase arrangement under any of the relevant pension schemesThe aggregate of the amount of such of the sums, and the market value of such of the assets, representing the individual’s rights under the arrangement as are applied to purchase the lifetime annuity [F109and any related dependants' annuity]
5. The individual reaching the age of 75 when prospectively entitled to a scheme pension or a lump sum (or both) under a defined benefits arrangement under any of the relevant pension schemes(RVF × DP) + DSLS
[F1105A. The individual reaching the age of 75 having designated sums or assets held for the purposes of a money purchase arrangement under any of the relevant pension schemes as available for the payment of unsecured pension to the individual The aggregate of the amount of the sums and the market value of the assets representing the individual's unsecured pension fund under the arrangement less the aggregate of amounts crystallised by benefit crystallisation event 1 in relation to the arrangement and the individual]
6. The individual becoming entitled to a relevant lump sum under any of the relevant pension schemesThe amount of the lump sum [F111paid to the individual]
7. A person being paid a relevant lump sum death benefit in respect of the individual under any of the relevant pension schemesThe amount of the lump sum death benefit
8. The transfer of sums or assets held for the purposes of, or representing accrued rights under, any of the relevant pension schemes so as to become held for the purposes of or to represent rights under a qualifying recognised overseas pension scheme in connection with the individual’s membership of that pension schemeThe aggregate of the amount of any sums transferred and the market value of any assets transferred

(2)Schedule 32 gives the meaning of expressions used in the table in subsection (1).

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Amendments (Textual)

F108Words in s. 216(1) inserted (retrospective to 6.4.2006) by Finance Act 2008 (c. 9), Sch. 29 paras. 5, 12(3)

F110Words in s. 216(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 30

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I57Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

217Persons liable to chargeE+W+S+N.I.

(1)The persons liable to the lifetime allowance charge are—

(a)the individual, and

(b)the scheme administrator of the pension scheme,

and their liability is joint and several.

(2)But where the liability arises by reason of the payment of a relevant lump sum death benefit it is a liability of the person to whom the lump sum death benefit is paid.

(3)Subsection (4) applies if—

(a)more than one relevant lump sum death benefit is paid in respect of an individual, and

(b)tax is not chargeable on the whole amount of all of them.

(4)In that case each of the persons to whom any of the relevant lump sum death benefits is paid is liable under subsection (2) to such portion of the total amount of the tax payable by reason of their having been paid as appears to the Inland Revenue to be just and reasonable.

(5)A person is liable to the lifetime allowance charge whether or not—

(a)that person,

(b)any other person who is liable to the lifetime allowance charge, and

(c)the scheme administrator (if not so liable),

are resident, ordinarily resident or domiciled in the United Kingdom.

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Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I58Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

218Individual’s lifetime allowance and standard lifetime allowanceE+W+S+N.I.

(1)Subject as follows, the individual’s lifetime allowance is the standard lifetime allowance.

(2)The standard lifetime allowance for the tax year 2006-07 is £1,500,000.

(3)The standard lifetime allowance for each subsequent tax year is such amount, not being less than the standard lifetime allowance for the immediately preceding tax year, as is specified by order made by the Treasury.

(4)Where one or more lifetime allowance enhancement factors operate in relation to a benefit crystallisation event occurring in relation to the individual, the individual’s lifetime allowance at the time of the benefit crystallisation event is—

where—

SLA is the standard lifetime allowance at the time of the benefit crystallisation event, and

LAEF is the lifetime allowance enhancement factor which operates with respect to the benefit crystallisation event and the individual or (where more than one so operates) the aggregate of them.

(5)The following make provision for the operation of lifetime allowance enhancement factors—

  • section 220 (pension credits from previously crystallised rights),

  • sections 221 to 223 (individuals who are not always relevant UK individuals),

  • sections 224 to 226 (transfers from recognised overseas pension schemes),

  • paragraphs 7 to 11 of Schedule 36 (primary protection), and

  • paragraph 18 of that Schedule (pre-commencement pension credits).

