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Part 4U.K.Pension schemes etc

Modifications etc. (not altering text)

C7Pt. 4 modified (1.7.2008) (N.I.) (with effect in accordance with reg. 1 of the amending Rule) by The Health and Social Care (Pension Scheme) Regulations (Northern Ireland) 2008 (S.R. 2008/256), regs. 1, 124(1) (with regs. 134, 258)

C9Pt. 4 applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 35 para. 18

C10Pt. 4 modified (19.7.2011) by Finance Act 2011 (c. 11), Sch. 18 para. 14(3)

C11Pt. 4 applied (with modifications) (with application in accordance with Sch. 22 para. 1 of the amending Act) by Finance Act 2013 (c. 29), Sch. 22 para. 1(2)

C12Pt. 4 modified (17.7.2014) by Finance Act 2014 (c. 26), Sch. 6 para. 1(2)(3)

C13Pt. 4: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)

C14Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 1

C15Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 9(2)

Chapter 1U.K.Introduction

IntroductoryU.K.

149Overview of Part 4U.K.

(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 conceptsU.K.

150Meaning of “pension scheme”U.K.

(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[F1, the National Assembly for Wales Commission or the Welsh Ministers], 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).

[F2(5A)This Part applies in relation to certain pension schemes that are not occupational pension schemes as it applies in relation to occupational pension schemes (see section [F3274ZA] and paragraph 1(4A) of Schedule 36).]

(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 [F4which satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Commissioners for Her Majesty's Revenue and Customs.]

Textual Amendments

F3Word in s. 150(5A) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 348(1)(a)(3)

F4Words in s. 150(8) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(1)

151Meaning of “member”U.K.

(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[F5; 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].

Textual Amendments

F5Words 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)

C16S. 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”U.K.

(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 [F6, collective money purchase 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.

[F7(3A)For the purposes of this Part a money purchase arrangement is a “collective 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 collective money purchase 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).

[F8(4A)The reference in subsection (4) to an amount available for the provision of benefits to or in respect of the member includes, in relation to a collective money purchase arrangement, an amount available for the provision of benefits to or in respect of members collectively.]

(5)In this Part “cash balance benefits” means benefits

[F9(a)] 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) [F10, and]

[F11(b)that are not collective money purchase benefits.]

[F12(5A)In this Part “collective money purchase benefits” means benefits that are

[F13(a)]collective money purchase benefits within the meaning of Part 1 or 2 of the Pension Schemes Act 2021 [F14, or]

[F15(b)payments of CMP periodic income.]]

(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 [F16two, three or four of the varieties specified in subsection (10)].

(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 [F17the varieties of benefits specified in subsection (10)], the arrangement is to be treated for the purposes of this Part as being [F18two, three or four] separate arrangements one of which relates to each of the [F18two, three or four] varieties of benefits that may be so provided.

[F19(10)The varieties of benefits mentioned in subsections (8) and (9) are—

(a)cash balance benefits,

(b)collective money purchase benefits,

(c)money purchase benefits that are neither cash balance benefits nor collective money purchase benefits, and

(d)defined benefits.]

Textual Amendments

F9Words in s. 152(5) renumbered as s. 152(5)(a) (1.8.2022) by Finance Act 2021 (c. 26), Sch. 5 paras. 2(5)(a), 25(1); S.I. 2022/874, reg. 2

F13Words in s. 152(5A) renumbered as s. 152(5A)(a) (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 24(2)(a)

F14Word in s. 152(5A)(a) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 24(2)(b)

F15S. 152(5A)(b) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 24(2)(c)

Modifications etc. (not altering text)

C17S. 152 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 6

Chapter 2U.K.Registration of pension schemes

Modifications etc. (not altering text)

RegistrationU.K.

153Registration of pension schemesU.K.

(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)[F20Following] 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—

[F21(a)any information falling within subsection (5A) is inaccurate in a material respect,

(b)any document falling within subsection (5B) contains a material inaccuracy,

(c)any declaration accompanying the application is false,

(d)the scheme administrator has failed to comply with an information notice under section 153A given in connection with the application (including any declaration accompanying it),

(e)the scheme administrator has deliberately obstructed an officer of Revenue and Customs in the course of an inspection under section 153B carried out in connection with the application (including any declaration accompanying it) where the inspection has been approved by the tribunal,

(f)the pension scheme has not been established, or is not being maintained, wholly or mainly for the purpose of making payments falling within section 164(1)(a) or (b) (authorised payments of pensions and lump sums), or

(g)the person who is, or any of the persons who are, the scheme administrator is not a fit and proper person to be, as the case may be—

(i)the scheme administrator, or

(ii)one of the persons who are the scheme administrator] [F22, or

(h)the pension scheme is an occupational pension scheme, and a sponsoring employer in relation to the scheme is a body corporate that has been dormant during a continuous period of one month that falls within the period of one year ending with the day on which the decision is made, or

(i)the pension scheme is an unauthorised Master Trust scheme.]

[F23(5A)The information falling within this subsection is any information—

(a)contained in the application, or

(b)otherwise provided to an officer of Revenue and Customs by the scheme administrator (whether under section 153A or otherwise) in connection with the application (including any declaration accompanying it).

(5B)The documents falling within this subsection are any documents produced to an officer of Revenue and Customs by the scheme administrator (whether under section 153A or otherwise) in connection with the application (including any declaration accompanying it).

(5C)The reference in subsection (5)(d) to the scheme administrator having failed to comply with an information notice under section 153A includes a case where the scheme administrator has concealed, destroyed or otherwise disposed of, or has arranged for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 153A(3).]

(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 [F24made 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.

[F25(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).

