Finance Act 2004

Valid from 06/04/2006

Income and Corporation Taxes Act 1988 (c. 1) U.K.

2 U.K. The Income and Corporation Taxes Act 1988 (c. 1) is amended as follows.

3 U.K. In section 21A(2) (Schedule A: computation of amount chargeable), insert at the end—

“sections 196 to 200 of the Finance Act 2004 (registered pension schemes); section 246 of that Act (employer-financed retirement benefits schemes).”

4 U.K. In section 56(3)(b) (transfers in deposits and debts: exemption for pensions), for “592(2), 613, 614 (1) to (3) or 620(6)” substitute “ 613(4) or 614(2) or (3) or section 186 of the Finance Act 2004 ”.

F1 5 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Sch. 35 para. 5 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

6 U.K. In section 129B(2) (stock lending fees), for “sections 592(2), 608(2)(a), 613(4), 614(3), 620(6) and 643(2)” substitute “ sections 613(4) and 614(3) and section 186 of the Finance Act 2004 ”.

7 U.K. In section 227(8)(a) (purchase of own shares: rules about trustees not to apply where shares held under exempt approved scheme), for “an exempt approved scheme as defined in Chapter 1 of Part 14” substitute “ a registered pension scheme ”.

8 U.K. In section 265(3)(c) (transfer of blind person’s allowance to spouse where allowance exceeds what is left of total income after deductions: deductions to be disregarded), for “593(2) or 639(3)” substitute “ 192 of the Finance Act 2004 ”.

9 U.K. In section 266 (1) (life assurance premiums), for “sections 274 and 619(6) and Schedules 14 and 15,” substitute “ section 274 and Schedules 14 and 15 and sections 192 to 194 of the Finance Act 2004, ”.

10 (1) Section 266A (life assurance premiums paid by employer) is amended as follows. U.K.

(2) In subsection (1), for “a non-approved” substitute “ an employer-financed ”.

(3) For subsections (3) to (6) substitute—

“(3) For the purposes of subsection (1)(a) benefits are provided in respect of an employee if they are provided for the employee’s spouse [F2 or civil partner], widow or widower [F3 or surviving civil partner], children, dependants or personal representatives.

(4) If a sum within subsection (1) is paid with a view to the provision of benefits for or in respect of more than one employee of the employer, part of it is to be treated as paid for or in respect of each of them.

(5) The amount treated as paid for or in respect of each employee is—

where—

A is the sum paid,

B is the amount which would have had to be paid to secure the benefits to be provided for or in respect of the employee in question, and

C is the total amount which would have had to be paid to secure the benefits to be provided for or in respect of all the employees if separate payments had been made in the case of each of them.

(6) This section does not apply if—

(a) in the year of assessment in which the sum is paid the earnings from the employee’s employment are (or, if there are none, would be if there were any) earnings charged on remittance, or

(b) the employee is not domiciled in the United Kingdom in the tax year in which the sum is paid and the conditions in subsection (7) are met.

(7) Those conditions are—

(a) that the employment is with a foreign employer, and

(b) that, on a claim made by the employee, the Board are satisfied that the pension scheme corresponds to a registered pension scheme.

(8) In subsection (6)(a) “earnings charged on remittance” means earnings which are taxable earnings under—

(a) section 22 of ITEPA 2003 (chargeable overseas earnings for year when employee resident and ordinarily resident, but not domiciled, in UK), or

(b) section 26 of that Act (foreign earnings for year when employee resident, but not ordinarily resident, in UK).

(9) 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).”

Textual Amendments

F2 Words in Sch. 35 para. 10(3) 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), 181(a)

F3 Words in Sch. 35 para. 10(3) 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), 181(b)

11 U.K. In section 268(7)(b) (early conversion or surrender of rights: life policies not covered), for “an approved scheme, as defined in Chapter 1 of Part 14;” substitute “ a registered pension scheme; ”.

12 U.K. In section 273 (payments securing annuities), for “, 617(3) and 619(6)” substitute “ and 617(3) and sections 192 to 194 of the Finance Act 2004 ”.

13 U.K. In section 336(1A)(b) (temporary residents not liable under certain pension tax provisions)—

(a) in sub-paragraph (i), for “605, 609, 610, 611, 623 or 629 of that Act applies,” substitute “ 609, 610, 611 or 629 of that Act applies, ”,

(b) after that sub-paragraph insert—

“(ia) an annuity under an annuity contract that is a registered pension scheme, or”, and

(c) omit sub-paragraph (iii) and the word “or” before it.

14 U.K. In section 348(1A)(b) (payments out of profits or gains brought into charge to income tax: exception for certain annuities), for “605 of that Act applies to it (retirement annuity contracts: annuities),” substitute “ 579A of that Act applies to it because it is an annuity under an annuity contract that is a registered pension scheme, ”.

15 U.K. In section 349(1A)(b) (payments not out of profits or gains brought into charge to income tax and annual interest: exception for certain annuities), for “605 of that Act applies to it,” substitute “ 579A of that Act applies to it because it is an annuity under an annuity contract that is a registered pension scheme, ”.

16 (1) Section 349B(3) (payments in case of which requirement to deduct tax does not apply) is amended as follows. U.K.

(2) For paragraph (i) substitute—

“(i) the scheme administrator of a registered pension scheme;”.

(3) After paragraph (j) insert “ or ”.

(4) Omit paragraphs (l) and (m).

17 U.K. In section 360A(9)(a) (meaning of “material interest” in section 360: exception from rule about trusts for certain pension scheme trusts), for “an exempt approved scheme as defined in section 592;” substitute “ a registered pension scheme; ”.