(6)Paragraph 19 of that Schedule makes provision for the reduction of what would otherwise be the individual’s lifetime allowance in certain cases where the individual is permitted to take pension before normal minimum pension age.

(7)In this Part references (however expressed) to a person’s lifetime allowance at any time are to what would be the person’s lifetime allowance, calculated in accordance with this section, if a benefit crystallisation event occurred in relation to the person at that time.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I59Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

219Availability of individual’s lifetime allowanceE+W+S+N.I.

(1)This section is about the availability of the individual’s lifetime allowance on the occurrence of a benefit crystallisation event in relation to the individual (“the current benefit crystallisation event”).

(2)If no benefit crystallisation event has occurred in relation to the individual before the current benefit crystallisation event, the whole of the individual’s lifetime allowance is available on the current benefit crystallisation event.

(3)If one or more benefit crystallisation events have occurred in relation to the individual before the current benefit crystallisation event—

(a)in a case in which the previously-used amount is equal to or greater than the amount of the individual’s lifetime allowance, none of the individual’s lifetime allowance is available on the current benefit crystallisation event, and

(b)in any other case, so much of the individual’s lifetime allowance as is left after deducting the previously-used amount is available on the current benefit crystallisation event.

(4)The previously-used amount is—

(a)where one benefit crystallisation event has occurred in relation to the individual before the current benefit crystallisation event, the amount [F112which is the relevant untaxed amount in relation to] the previous benefit crystallisation event as adjusted under subsection (5), or

(b)where two or more benefit crystallisation events have occurred in relation to the individual before the current benefit crystallisation event, the aggregate of the amounts [F113which are the relevant untaxed amounts in relation to] each previous benefit crystallisation event as adjusted under subsection (5).

[F114(4A)The relevant untaxed amount”, in relation to a previous benefit crystallisation event, is—

(a)where no tax was charged in relation to the benefit crystallisation event, the amount in respect of which tax would have been so charged if none of the individual's lifetime allowance had been available, and

(b)where tax was charged in relation to the benefit crystallisation event, so much of the amount in respect of which tax would have been so charged if none of the individual's lifetime allowance had been available as exceeds the amount in respect of which tax was so charged.]

(5)The adjustment of the [F115relevant untaxed amount in relation to] a previous benefit crystallisation event referred to in subsection (4)(a) and (b) is the multiplication of that amount by—

where—

CSLA is the standard lifetime allowance at the time of the current benefit crystallisation event, and

PSLA is the standard lifetime allowance at the time of the previous benefit crystallisation event.

(6)Where more than one benefit crystallisation event occurs in relation to an individual on the same day, it is for the individual to decide the order in which they are to be treated as occurring for the purposes of this section; but this subsection is subject to section 166(2) (entitlement to pension commencement lump sum to arise immediately before entitlement to associated pension).

(7)Where more than one benefit crystallisation event occurs by reason of the payment of lump sum death benefits in respect of an individual the benefit crystallisation events are to be treated for the purposes of this section as occurring immediately before the individual’s death [F116but immediately after any benefit crystallisation event occurring immediately before the individual's death by virtue of section 166(2)].

(8)Paragraph 20 of Schedule 36 makes provision affecting this section in relation to pre-commencement pensions.

(9)In this Part references (however expressed) to the portion of a person’s lifetime allowance that is available at any time are to the portion of the person’s lifetime allowance that would be available, calculated in accordance with this section, if a benefit crystallisation event occurred in relation to the person at that time.

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Amendments (Textual)

F112Words in s. 219(4)(a) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 31(2)(a)

F113Words in s. 219(4)(b) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 31(2)(b)

F114S. 219(4A) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 31(3)

F115Words in s. 219(5) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 31(4)

F116Words in s. 219(7) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 10, 24(3)

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I60Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

220Pension credits from previously crystallised rightsE+W+S+N.I.