Textual Amendments

F20Word in s. 153(4) substituted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 2(2), 5(1)

F21S. 153(5)(a)-(g) substituted for s. 153(5)(a) (with effect in accordance with Sch. 7 para. 5 of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 2(3), 5(1)

F22S. 153(5)(h)(i) and word inserted (15.3.2018 for specified purposes, 6.4.2018 in so far as not already in force) by Finance Act 2018 (c. 3), Sch. 3 paras. 1(3), 2(1)(a)(2)(a)(3)

F23S. 153(5A)-(5C) inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 2(4), 5(1)

F24Words in s. 153(8) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 2, 64(1)

F25S. 153(8A) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 3, 64(1)

[F26153APower to require information or documents in relation to applications for registrationU.K.

(1)This section applies where an application for a pension scheme to be registered is made.

(2)An officer of Revenue and Customs may by notice (an “information notice”) require the scheme administrator or any other person—

(a)to provide the officer with any information, or

(b)to produce a document to the officer,

if the officer reasonably requires the information or document in connection with the application (including any declaration accompanying it).

(3)Paragraphs 6(2), 7, 8, 15, 16, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc) apply in relation to information notices under this section as they apply in relation to information notices under that Schedule.

(4)Where an information notice under this section is given to a person other than the scheme administrator, an officer of Revenue and Customs must give a copy of the notice to the scheme administrator.

(5)A person, other than the scheme administrator, who is given an information notice under this section may appeal against the notice or any requirement in the notice.

(6)Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes of an appeal under subsection (5) as it applies for the purposes of an appeal under Part 5 of that Schedule.

Textual Amendments

F26Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153BPower to inspect documents in relation to applications for registrationU.K.

(1)This section applies where an application for a pension scheme to be registered is made.

(2)An officer of Revenue and Customs may—

(a)enter any business premises of the scheme administrator or any other person, and

(b)inspect documents that are on the premises,

if the officer reasonably requires to inspect the documents in connection with the application (including any declaration accompanying it).

(3)In subsection (2)(a) “business premises” has the meaning given by paragraph 10(3) of Schedule 36 to the Finance Act 2008 (power to inspect business premises etc).

(4)Paragraphs 10(2), 12, 15 and 16 of Schedule 36 to the Finance Act 2008 apply in relation to the power of inspection conferred by this section as they apply in relation to the power of inspection conferred by paragraph 10 of that Schedule.

(5)An officer of Revenue and Customs may not inspect a document under this section if or to the extent that, by virtue of a provision of Part 4 of Schedule 36 to the Finance Act 2008 (restrictions on powers) applied by section 153A(3), an information notice under section 153A given at the time of the inspection to the occupier of the premises could not require the occupier to produce the document.

(6)An officer of Revenue and Customs may ask the tribunal to approve an inspection under this section.

(7)Paragraph 13(1A), (2) and (3) of Schedule 36 to the Finance Act 2008 (approval of tribunal for inspections) applies in relation to an application under subsection (6) as it applies in relation to an application under paragraph 13 of that Schedule in relation to an inspection under paragraph 10 of that Schedule.

Textual Amendments

F26Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153CPenalties for failure to comply with information notices etcU.K.

(1)This section applies where a person other than the scheme administrator—

(a)fails to comply with an information notice under section 153A, or

(b)deliberately obstructs an officer of Revenue and Customs in the course of an inspection under section 153B that has been approved by the tribunal.

(2)The reference in subsection (1)(a) to a person who fails to comply with an information notice includes a person who conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 153A(3).

(3)Paragraphs 39(2), 40 and 44 to 49 of Schedule 36 to the Finance Act 2008 (penalties for failure to comply with information notice etc) apply in relation to the failure or obstruction as they apply in relation to a failure or obstruction mentioned in paragraph 39(1) of that Schedule.

Textual Amendments

F26Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153DPenalties for inaccurate information in applicationsU.K.

(1)This section applies where—

(a)an application under section 153 contains information which is inaccurate,

(b)the inaccuracy is material, and

(c)condition A, B or C is met.

(2)Condition A is that the inaccuracy is careless or deliberate.

(3)An inaccuracy is careless if it is due to a failure by the scheme administrator to take reasonable care.

(4)Condition B is that the scheme administrator knows of the inaccuracy at the time the application is made but does not inform an officer of Revenue and Customs at that time.

(5)Condition C is that the scheme administrator—

(a)discovers the inaccuracy some time later, and

(b)fails to take reasonable steps to inform an officer of Revenue and Customs.

(6)The scheme administrator is liable to a penalty not exceeding the maximum penalty for which the scheme administrator could have been liable under paragraph 40A of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) had that paragraph applied in relation to the inaccuracy.

(7)Where the information contains more than one material inaccuracy, a penalty is payable for each inaccuracy.

(8)Paragraphs 46 to 49 of Schedule 36 to the Finance Act 2008 (assessment of penalties etc) apply in relation to a penalty under this section as they apply in relation to a penalty under paragraph 40A of that Schedule.

Textual Amendments

F26Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153EPenalties for inaccurate information or documents provided under information noticeU.K.

(1)This section applies where—

(a)in complying with an information notice under section 153A, a person provides inaccurate information or produces a document that contains an inaccuracy, and

(b)the inaccuracy is material.

(2)Paragraphs 40A and 46 to 49 of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) apply in relation to the inaccuracy as they apply in relation to an inaccuracy connected with an information notice under that Schedule.

Textual Amendments

F26Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

153FPenalties for false declarationsU.K.

(1)This section applies where—

(a)a declaration accompanying an application under section 153 is false, and

(b)at least one of conditions A to C in section 153D is met (reading references to an inaccuracy as references to a falsehood and references to the scheme administrator as references to the person who made the declaration).

