Payments in good faith to scheme solely for providing approved benefits.
6.—(1) A payment made in respect of a scheme which is established in good faith for the sole purpose of providing relevant benefits where at the time of the payment the conditions specified in sub-paragraphs (2) to (4) are satisfied and, if appropriate, the additional conditions in sub-paragraph (5) and (6) are satisfied.
(2) The first condition is that an application has been made to the Board in accordance with section 604 of the Taxes Act(1) and has not been rejected.
(3) The second condition is that the payment represents contributions in respect of an employed earner’s earnings not in excess of the permitted maximum in force at the time when the payment is made.
(4) The third condition is that the terms of the scheme do not permit any pension payable under it, in whole or in part, to be surrendered, commuted or assigned except in so far as to allow an employed earner on his retirement to obtain, by commutation of his pension, a lump sum or sums not exceeding in all 3/80ths of his final remuneration for each year of service up to a maximum of 40.
(5) The first additional condition is that if the scheme is connected with another scheme or schemes each of which is an approved scheme, the amount payable by way of pension or commuted pension under the scheme will not, when aggregated with any amount payable by way of pension or commuted pension under the other scheme or schemes exceed the relevant amount.
(6) The second additional condition is that if the scheme is a small self-administered scheme—
(a)the requirements of regulation 9 of the Retirement Benefits Schemes (Restrictions on Discretion to Approve) (Small Self-administered Schemes) Regulations 1991 (independent pensioner trustees)(2) have been satisfied; and
(b)regulation 3 of those Regulations (restriction on the Board’s discretion to approve) does not apply.
(7) In this paragraph—
(a)“permitted maximum” is the amount for the time being specified in an order made under section 590C(6) of the Taxes Act (earnings cap)(3);
(b)“relevant amount” shall be determined—
(i)in the case of a pension which is not a commuted pension, in accordance with the provisions of section 590B(3) and (7) to (11) of the Taxes Act (further supplementary provisions in respect of approval of retirement benefit schemes)(4); and
(ii)in the case of a pension which is a commuted pension, in accordance with the provisions of section 590B(4) and (7) to (11) of that Act;
(c)“relevant benefits” has the meaning given in section 612 of the Taxes Act;
(d)“small self-administered scheme” has the meaning given in regulation 2(1) of the Retirement Benefits Schemes (Restrictions on Discretion to Approve) (Small Self-administered Schemes) Regulations 1991; and
(e)whether or not a scheme is connected with another shall be determined in accordance with section 590A(2) to (4) of the Taxes Act (supplementary provisions in respect of approval of retirement benefit schemes)(5).
Section 604 was amended by paragraph 3 of Schedule 15 to the Finance Act 1998.
S.I. 1991/1614 Regulation 9 was substituted by regulation 9 of S.I. 1998/728 and amended by regulation 6 of S.I. 1998/1315.
Section 590C was inserted by paragraph 4 of Schedule 6 to the Finance Act 1989.
Section 590B was inserted by paragraph 4 of Schedule 6 to the Finance Act 1989 and amended by section 107(6) of the Finance Act 1993 (c. 34).
Section 590A was inserted by paragraph 4 of Schedule 6 to the Finance Act 1989.