(1)This section makes provision for the operation of a lifetime allowance enhancement factor with respect to a benefit crystallisation event occurring in relation to an individual where—

(a)the individual has (at any time after 5th April 2006 but before the benefit crystallisation event) acquired rights under a registered pension scheme by reason of having become entitled to a pension credit,

(b)the pension credit derived from the same or another registered pension scheme, and

(c)the rights under that registered pension scheme which became subject to the corresponding pension debit consisted of or included rights to a post-commencement pension in payment.

(2)Post-commencement pension in payment” means a pension to which a person became (actually) entitled on or after 6th April 2006.

(3)The lifetime allowance enhancement factor is the pension credit factor.

(4)The pension credit factor is—

where—

APC is [F117the post-commencement pension in payment portion of] the amount which is the appropriate amount for the purposes of section 29(1) of WRPA 1999 or Article 26(1) of WRP(NI)O 1999 in relation to the pension credit, and

SLA is the standard lifetime allowance at the time when the rights were acquired.

[F118(4A)The post-commencement pension in payment portion of the appropriate amount referred to in the definition of APC—

(a)in a case where the appropriate amount is arrived at under section 29(2) or (3)(b) of WRPA 1999 or Article 26(2) or (3)(b) of WRP(NI)O 1999, is so much of that amount as is attributable to rights to a post-commencement pension in payment, and

(b)in a case where the appropriate amount is arrived at under section 29(3)(a) of WRPA 1999 or Article 26(3)(a) of WRP(NI)O 1999, is so much of that amount as is just and reasonable.]

(5)This section only applies if notice of intention to rely on it is given to the Inland Revenue in accordance with regulations made by the Board of Inland Revenue.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I61Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

221Non-residence: generalE+W+S+N.I.

(1)This section makes provision for the operation of a lifetime allowance enhancement factor with respect to a benefit crystallisation event occurring in relation to an individual where, during any part of the period that is the active membership period in relation to an arrangement relating to the individual under a registered pension scheme, the individual is a relevant overseas individual.

(2)Section 222 provides the lifetime allowance enhancement factor in the case of an arrangement that is a money purchase arrangement; and section 223 provides the lifetime allowance enhancement factor in the case of any other arrangement.

(3)For the purposes of this Part an individual is a relevant overseas individual at any time if, at that time, the individual either is not a relevant UK individual or—

(a)is a relevant UK individual only by virtue of paragraph (c) of section 189(1) (individuals resident in UK at some time in previous five tax years), and

(b)is not employed by a person resident in the United Kingdom.

(4)In this section and sections 222 and 223 “the active membership period”, in relation to a benefit crystallisation event occurring in relation to an arrangement relating to the individual, is the period—

(a)beginning with the date on which the benefits first began to accrue to or in respect of the individual under the arrangement or, if later, 6th April 2006, and

(b)ending immediately before the benefit crystallisation event.

(5)But if benefits ceased to accrue to or in respect of the individual under the arrangement before the benefit crystallisation event, the active membership period is to be treated as having ended then.

(6)This section only applies if notice of intention to rely on it is given to the Inland Revenue in accordance with regulations made by the Board of Inland Revenue.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I62Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

222Non-residence: money purchase arrangementsE+W+S+N.I.

(1)This section applies in the case of an arrangement that is a money purchase arrangement.

(2)The lifetime allowance enhancement factor is—

(a)if the arrangement is a cash balance arrangement, the cash balance arrangement non-residence factor (see subsections (3) to (5)), and

(b)if the arrangement is any other sort of money purchase arrangement, the other money purchase arrangement non-residence factor (see subsections (6) and (7)).

(3)The cash balance arrangement non-residence factor is—

(a)the factor arrived at by the application of subsection (4) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or

(b)if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of subsection (4) in relation to each of those parts of that period.

(4)The factor arrived at by the application of this subsection in relation to any part of the active membership period is—

where—

CV is the closing value of the individual’s rights under the arrangement,

OV is the opening value of the individual’s rights under the arrangement, and

SLA is the standard lifetime allowance at the time when that part of that period ended.

(5)For the purposes of subsection (4)—

(a)the closing value of the individual’s rights under the arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the end of that part of that period, and

(b)the opening value of the individual’s rights under the arrangement is the amount which would, on the valuation assumptions, be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the beginning of that part of that period.