(2)The person who made the declaration is liable to a penalty not exceeding the maximum penalty for which the person could have been liable under paragraph 40A of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) had that paragraph applied in relation to the falsehood.

(3)Where the declaration contains more than one falsehood, a penalty is payable in relation to each falsehood.

(4)Paragraphs 46 to 49 of Schedule 36 to the Finance Act 2008 (assessment of penalties etc) apply in relation to a penalty under this section as they apply in relation to a penalty under paragraph 40A of that Schedule.]

Textual Amendments

F26Ss. 153A-153F inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 3, 5(1)

154Persons by whom registered pension scheme may be establishedU.K.

[F27(1)An application to register a pension scheme may be made only if the pension scheme—

(a)is an occupational pension scheme, or

(b)has been established by a person with permission under FISMA 2000 to establish in the United Kingdom a personal pension scheme or a stakeholder pension scheme.]

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

[F28(2A)Subsection (1) is to be construed in accordance with section 22 of FISMA 2000, any relevant order under that section and Schedule 2 to that Act.]

F29(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)The Treasury may by order amend this section F30....

Textual Amendments

F27S. 154(1) substituted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 2(2), 24(1)

F28S. 154(2A) inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 2(3), 24(1)

F29S. 154(3) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 2(4), 24(1), Sch. 27 Pt. 3(2)

F30Words in s. 154(4) repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 2(5), 24(1), Sch. 27 Pt. 3(2)

F31155Persons by whom scheme may be established: supplementaryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F31S. 155 repealed (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), Sch. 20 paras. 324(1), Sch. 27 Pt. 3(2)

156Appeal against decision not to registerU.K.

(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.

F32(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F32(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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)[F33On an appeal under this section that is notified to the tribunal, the tribunal] must consider whether the pension scheme ought to have been registered by the Inland Revenue.

(7)If [F34the tribunal decides] that the pension scheme ought not to have been registered by the Inland Revenue, [F35the tribunal must] dismiss the appeal.

(8)If [F36the tribunal decides] 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 [F37tribunal determines] (but subject to any further appeal F38...).

[F39156ACases where application for registration not decided within 6 monthsU.K.

(1)This section applies where—

(a)an application for a pension scheme to be registered is made, but

(b)the scheme administrator is not notified under section 153(6) within the period of 6 months after the day on which the application is made.

(2)The scheme administrator may appeal to the tribunal as if, at the end of that period of 6 months, the scheme administrator had been notified under section 153(6) of a decision not to register the scheme; and section 156(5) to (8) applies accordingly.]

Textual Amendments

F39S. 156A inserted (with effect in accordance with Sch. 7 para. 5(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 4, 5(1)

De-registrationU.K.

157De-registrationU.K.

(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-registrationU.K.

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

[F40(za)that the pension scheme has not been established, or is not being maintained, wholly or mainly for the purpose of making payments falling within section 164(1)(a) or (b) (authorised payments of pensions and lump sums),]

[F41(zb)that the person who is, or any of the persons who are, the scheme administrator is not a fit and proper person to be, as the case may be—

(i)the scheme administrator, or

(ii)one of the persons who are the scheme administrator,]

(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 [F42or Part 1 of Schedule 36 to the Finance Act 2008] 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 [F43inaccurate] in a material particular,

[F44(da)that the scheme administrator fails to produce any document required to be produced to an officer of Revenue and Customs by virtue of this Part or Part 1 of Schedule 36 to the Finance Act 2008,

(db)that any document produced to an officer of Revenue and Customs by the scheme administrator contains a material inaccuracy in relation to which at least one of conditions A to C in subsections (7) to (10) is met,]

[F45(e)that any declaration accompanying the application to register the pension scheme, or otherwise made to an officer of Revenue and Customs in connection with the pension scheme, is false in a material particular,

(ea)that the scheme administrator has deliberately obstructed an officer of Revenue and Customs in the course of an inspection under [F46section 159B or] Part 2 of Schedule 36 to the Finance Act 2008 that has been approved by the tribunal, or]

(f)that there is no scheme administrator[F47, or

(g)that the pension scheme is an occupational pension scheme, and a sponsoring employer in relation to the scheme is a body corporate that has been dormant during a continuous period of one month that falls within the period of one year ending with the day on which the decision to withdraw registration is made, or

(h)that the scheme is an unauthorised Master Trust scheme.]

(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 [F48or Part 1 of Schedule 36 to the Finance Act 2008] 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.

[F49(6)Subsections (7) to (10) apply for the purposes of subsection (1)(db).

(7)Condition A is that the inaccuracy is careless or deliberate.

(8)An inaccuracy is careless if it is due to a failure by the scheme administrator to take reasonable care.

(9)Condition B is that the scheme administrator knows of the inaccuracy at the time the document is produced to an officer of Revenue and Customs but does not inform such an officer at that time.

(10)Condition C is that the scheme administrator—

(a)discovers the inaccuracy some time later, and

(b)fails to take reasonable steps to inform an officer of Revenue and Customs.]

