Statutory Instruments
Income Tax
Made
14th March 2018
Laid before the House of Commons
15th March 2018
Coming into force
6th April 2018
1. These Regulations may be cited as the Relevant Overseas Schemes (Transfer of Sums and Assets) Regulations 2018 and come into force on 6th April 2018.
2. In these Regulations “Part”, “section” or “Schedule”, without more, means a Part, section or Schedule of the Finance Act 2004.
3.—(1) Paragraph 2 applies where there is a transfer within section 169(7B) (relevant overseas transfer) of sums or assets which, if the relevant overseas scheme were a registered pension scheme, would represent—
(a)rights in respect of a scheme pension to which a member of that relevant overseas pension scheme(3) has become entitled (“the original pension”) and those sums and assets are, after the transfer, applied towards the provision of a scheme pension (“the new pension”), or
(b)a member’s flexi-access drawdown fund (“the original pension”) or a member’s drawdown pension fund (“the original pension”) under that relevant overseas scheme, which, after the transfer, is designated as available for payment of a drawdown pension (“the new pension”) or applied towards the provision of a scheme pension (“the new pension”).
(2) The new pension is to be treated as if it were the original pension for the purposes of Part 4 prescribed in the table.
| Provision | Purpose |
|---|---|
| Paragraph 2A(3) and (5) of Schedule 28(4) (unauthorised payments) | To determine— (i) the rate payable when the member became entitled to the pension, and (ii) the amount of any lump sum on which there is no liability to tax to which the member became entitled in conjunction with the pension,
|
| Paragraph 8 of Schedule 28(5) (member’s drawdown pension fund) | To determine whether the member’s funds are newly designated funds to prevent the funds becoming newly designated funds as a result of the transfer. |
| Paragraph 1(1) and (3)(a) of Schedule 29(6) (pension commencement lump sum) | To determine whether the member has become entitled to a lump sum in connection with the member becoming entitled to the new pension by reference to the original pension (to prevent a lump sum to which a member becomes entitled in connection with becoming entitled to the new pension being a pension commencement lump sum). |
| Paragraph 14(3) of Schedule 29(7) (pension protection lump sum death benefit) | To determine— (i) the amount crystallised by reason of the member becoming entitled to the pension (AC) by reference to the member becoming entitled to the original pension, (ii) the amount of the pension paid (AP) as that paid in respect of the original pension and the new pension in respect of the period between the member becoming entitled to the original pension and the member’s death, and (iii) the total amount of the pension protection lump sum death benefit (TPLS) by reference to that paid in respect of the original pension and the new pension. |
| Paragraph 16(3) of Schedule 29(8) (annuity protection lump sum death benefit) | To determine— (i) the amount crystallised by reason of the member becoming entitled to the pension (AC) by reference to the member becoming entitled to the original pension, (ii) the amount paid (AP) as that paid in respect of the original pension and the new pension in respect of the period between the member becoming entitled to the original pension and the member’s death, and (iii) the total amount of the annuity protection lump sum death benefit (TPLS) by reference to that paid in respect of the original pension and the new pension. |
4.—(1) In the case of a new pension treated as the original pension by virtue of regulation 3(2) a reduction of that pension is a prescribed circumstance for the purposes of paragraph 2(4) of Schedule 28(9) (scheme pension) if—
(a)the rate of the pension payable under the new pension on the day on which the member becomes entitled to it is not less than the rate payable under the original pension immediately before the original pension ceased to be payable, save to the extent that any reduction reflects reasonable administration costs of the transfer of sums or assets, and
(b)where the new pension is payable until the later of the member’s death and the end of a term certain, that term ends before the date on which the term certain under the original pension would have ended.
(2) In paragraph (1)(a) “administration costs” includes the payment of wages, salaries or fees to persons engaged in administering the pension scheme.
Justin Holliday
Melissa Tatton
Two of the Commissioners for Her Majesty’s Revenue and Customs
14th March 2018
(This note is not part of the Regulations)
These Regulations make provision in relation to the transfer of sums and assets by relevant overseas schemes under Part 4 of the Finance Act 2004 (c. 12).
Regulation 1 provides for the citation and commencement of the Regulations, and regulation 2 for the interpretation of certain terms used in them.
Regulation 3 makes provision in relation to a relevant overseas transfer in respect of a scheme pension or drawdown pension to which a member of a relevant overseas scheme has become entitled (“the original pension”). After a transfer of sums or assets in respect of the original scheme pension from a relevant overseas scheme to another relevant overseas scheme or a registered pension scheme, where another scheme pension (“the new pension”) is provided the new pension is to be treated as the original scheme for the purposes prescribed in the table.
Where a transfer of sums or assets that represent a member’s flexi-access drawdown fund or member’s drawdown fund is made from a relevant overseas scheme to another relevant overseas scheme or a registered pension scheme, the new pension is to be treated as the original scheme for the purposes prescribed in the table. .
Regulation 4 prescribes transfers within regulation 3 for the purposes of paragraph 2(4) of Schedule 28 to the Finance Act 2004 (c. 12) (scheme pension: satisfying conditions) to avoid an unauthorised payments charge on the transfer.
A Tax Information and Impact Note covering this instrument was published on 8 March 2017 (Qualifying recognised overseas pension schemes charge on transfers) alongside draft Schedule 4 to Finance Bill 2017 and is available on the website gov.uk website https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins. It remains an accurate summary of the impacts that apply to this instrument.
2004 c. 12. Section 169(7A) and (7D) were inserted by paragraph 13(7) of Schedule 4 to the Finance Act 2017 (c. 10) and has effect in relation to transfers made on or after 9th March 2017. Section 169(7A) defines “original pension” and “new pension”. Section 169(7B) defines “relevant overseas transfer”.
The functions of the Commissioners for Inland Revenue were transferred to the Commissioners for Her Majesty’s Revenue and Customs by section 5(1) of the Commissioners for Revenue and Customs Act 2005 (c. 11). Section 50(1) of that Act provides that insofar as it is appropriate in consequence of section 5, a reference in an enactment, however expressed, to the Commissioners of Inland Revenue is to be treated as a reference to the Commissioners for Her Majesty’s Revenue and Customs.
“Relevant overseas scheme” has the meaning given in section 169(7C) of the Finance Act 2004 (c. 12), which was inserted by paragraph 13(7) of Schedule 4A to the Finance Act 2017.
Paragraph 2A was inserted by paragraph 12 of Schedule 10 to the Finance Act 2005 (c. 7).
Paragraph 8 was amended by the Taxation of Pensions Act 2014 (c. 30); the Finance Act 2011 (c. 11) and the Finance Act 2005 (c. 7).
Paragraphs 1(1) was amended by Finance Act 2011 and Finance Act 2007 (c. 11).
Paragraph 14(3) was amended by the Finance Act 2011.
Paragraph 16(3) was amended by the Finance Act 2011.
Paragraph 2(4) was amended by sections 101 and 104 Finance Act 2005 (c. 7), section 161 Finance Act 2006 (c. 25), section 70 Finance Act 2007 (c. 11), and section 20 (1)-(4) Finance Act 2016 (c. 24) (by virtue of S.I. 2016/1006).