(6)The other money purchase arrangement non-residence factor is—

(a)the factor arrived at by the application of subsection (7) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or

(b)if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of subsection (7) in relation to each of those parts of that period.

(7)The factor arrived at by the application of this subsection in relation to any part of the active membership period is—

where—

ROIC is the amount of the contributions made under the arrangement by or in respect of the individual in any part of the active membership period during which the individual is a relevant overseas individual, and

SLA is the standard lifetime allowance at the time when that part of that period ended.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I63Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

223Non-residence: other arrangementsE+W+S+N.I.

(1)This section applies in the case of an arrangement that is not a money purchase arrangement.

(2)The lifetime allowance enhancement factor is—

(a)if the arrangement is a defined benefits arrangement, the defined benefits arrangement non-residence factor (see subsections (3) and (4)), and

(b)if the arrangement is a hybrid arrangement, the hybrid arrangement non-residence factor (see subsections (5) to (7)).

(3)The defined benefits arrangement non-residence factor is—

(a)the factor arrived at by the application of subsection (4) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or

(b)if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of subsection (4) in relation to each of those parts of that period.

(4)The factor arrived at by the application of this subsection in relation to any part of the active membership period is—

where—

RVF is the relevant valuation factor (see section 276),

PE is the amount of the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the arrangement if the individual became entitled to payment of it at the end of that part of that period,

LSE is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the end of that part of that period,

PB is the amount of the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of that part of that period,

LSB is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the beginning of that part of that period, and

SLA is the standard lifetime allowance at the time when that part of that period ended.

(5)The hybrid arrangement non-residence factor is the greater or greatest of such of—

(a)what would be the cash balance arrangement non-residence factor (under section 222) if the arrangement were a cash balance arrangement,

(b)what would be the other money purchase arrangement non-residence factor (under that section) if the arrangement were any other sort of money purchase arrangement, and

(c)what would be the defined benefits arrangement non-residence factor (under subsections (3) and (4)) if the arrangement were a defined benefits arrangement,

as are relevant factors in relation to the arrangement.

(6)A factor is a relevant factor in relation to a hybrid arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under the arrangement may be benefits linked to that factor.

(7)For that purpose—

(a)cash balance benefits are linked to the cash balance arrangement non-residence factor,

(b)other money purchase benefits are linked to the other money purchase arrangement non-residence factor, and

(c)defined benefits are linked to the defined benefits arrangement non-residence factor.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I64Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

224Transfers from recognised overseas pension scheme: generalE+W+S+N.I.

(1)This section makes provision for the operation of a lifetime allowance enhancement factor with respect to a benefit crystallisation event occurring in relation to an individual where (at any time after 5th April 2006 but before the benefit crystallisation event) there has been a recognised overseas scheme transfer.

(2)There is a “recognised overseas scheme transfer” if any sums or assets—

(a)held for the purposes of an arrangement under a recognised overseas pension scheme, or

(b)representing accrued rights under such an arrangement,

are transferred so as to become held for the purposes of, or to represent rights under, an arrangement under a registered pension scheme relating to the individual.

(3)The arrangement specified in subsection (2)(a) or (b) is referred to in this section and sections 225 and 226 as the “recognised overseas scheme arrangement”.

(4)The lifetime allowance enhancement factor is the recognised overseas scheme transfer factor.

(5)The recognised overseas scheme transfer factor is—

where—

AAT is the aggregate of the amount of any sums transferred, and the market value of any assets transferred, on the recognised overseas scheme transfer,

RRA is the relevant relievable amount, and

SLA is the standard lifetime allowance at the time when the recognised overseas scheme transfer took place.

(6)Section 225 specifies the relevant relievable amount in the case of a recognised overseas scheme arrangement that was a money purchase arrangement; and section 226 specifies the relevant relievable amount in the case of an recognised overseas scheme arrangement that was any other sort of arrangement.