Textual Amendments

F40S. 158(1)(za) inserted (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(2)(a), 8(2)

F41S. 158(1)(zb) inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(3)(a), 8(3)

F42Words in s. 158(1)(c) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Pension Schemes (Miscellaneous Amendments) Order 2013 (S.I. 2013/1114), arts. 1(1), 2(2)

F43Word in s. 158(1)(d) substituted (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(2)(b), 8(2)

F44S. 158(1)(da)(db) inserted (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(2)(c), 8(2)

F45S. 158(1)(e)(ea) substituted for s. 158(1)(e) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(2)(d), 8(2)

F46Words in s. 158(1)(ea) inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(3)(b), 8(3)

F47S. 158(1)(g)(h) and word inserted (15.3.2018 for specified purposes, 6.4.2018 in so far as not already in force) by Finance Act 2018 (c. 3), Sch. 3 paras. 1(4), 2(1)(b)(2)(b)(3)

F48Words in s. 158(5) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Pension Schemes (Miscellaneous Amendments) Order 2013 (S.I. 2013/1114), arts. 1(1), 2(3)

F49S. 158(6)-(10) inserted (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 6(4), 8(2)

159Appeal against decision to de-registerU.K.

(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.

F50(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F50(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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)[F51On an appeal that is notified to the tribunal, the tribunal] must consider whether the registration of the pension scheme ought to have been withdrawn.

(7)If [F52the tribunal decides] that the registration of the pension scheme ought to have been withdrawn, [F53the tribunal must] dismiss the appeal.

(8)If [F54the tribunal decides] 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 F55...).

[F56159APower to require information or documents for purpose of considering if scheme administrator is fit and properU.K.

(1)An officer of Revenue and Customs may by notice (an “information notice”) require the scheme administrator of a registered pension scheme or any other person—

(a)to provide the officer with any information, or

(b)to produce a document to the officer,

if the officer reasonably requires the information or document for the purpose of considering whether the person who is, or any of the persons who are, the scheme administrator is a fit and proper person to be the scheme administrator or one of those persons (as the case may be).

(2)Paragraphs 6(2), 7, 8, 15, 16, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc) apply in relation to information notices under this section as they apply in relation to information notices under that Schedule.

(3)Where an information notice under this section is given to a person other than the scheme administrator, an officer of Revenue and Customs must give a copy of the notice to the scheme administrator.

(4)A person who is given an information notice under this section may appeal against the notice or any requirement in the notice.

(5)Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes of an appeal under subsection (4) as it applies for the purposes of an appeal under Part 5 of that Schedule.

Textual Amendments

F56Ss. 159A-159D inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 7, 8(3)

159BPower to inspect documents for purpose of considering if scheme administrator is fit and properU.K.

(1)An officer of Revenue and Customs may—

(a)enter any business premises of the scheme administrator of a registered pension scheme or of any other person, and

(b)inspect documents that are on the premises,

if the officer reasonably requires to inspect the documents for the purpose of considering whether the person who is, or any of the persons who are, the scheme administrator is a fit and proper person to be the scheme administrator or one of those persons (as the case may be).

(2)In subsection (1)(a) “business premises” has the meaning given by paragraph 10(3) of Schedule 36 to the Finance Act 2008 (power to inspect business premises etc).

(3)Paragraphs 10(2), 12, 15 and 16 of Schedule 36 to the Finance Act 2008 apply in relation to the power of inspection conferred by this section as they apply in relation to the power of inspection conferred by paragraph 10 of that Schedule.

(4)An officer of Revenue and Customs may not inspect a document under this section if or to the extent that, by virtue of a provision of Part 4 of Schedule 36 to the Finance Act 2008 (restrictions on powers) applied by section 159A(2), an information notice under section 159A given at the time of the inspection to the occupier of the premises could not require the occupier to produce the document.

(5)An officer of Revenue and Customs may ask the tribunal to approve an inspection under this section.

(6)Paragraph 13(1A), (2) and (3) of Schedule 36 to the Finance Act 2008 (approval of tribunal for inspections) applies in relation to an application under subsection (5) as it applies in relation to an application under paragraph 13 of that Schedule in relation to an inspection under paragraph 10 of that Schedule.

Textual Amendments

F56Ss. 159A-159D inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 7, 8(3)

159CPenalties for failure to comply with information notices etcU.K.

(1)This section applies where a person—

(a)fails to comply with an information notice under section 159A, or

(b)deliberately obstructs an officer of Revenue and Customs in the course of an inspection under section 159B that has been approved by the tribunal.

(2)The reference in subsection (1)(a) to a person who fails to comply with an information notice includes a person who conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 159A(2).

(3)Paragraphs 39(2), 40 and 44 to 49 of Schedule 36 to the Finance Act 2008 (penalties for failure to comply with information notice etc) apply in relation to the failure or obstruction as they apply in relation to a failure or obstruction mentioned in paragraph 39(1) of that Schedule.

Textual Amendments

F56Ss. 159A-159D inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 7, 8(3)

159DPenalties for inaccurate information or documents provided under information noticeU.K.

(1)This section applies where—

(a)in complying with an information notice under section 159A, a person provides inaccurate information or produces a document that contains an inaccuracy, and

(b)the inaccuracy is material.

(2)Paragraphs 40A and 46 to 49 of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) apply in relation to the inaccuracy as they apply in relation to an inaccuracy connected with an information notice under that Schedule.]

Textual Amendments

F56Ss. 159A-159D inserted (1.9.2014) (with effect in accordance with Sch. 7 para. 8(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 paras. 7, 8(3)

Chapter 3U.K.Payments by registered pension schemes

IntroductoryU.K.

160Payments by registered pension schemesU.K.

(1)The only payments which a registered pension scheme is authorised to make to or in respect of a [F57person 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 [F58person 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 [F59person who is or has been a] member of the pension scheme under [F60this 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 [F61person 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 [F62person 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 [F63person who is or has been a] sponsoring employer under section 181.

[F64(4A)If an unauthorised member payment or unauthorised employer payment made to or in respect of a person would have been greater but for a reduction made in respect of the whole, or any proportion, of the amount which the scheme administrator considers may be the amount of the liability to the scheme sanction charge in respect of it, it is to be regarded for the purposes of this Part as increased by the amount of the reduction.