18 U.K. In section 414(7), (close companies: shares held on trust for certain pension schemes), for “an exempt approved scheme as defined in section 592” substitute “ a registered pension scheme ”.

19 U.K. In section 415(4)(b), (certain quoted companies not to be close companies: shares held on trust for certain pension schemes deemed to be beneficially held for public), for “an exempt approved scheme as defined in section 592,” substitute “ a registered pension scheme, ”.

20 U.K. For section 431B (life assurance: meaning of “pension business”) substitute—

“431B Meaning of “pension business”

(1) In this Chapter “pension business” means so much of a company’s life assurance business as is referable to contracts entered into for the purposes of a registered pension scheme or is the reinsurance of such business.

(2) Where a pension scheme ceases to be a registered pension scheme, any of the company’s life assurance business that was pension business when the pension scheme was a registered pension scheme is to be treated as ceasing to be pension business at the beginning of the period of account of the company in which the pension scheme ceases to be a registered pension scheme.”

21 U.K. In section 464(5) (policies and contracts to be disregarded in applying limits on benefits payable to member of friendly society), for paragraph (b) substitute—

“(b) any policy of insurance or annuity contract by means of which the benefits to be provided under an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) are secured or any annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than such an occupational pension scheme;”.

22 (1) Section 466 (interpretation of Chapter 2 of Part 12) is amended as follows. U.K.

(2) In subsection (2), omit the definition of “pension business”.

(3) After that subsection insert—

“(2A) In this Chapter “pension business” means so much of a friendly society’s life assurance business as is referable to contracts entered into for the purposes of a registered pension scheme.

(2B) But where a pension scheme ceases to be a registered pension scheme, any of the friendly society’s life assurance business that was pension business when the pension scheme was a registered pension scheme is to be treated as ceasing to be pension business at the beginning of the period of account of the friendly society in which the pension scheme ceases to be a registered pension scheme.”

23 U.K. In section 467(3) (exemption for trade unions and employers' associations: disregard of certain annuities for purposes of limit), for “approved annuities (as defined in section 620(9))” substitute “ annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) ”.

F4 24 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4 Sch. 35 para. 24 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

25 U.K. In section 539(2) (policies of life insurance to which Chapter 2 of Part 13) does not apply), for paragraphs (b) to (d) substitute—

“(b) to any policy of insurance which constitutes, or is issued or held in connection with, a registered pension scheme; or”.

26 U.K. In section 613(4) (parliamentary pension funds)—

(a) omit “respective” and paragraphs (b) to (d), and

(b) for “those funds” (in both places) substitute “ that Fund ”.

27 (1) Section 657(2) (life annuities to which section 656 does not apply) is amended as follows. U.K.

(2) In paragraph (b), for “266, 273 or 619 or to any annuity payable under a substituted contract within the meaning of section 622(3);” substitute “ 266 or 273; ”.

(3) For paragraphs (d) to (f) substitute—

“(d) to any annuity under, or purchased with sums or assets held for the purposes of, a registered pension scheme; or

(e) to any annuity purchased by any person in recognition of another’s services (or past services) in any office or employment.”

F5 28 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F5 Sch. 35 para. 28 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

29 (1) Section 686 (accumulation and discretionary trusts: special rates of tax) is amended as follows. U.K.

(2) In subsection (2)(c), for the words following “held” substitute “ for the purposes of a superannuation fund to which section 615(3) applies ”.

(3) In subsection (6A)—

(a) for “exemptions” substitute “ exemption ”, and

(b) for “as mentioned in sub-paragraph (i) or (ii) of that paragraph do” substitute “ for the purposes of a superannuation fund to which section 615(3) applies does ”.

30 U.K. In section 715(1)(k) (exceptions from section 713 where exemption could be allowed under section 592(2)), for “section 592(2)” substitute “ section 186 of the Finance Act 2004 ”.

31 U.K. In section 730A(7) (treatment of price differential on sale and repurchase of securities: power to provide eligibility for relief), for “592(2), 608(2)(a), 613(4), 614(2), (3) or (4), 620(6) or 643(2).” substitute “ 613(4) or 614(2), (3) or (4) or section 186 of the Finance Act 2004. ”

32 U.K. In section 737D (1) (manufactured dividends: power to provide eligibility for relief), for “592(2), 608(2)(a), 613(4), 614(2), (3) or (4), 620(6) or 643(2).” substitute “ 613(4) or 614(2), (3) or (4) or section 186 of the Finance Act 2004. ”

33 U.K. In section 824(9) (repayment supplements), after “settlement” insert “ , scheme administrators of registered pension schemes ”.

34 U.K. In section 828 (orders and regulations), after subsection (5) insert—

“(6) Nothing in this section applies in relation to any of the following (in relation to which section 282 of the Finance Act 2004 applies)—

(a) any power of the Treasury or the Board to make any order or regulations under Part 4 of that Act;

(b) any statutory instrument containing any order or regulations made by the Treasury or the Board under that Part of that Act.”

35 (1) Section 832 (1) (interpretation of the Tax Acts) is amended as follows. U.K.

(2) After the definition of “the rate applicable to trusts” insert—

““registered pension scheme” has the meaning given by section 150(2) of the Finance Act 2004;”.

(3) After the definition of “Schedule A business” insert—

““scheme administrator”, in relation to a pension scheme, has the meaning given by section 270 of the Finance Act 2004 (but see also sections 271 to 274 of that Act);”.

36 U.K. In section 840A(1)(b)(iv) (definition of “bank”: exclusion of insurance companies), for “659B(1);” substitute “ 275 of the Finance Act 2004; ”.