(7)In this section and sections 225 and 226 “overseas arrangement active membership period” is the period—

(a)beginning with the date on which the benefits first began to accrue to or in respect of the individual under the recognised overseas scheme arrangement or, if later, 6th April 2006, and

(b)ending immediately before the recognised overseas scheme transfer.

(8)But if benefits ceased to accrue to or in respect of the individual under the recognised overseas scheme arrangement before the recognised overseas scheme transfer, the overseas arrangement active membership period is to be treated as having ended then.

(9)This section only applies if notice of intention to rely on it is given to the Inland Revenue in accordance with regulations made by the Board of Inland Revenue.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I65Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

225Overseas scheme transfers: money purchase arrangementsE+W+S+N.I.

(1)This section applies in the case of a recognised overseas scheme arrangement that was a money purchase arrangement.

(2)The relevant relievable amount is—

(a)if the recognised overseas scheme arrangement was a cash balance arrangement, the cash balance relevant relievable amount (see subsections (3) to (5)), and

(b)if the recognised overseas scheme arrangement was any other sort of money purchase arrangement, the other money purchase relevant relievable amount (see subsections (6) and (7)).

(3)The cash balance relevant relievable amount is—

(a)the amount arrived at by the application of subsection (4) in relation to the part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual, or

(b)if there have been two or more parts of that period during which the individual was not a relevant overseas individual, the aggregate of the amounts arrived at by the application of subsection (4) in relation to each of those parts of that period.

(4)The amount arrived at by the application of this subsection in relation to any part of the overseas arrangement active membership period is—

where—

CV is the closing value of the individual’s rights under the arrangement, and

OV is the opening value of the individual’s rights under the arrangement.

(5)For the purposes of subsection (4)—

(a)the closing value of the individual’s rights under the recognised overseas scheme arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the end of that part of that period, and

(b)the opening value of the individual’s rights under the arrangement is the amount which would, on the valuation assumptions, be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the beginning of that part of that period.

(6)The other money purchase relevant relievable amount is—

(a)the amount arrived at by the application of subsection (7) in relation to the part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual, or

(b)if there have been two or more parts of that period during which the individual was not a relevant overseas individual, the aggregate of the amounts arrived at by the application of subsection (7) in relation to each of those parts of that period.

(7)The amount arrived at by the application of this subsection in relation to any part of the overseas arrangement active membership period is the amount of the contributions made under the arrangement by or in respect of the individual in any part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I66Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

226Overseas scheme transfers: other arrangementsE+W+S+N.I.

(1)This section applies in the case of a recognised overseas scheme arrangement that was not a money purchase arrangement.

(2)The relevant relievable amount is—

(a)if the recognised overseas scheme arrangement was a defined benefits arrangement, the defined benefits relevant relievable amount (see subsections (3) and (4)), and

(b)if the recognised overseas scheme arrangement was a hybrid arrangement, the hybrid relevant relievable amount (see subsections (5) to (7)).

(3)The defined benefits relevant relievable amount is—

(a)the amount arrived at by the application of subsection (4) in relation to the part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual, or

(b)if there have been two or more parts of that period during which the individual was not a relevant overseas individual, the aggregate of the amounts arrived at by the application of subsection (4) in relation to each of those parts of that period.

(4)The amount arrived at by the application of this subsection in relation to any part of the overseas arrangement active membership period is—

where—

RVF is the relevant valuation factor (see section 276),

PE is the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the recognised overseas scheme arrangement if the individual became entitled to payment of it at the end of that part of that period,

LSE is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the end of that part of that period,

PB is the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of that part of that period, and

LSB is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the beginning of that part of that period.

(5)The hybrid relevant relievable amount is the greater or greatest of such of—

(a)what would be the cash balance relevant relievable amount (under section 225) if the recognised overseas scheme arrangement had been a cash balance arrangement,

(b)what would be the other money purchase relevant relievable amount (under that section) if that arrangement had been any other sort of money purchase arrangement, and

(c)what would be the defined benefits relevant relievable amount (under subsections (3) and (4)) if that arrangement had been a defined benefits arrangement,

as are relevant to that arrangement.