(4B)But if the amount, or that proportion of the amount, of that liability is in fact less than the amount of the reduction, a subsequent payment of an amount not exceeding the difference between that amount and the amount of the reduction made—

(a)to or in respect of the same person, and

(b)before the end of the period of two years beginning with the date on which the unauthorised member payment or unauthorised employer payment was made,

is not to be regarded for the purposes of this Part as an unauthorised member payment or unauthorised employer payment.]

(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.

[F65(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 [F66and the receipt of income and gains from taxable property].

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

Textual Amendments

F57Words in s. 160(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(2)

F58Words 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)

F59Words 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)

F60Words 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)

F61Words in s. 160(3) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 3(4)

F62Words 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)

F63Words 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)

F64S. 160(4A)(4B) inserted (19.7.2007) (with effect in accordance with Sch. 20 para. 24(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 20 para. 5

F65S. 160(7A) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 3(2)

F66Words 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” etcU.K.

(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 [F67or in respect of] a person who—

(a)is connected with a [F68person who is or has been a] member or sponsoring employer (or was connected with [F69such a person at the date of the person's] death), and

(b)is not a [F68person who is or has been a] member or sponsoring employer,

is to be treated as made in respect of the [F68person who is or has been a] member or sponsoring employer.

(6)Any asset held by a person connected with a [F70person who is or has been a] member or sponsoring employer (or who was connected with [F71such a person at the date of the person's] death) is to be treated as held for the benefit of the [F70person 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 [F72person who is or has been a] member or sponsoring employer (or who was connected with [F73such a person at the date of the person's] death) is to be treated as an increase or reduction for the benefit of the [F72person who is or has been a] member or sponsoring employer.

[F74(8)For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]

Textual Amendments

F67Words in s. 161(5) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 5, 64(1)

F68Words 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)

F69Words 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)

F70Words 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)

F71Words 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)

F72Words 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)

F73Words 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)

F74S. 161(8) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 467 (with Sch. 2)

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”U.K.

(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 [F75section 1005 of ITA 2007]), or

(b)offered to the public.

(3)A guarantee of a loan made to or in respect of a [F76person who is or has been a] member or sponsoring employer of a registered pension scheme [F77, or to or in respect of a person who is connected with a [F76person who is or has been a] member or sponsoring employer of a registered pension scheme but is not [F78such a person],] is to be treated as a loan to or in respect of the [F76person who is or has been a] member or sponsoring employer of an amount equal to the amount guaranteed.

(4)If a [F79person who is or has been a] member or sponsoring employer of a registered pension scheme [F80or a person who is connected with a [F79person who is or has been a] member or sponsoring employer of a registered pension scheme but is not [F81such 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 [F79person 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.

[F82(6)For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]

Textual Amendments

F75Words in s. 162(2)(a) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 468(2) (with Sch. 2)

F76Words in s. 162(3) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(a)

F77Words in s. 162(3) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 6(2), 64(1)

F78Words in s. 162(3) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(b)

F79Words in s. 162(4) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(a)

F80Words in s. 162(4) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 6(3), 64(1)

F81Words in s. 162(4) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 5(b)

F82S. 162(6) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 468(3) (with Sch. 2)

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” etcU.K.

(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.

Modifications etc. (not altering text)

C21S. 163(2) applied (retrospective to 6.4.2011) by Finance Act 2011 (c. 11), s. 68(5)(6)

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 paymentsU.K.

164Authorised member paymentsU.K.

[F83(1)]The only payments a registered pension scheme is authorised to make to or in respect of a [F84person 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 [F85to 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 [F86to 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.

[F87(2)Regulations under subsection (1)(f) may—

(a)provide that for the purposes of Part 9 of ITEPA 2003 all or part of a prescribed payment is to be treated as pension under a registered pension scheme, or as a lump sum of a prescribed description,

(b)provide that all or part of a prescribed payment is subject to the short service refund lump sum chargeF88... or the special lump sum death benefits charge,

(c)provide that a prescribed event in relation to a prescribed payment is to be treated [F89as a relevant benefit crystallisation event for the purposes of section 637Q or 637S of ITEPA 2003 (availability of individual’s lump sum allowance and lump sum and death benefit allowance)],

F90(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and “prescribed” means prescribed in regulations under subsection (1)(f).]

[F91(3)The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision—

(a)having the effect that the making of a prescribed authorised payment does not (directly or indirectly) result in an individual first flexibly accessing pension rights for the purposes of sections 227B to 227F,

(b)having the effect that the making of a prescribed authorised payment is not a relevant withdrawal for the purposes of section 579CA of ITEPA 2003, and

(c)having the effect that the making of a prescribed payment by a pension scheme that is not a registered pension scheme, where the payment would be an authorised payment if the scheme were a registered pension scheme, is not a relevant withdrawal for the purposes of section 576A of ITEPA 2003.

(4)In subsection (3)—

  • authorised payment” means a payment specified in subsection (1), and

  • prescribed” means prescribed in regulations under subsection (3).]

Textual Amendments

F83S. 164(1): s. 164 renumbered as s. 164(1) (21.7.2008) by Finance Act 2008 (c. 9), Sch. 29 para. 1(2)(a)

F84Words in s. 164 inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(a)

F85Words in s. 164(a) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(b)

F86Words in s. 164(b) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 6(c)

F87S. 164(2) inserted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 29 para. 1(2)(b)

F88Words in s. 164(2)(b) omitted (with effect in accordance with Sch. 5 para. 4 of the amending Act) by virtue of Finance Act 2016 (c. 24), Sch. 5 para. 3(1)(a)

F89Words in s. 164(2)(c) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 16, 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F90S. 164(2)(d) omitted (21.7.2009) by virtue of Finance Act 2009 (c. 10), s. 75(2)(a)

F91S. 164(3)(4) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 85

Modifications etc. (not altering text)

C22S. 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 rulesU.K.