(6)An amount is relevant to a hybrid arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under the arrangement may be benefits linked to that amount.

(7)For that purpose—

(a)cash balance benefits are linked to the cash balance relevant relievable amount,

(b)other money purchase benefits are linked to the other money purchase relevant relievable amount, and

(c)defined benefits are linked to the defined benefits relevant relievable amount.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

C33Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

Commencement Information

I67Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

Annual allowance chargeE+W+S+N.I.

227Annual allowance chargeE+W+S+N.I.

(1)A charge to income tax, to be known as the annual allowance charge, arises where—

(a)the total pension input amount for a tax year in the case of an individual who is a member of one or more registered pension schemes, exceeds

(b)the amount of the annual allowance for the tax year.

(2)The person liable to the annual allowance charge is the individual.

(3)The individual is liable to the annual allowance charge whether or not—

(a)the individual, and

(b)the scheme administrator of the pension scheme or schemes concerned,

are resident, ordinarily resident or domiciled in the United Kingdom.

(4)The annual allowance charge is a charge at the rate of 40% in respect of the amount by which the total pension input amount exceeds the amount of the annual allowance.

(5)That excess is not to be treated as income for any purpose of the Tax Acts.

(6)The following sections make further provision about the annual allowance charge—

  • section 228 (annual allowance),

  • section 229 (total pension input amount to be aggregate of pension input amounts for pension input periods ending in tax year),

  • sections 230 to 237 (pension input amounts), and

  • section 238 (pension input period).

(7)Schedule 36 contains (in Part 4) transitional provision about the annual allowance charge.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I68Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

228Annual allowanceE+W+S+N.I.

(1)The annual allowance for the tax year 2006-07 is £215,000.

(2)The annual allowance for each subsequent tax year is such amount, not being less than the annual allowance for the immediately preceding tax year, as is specified by order made by the Treasury.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Commencement Information

I69Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

229Total pension input amountE+W+S+N.I.

(1)The total pension input amount is arrived at by aggregating the pension input amounts in respect of each arrangement relating to the individual under a registered pension scheme of which the individual is a member.

(2)The pension input amount in respect of an arrangement—

(a)is the amount arrived at under sections 230 to 232 if it is a cash balance arrangement,

(b)is the amount arrived at under section 233 if it is any other sort of money purchase arrangement,

(c)is the amount arrived at under sections 234 to 236 if it is a defined benefits arrangement, and

(d)is the amount arrived at under section 237 if it is a hybrid arrangement.

(3)But there is no pension input amount in respect of an arrangement if, before the end of the tax year, the individual—

(a)has become entitled to all the benefits which may be provided to the individual under the arrangement, or

(b)has died.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Commencement Information

I70Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

230Cash balance arrangementsE+W+S+N.I.

(1)The pension input amount in respect of a cash balance arrangement is the amount of any increase in the value of the individual’s rights under the arrangement during the pension input period of the arrangement that ends in the tax year.

(2)There is an increase in the value of the individual’s rights under the arrangement during the pension input period if—

(a)the opening value of the individual’s rights under the arrangement, is exceeded by

(b)the closing value of the individual’s rights under the arrangement.

(3)The amount of the increase in the value of the individual’s rights under the arrangement during the pension input period is the amount of that excess.

(4)The opening value of the individual’s rights under the arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the beginning of the pension input period.

(5)The closing value of the individual’s rights under the arrangement is the amount which would, on the valuation assumptions, be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the end of the pension input period.

(6)Section 231 (uprating of opening value) and section 232 (adjustments of closing value) supplement this section.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I71Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

231Cash balance arrangements: uprating of opening valueE+W+S+N.I.

(1)This section applies for adjusting the opening value of the individual’s rights as calculated under section 230(4).

(2)The opening value is to be increased by the appropriate percentage.