(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 [F92or an annuity], [F93and if in the case of an annuity that day was before 6 April 2015,] payment of the scheme pension [F94or annuity] may continue to be made (to any person) until the end of that period.

    [F95If the member becomes entitled to an annuity on or after 6 April 2015 and the annuity is payable until the later of the member's death and the end of a term certain, payment of the annuity may continue to be made (to any person) until the end of that term.]

    [F96Except as provided by the preceding provisions of this rule, no] 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 [F97or a collective money purchase arrangement].

  • Pension rule 4

    [F98No payment of pension] other than—

    (a)

    a scheme pension,

    (b)

    a lifetime annuity, or

    (c)

    [F99drawdown pension]

    may be made in respect of a money purchase arrangement [F100that is not a collective money purchase arrangement]; but a scheme pension may only be paid if the member had an opportunity to select a lifetime annuity instead.

  • [F101Pension rule 5

    The total amount of drawdown pension paid in each drawdown pension year [F102from, or under a short-term annuity purchased using sums or assets out of, the member's drawdown pension fund] in respect of a money purchase arrangement must not exceed [F103150%] of the basis amount for the drawdown pension .]

  • F104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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 [F105drawdown pension], and

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

[F106and, 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].

F107(3A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F107(3B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Textual Amendments

F92Words in s. 165(1) substituted (with effect as specified in Sch. 19 para. 29(1) to the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 2(2)(a)

F93Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(a)

F94Words in s. 165(1) substituted (with effect as specified in Sch. 19 para. 29(1) to the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 2(2)(b)

F95Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(b)

F96Words in s. 165(1) substituted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 41(c)

F98Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(a)(i)

F99Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(a)(ii)

F101Words in s. 165(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(b)

F102Words in s. 165(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 1

F103Word in s. 165(1) substituted (with effect in accordance with s. 41(6) of the amending Act) by Finance Act 2014 (c. 26), s. 41(1)

F104Words in s. 165(1) omitted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 1(2)(c); and omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(a)(4)

F105Words in s. 165(3)(a) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 64

F106Words in s. 165(3) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 7, 64(1)

F107S. 165(3A)(3B) omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(b)(4)

Modifications etc. (not altering text)

C27S. 165 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 90(2)(a)

C28S. 165 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 91(2)(a)

C29S. 165 modified by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), reg. 6 (as substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2012/1795, regs. 1(1), 3)

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 ruleU.K.

(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,

[F108(aa)a pension commencement excess lump sum,]

(b)a serious ill-health lump sum,

[F109(ba)an uncrystallised funds pension lump sum,]

(c)a short service refund lump sum,

(d)a refund of excess contributions lump sum,

(e)a trivial commutation lump sum [F110, or]

(f)a winding-up lump sum, F111...

F112(g). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F113(h). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

F114(za). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(a)in the case of [F115a pension commencement lump sum or a pension commencement excess lump sum], immediately before the person becomes entitled to the pension in connection with which it is paid [F116(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)],

[F117(aa)in the case of an uncrystallised funds pension lump sum, immediately before it is paid,] 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.

[F118(5)The Commissioners for Her Majesty's Revenue and Customs may by regulations amend Part 1 of Schedule 29, or Part 3 of Schedule 36, in connection with cases involving a lump sum within subsection (6).

(6)A lump sum is within this subsection if—

(a)the sum is paid on or after 19 September 2013 and before 6 April 2015, or

(b)the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the pension in connection with which the sum is paid, and on or after 19 March 2014 the contract is cancelled.

(7)The provision that may be made under subsection (5) includes provision altering the effect of amendments made by the Finance Act 2014.]

Textual Amendments

F108S. 166(1)(aa) inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 17(2)(a), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F109S. 166(1)(ba) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 54

F110Word in s. 166(1)(e) inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 17(2)(b), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F111Word in s. 166(1) omitted (19.3.2014) by virtue of Finance Act 2014 (c. 26), Sch. 5 paras. 5(1), 15

F112S. 166(1)(g) omitted (for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2024 (c. 3), Sch. 9 paras. 17(2)(c), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F113S. 166(1)(h) omitted (for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2024 (c. 3), Sch. 9 paras. 17(2)(c), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F114S. 166(2)(za) omitted (for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2024 (c. 3), Sch. 9 paras. 17(3)(a), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F115Words in s. 166(2)(a) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 17(3)(b), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F116Words in s. 166(2)(a) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 9, 24(3)

F117S. 166(2)(aa) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 55

F118S. 166(5)-(7) inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 13, 15

Modifications etc. (not altering text)

C31S. 166 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 11

C34S. 166(2)(a) modified by S.I. 2006/572, art. 23ZE(2) (as inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Taxation of Pension Schemes (Transitional Provisions) (Amendment) Order 2011 (S.I. 2011/732), arts. 1(1), 3)

C35S. 166(2)(a) modified by S.I. 2006/572, art. 23ZC(2) (as inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Taxation of Pension Schemes (Transitional Provisions) (Amendment) Order 2011 (S.I. 2011/732), arts. 1(1), 3)

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 rulesU.K.

(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[F119, or nominee or successor,] 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 [F120or a collective money purchase arrangement].

  • Pension death benefit rule 3

    [F121No payment of pension death benefit] other than—

    (a)

    a dependants' scheme pension,

    (b)

    a dependants' annuity, or

    (c)

    [F122dependants’ drawdown pension,]

    may be made to [F123a dependant] in respect of a money purchase arrangement [F124that is not a collective 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.

  • [F125Pension death benefit rule 3A

    No payment of pension death benefit, other than [F126a nominees' annuity in respect of a money purchase arrangement or] nominees' drawdown pension in respect of a money purchase arrangement, may be made to a nominee of the member.]

  • [F125Pension death benefit rule 3B

    No payment of pension death benefit, other than [F127a successors' annuity in respect of a money purchase arrangement or] successors' drawdown pension in respect of a money purchase arrangement, may be made to a successor of the member.]

  • [F128Pension death benefit rule 4

    The total amount of dependants’ drawdown pension paid to a dependant in each drawdown pension year [F129from, or under a dependants' short-term annuity purchased using sums or assets out of, the dependant's drawdown pension fund] in respect of a money purchase arrangement must not exceed [F130150%] of the basis amount for the drawdown pension year.

    F131...]

  • F132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F133(1A)For the purposes of this Part, a person becomes entitled to dependants' income withdrawal, nominees' income withdrawal or successors' income withdrawal under a registered 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 (as the case may be) dependants' drawdown pension, nominees' drawdown pension or successors' drawdown pension.]

(2)[F134In 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)[F135, or a pension payable in respect of the member on the subsequent death of a dependant, nominee or successor of the member].

F136(2A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F136(2B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Textual Amendments

F119Words in s. 167 inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 2(2)

F121Words in s. 167(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(a)(i)

F122Words in s. 167(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(a)(ii)

F123Words in s. 167(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(a)(iii)

F125Words in s. 167 inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 2(3)

F126Words in s. 167(1) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 2(2)

F127Words in s. 167(1) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 2(3)

F128Words in s. 167(1) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(b)

F129Words in s. 167(1) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 6

F130Word in s. 167(1) substituted (with effect in accordance with s. 41(6) of the amending Act) by Finance Act 2014 (c. 26), s. 41(2)

F131Words in s. 167(1) omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(c)(4)

F132Words in s. 167(1) omitted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 11(2)(c)

F134Words in s. 167(2) substituted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 22(1), 24(3)

F135Words in s. 167(2) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 2(5)

F136S. 167(2A)(2B) omitted (6.4.2015) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 32(1)(d)(4)

Modifications etc. (not altering text)

C38S. 167 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 99(2)(a)

C39S. 167 modified (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 98(2)(a)

C40S. 167 modified by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), reg. 7 (as substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2012/1795, regs. 1(1), 4)

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 ruleU.K.

(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,

[F137(e)a drawdown pension fund lump sum death benefit,]

[F138(ea)a flexi-access drawdown fund lump sum death benefit,]

(f)a charity lump sum death benefit [F139, or]

F140(g). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(h)a trivial commutation lump sum death benefit, F141...

F141(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)In this Part “lump sum death benefit” means a lump sum payable on the death of the member [F142, or a lump sum payable in respect of the member on the subsequent death of a dependant, nominee or successor 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.

Textual Amendments

F137S. 168(1)(e) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 65

F138S. 168(1)(ea) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 7

F139Word in s. 168(1)(f) inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 18(a), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F140S. 168(1)(g) repealed (19.7.2007) (with effect in accordance with Sch. 19 para. 29(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 5, Sch. 27 Pt. 3(1)

F141S. 168(1)(i) and word omitted (for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2024 (c. 3), Sch. 9 paras. 18(b), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

Modifications etc. (not altering text)

C42S. 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 transfersU.K.

(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.

[F143(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 [F144member's drawdown pension fund or dependant's drawdown pension fund], F145... [F146or

(aa)a member's flexi-access drawdown fund or dependant's flexi-access drawdown fund,] [F147or

(ab)a nominee's flexi-access drawdown fund, or

(ac)a successor's flexi-access drawdown fund,]

F145(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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.]

[F148(1F)The Commissioners for His Majesty’s Revenue and Customs may by regulations make provision as to the treatment for the purposes of any provision of this Part [F149of—

(a)sums or assets that—

(i)were transferred in accordance with section 36 of the Pension Schemes Act 2021 and regulations made under that section (collective money purchase scheme pursuing continuity option 1: discharge of liabilities and winding up (Great Britain)),

(ii)were transferred in accordance with section 87 of the Pension Schemes Act 2021 and regulations made under that section (collective money purchase scheme pursuing continuity option 1: discharge of liabilities and winding up (Northern Ireland)), or

(iii)are derived from sums or assets within sub-paragraph (i) or (ii);

(b)any pension or other benefits provided from sums or assets within paragraph (a).]

(1G)The provision that may be made under subsection (1F) includes provision for treating sums or assets [F150within paragraph (a) of that subsection] as remaining, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, held for the purposes of the collective money purchase arrangement under the pension scheme from which they were transferred.]

(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,

[F151(ba)the scheme manager has confirmed to an officer of Revenue and Customs that the scheme manager understands the scheme manager's potential liability to overseas transfer charge and has undertaken to such an officer to operate the charge including by meeting the scheme manager's liabilities to the charge,]

(c)the scheme manager has undertaken to the Inland Revenue to comply with [F152any requirements imposed under subsection (4)], and

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

[F153(2A)Regulations may make provision as to—

(a)information that is to be included in, or is to accompany, a notification under subsection (2)(a);

(b)the way and form in which such a notification, or any required information or evidence, is to be given or provided.]

(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.