(3)The appropriate percentage is whichever is the greatest of—

(a)5%,

(b)the percentage (if any) by which the retail prices index for the month in which the pension input period ends is higher than it was for the month in which it began, and

(c)if provision made by regulations made by the Board of Inland Revenue applies in relation to the arrangement, the percentage to which the regulations refer.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I72Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

232Cash balance arrangements: adjustments of closing valueE+W+S+N.I.

(1)This section applies for adjusting the closing value of the individual’s rights under the arrangement as calculated under section 230(5).

(2)If, during the pension input period, the rights of the individual under the arrangement have been reduced by having become subject to a pension debit, the amount of the debit is to be added.

(3)If, during the pension input period, the rights of the individual under the arrangement have been increased by the individual having become entitled to a pension credit deriving from the same or another registered pension scheme, the amount of the credit is to be subtracted.

(4)Subsection (5) applies if, during the pension input period, the rights of the individual under the arrangement have been reduced by virtue of a transfer of any sum or asset held for the purposes of, or representing accrued rights under, the arrangement so as to become held for the purposes of, or to represent rights under, any other pension scheme that is—

(a)a registered pension scheme, or

(b)a qualifying recognised overseas pension scheme.

(5)The aggregate of the amount of any sums transferred and the market value of any assets transferred is to be added.

(6)Subsection (7) applies if, during the pension input period, the rights of the individual under the arrangement have been increased by virtue of a transfer of any sums or assets held for the purposes of, or representing accrued rights under, any pension scheme so as to become held for the purposes of, or to represent rights under, the arrangement.

(7)The aggregate of the amount of any sums transferred and the market value of any assets transferred is to be subtracted.

(8)If, during the pension input period, a benefit crystallisation event occurs in relation to the individual and the arrangement, the amount crystallised is to be added (but this is subject to section 229(3)).

(9)If, during the pension input period, minimum payments are made under—

(a)section 8 of the Pension Schemes Act 1993 (c. 48), or

(b)section 4 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

in relation to the individual in connection with the arrangement, the amount paid is to be subtracted.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I73Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

233Other money purchase arrangementsE+W+S+N.I.

(1)The pension input amount in respect of a money purchase arrangement other than a cash balance arrangement is the total of—

(a)any relievable pension contributions paid by or on behalf of the individual under the arrangement, and

(b)contributions paid in respect of the individual under the arrangement by an employer of the individual,

during the pension input period of the arrangement that ends in the tax year.

(2)The references to contributions in subsection (1)(a) and (b) do not include minimum payments under—

(a)section 8 of the Pension Schemes Act 1993, or

(b)section 4 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

or any amount recovered under regulations made under subsection (3) of either of those sections.

(3)When at any time contributions paid under a pension scheme by an employer otherwise than in respect of any individual become held for the purposes of the provision under an arrangement under the pension scheme of benefits to or in respect of an individual, they are to be treated as being contributions paid at that time in respect of the individual under the arrangement.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I74Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

234Defined benefits arrangementsE+W+S+N.I.

(1)The pension input amount in respect of a defined benefits arrangement is the amount of any increase in the value of the individual’s rights under the arrangement during the pension input period of the arrangement that ends in the tax year.

(2)There is an increase in the value of the individual’s rights under the arrangement during the pension input period if—

(a)the opening value of the individual’s rights under the arrangement, is exceeded by

(b)the closing value of the individual’s rights under the arrangement.

(3)The amount of the increase in the value of the individual’s rights under the arrangement during the pension input period is the amount of that excess.

(4)The opening value of the individual’s rights under the arrangement is—

where—

PB is the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of the pension input period, and

LSB is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to the payment of it at that time.

(5)The closing value of the individual’s rights under the arrangement is—

where—

PE is the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the end of the pension input period, and

LSE is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to the payment of it at that time.

(6)Section 235 (uprating of opening value) and section 236 (adjustments of closing value) supplement this section.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Modifications etc. (not altering text)

Commencement Information

I75Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284

235Defined benefits arrangements: uprating of opening valueE+W+S+N.I.

(1)This section applies for adjusting the opening value of the individual’s rights as calculated under section 234(4) in a case where rights do not accrue to the individual under the arrangement