[F154(4)Regulations may require the scheme manager of a QROPS or former QROPS to—

(a)give the Commissioners information of a prescribed description,

(b)give the Commissioners such evidence as they may require of a prescribed matter,

[F155(ba)give information of a prescribed description to the scheme manager of a QROPS or former QROPS,

(bb)give information of a prescribed description to the scheme administrator of a registered pension scheme,

(bc)give information of a prescribed description to a member, or former member, of the QROPS or former QROPS,] and

(c)give a prescribed authority, in prescribed circumstances, information of a prescribed description.

[F156(4ZA)Regulations may require a member, or former member, of a QROPS or former QROPS to give information of a prescribed description to the scheme manager of a QROPS or former QROPS.]

(4A)Regulations under subsection (4) [F157or (4ZA)] may make provision as to—

(a)the way and form in which information or evidence is to be given, and

(b)the times or intervals at which information or evidence is to be given.

(4B)The regulations may apply any provision of Part 7 of Schedule 36 to FA 2008 (penalties), with or without modifications, in relation to requirements imposed under the regulations on a former QROPS.]

[F158(4C)Provision under subsection (2A)(b) or (4A)(a) may, in particular, provide for use of a way or form specified by the Commissioners.]

(5)A recognised overseas pension scheme is excluded from being a qualifying recognised overseas pension scheme by this subsection if [F159the Commissioners have] decided that—

(a)[F160any of the following conditions is met in relation to the scheme—

(i)there has been a failure to comply with a relevant requirement and the failure is significant,

(ii)any information given pursuant to a relevant requirement is [F161inaccurate] in a material respect,

(iii)any declaration given pursuant to a relevant requirement is false in a material respect,

(iv)there is no scheme manager,] and

(b)by reason of [F162that condition being met] 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).

[F163(6)A failure to comply with a requirement is significant if—

(a)it is a failure to give information or evidence that is (or may be) of significance, or

(b)there are reasonable grounds for believing that the failure prejudices (or might prejudice) the assessment or collection of tax by the Commissioners.]

(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.

[F164(7A)Regulations may, in a case where—

(a)any of the sums and assets transferred by a relevant overseas transfer represent rights in respect of a pension to which a person has become entitled under the transferring scheme (“the original pension”), and

(b)those sums and assets are, after the transfer, applied towards the provision of a pension under the other scheme (“the new pension”),

provide that the new pension is to be treated, to such extent as is prescribed and for such of the purposes of this Part as are prescribed, as if it were the original pension.

(7B)For the purposes of subsection (7A), a “relevant overseas transfer” is a transfer of sums or assets held for the purposes of, or representing accrued rights under, a relevant overseas scheme (“the transferring scheme”) so as to become held for the purposes of, or to represent rights under—

(a)another relevant overseas scheme, or

(b)a registered pension scheme,

in connection with a member of that pension scheme.

(7C)In subsection (7B) “relevant overseas scheme” means—

(a)a QROPS, or

(b)a relevant non-UK scheme (see paragraph 1(5) of Schedule 34).

(7D)Regulations under subsection (7A) may—

(a)apply generally or only in specified cases, and

(b)make different provision for different cases.]

[F165(8)In subsections (4) to (6) [F166, (7A) to (7D)] and this subsection—

  • the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

  • prescribed” means prescribed by regulations;

  • QROPS” means a qualifying recognised overseas pension scheme, and “former QROPS” means a scheme that has at any time been a QROPS;

  • regulations” means regulations made by the Commissioners;

  • relevant requirement” means—

    (a)

    a requirement imposed by regulations under subsection (4), or

    (b)

    a requirement imposed by virtue of Part 1 of Schedule 36 to FA 2008 (powers to obtain information and documents)[F167, or

    (c)

    a requirement to pay overseas transfer charge, or interest on overseas transfer charge, imposed by regulations under section 244L(2) or by an assessment under such regulations.]]

Textual Amendments

F143S. 169(1A)-(1E) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 36, 64(1)

F144Words in s. 169(1D)(a) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 66(a)

F145S. 169(1D)(b) and preceding word omitted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 66(b)

F146S. 169(1D)(aa) and preceding word inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 8

F147S. 169(1D)(ab)(ac) and preceding word inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 4

F148S. 169(1F)(1G) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 24(3)

F149Words in s. 169(1F) substituted (24.5.2024) by Finance (No. 2) Act 2024 (c. 12), s. 24(2)

F150Words in s. 169(1G) substituted (24.5.2024) by Finance (No. 2) Act 2024 (c. 12), s. 24(3)

F151S. 169(2)(ba) inserted (with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 paras. 13(2), 25(3)

F152Words in s. 169(2)(c) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(3)

F153S. 169(2A) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(3)

F154S. 169(4)-(4B) substituted for s. 169(4) (17.7.2013) by Finance Act 2013 (c. 29), s. 53(4)

F155S. 169(4)(ba)-(bc) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 92

F156S. 169(4ZA) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(4)

F157Words in s. 169(4A) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(5)

F158S. 169(4C) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(6)

F159Words in s. 169(5) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(5)(a)

F160S. 169(5)(a) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(5)(b)

F161Word in s. 169(5)(a)(ii) substituted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 7 para. 23(a)

F162Words in s. 169(5)(b) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(5)(c)

F163S. 169(6) substituted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(6)

F164S. 169(7A)-(7D) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(7)

F165S. 169(8) inserted (17.7.2013) by Finance Act 2013 (c. 29), s. 53(7)

F166Words in s. 169(8) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(8)(a)

F167Words in s. 169(8) inserted (retrospective to 9.3.2017 and with effect in accordance with Sch. 4 para. 25 of the amending Act) by Finance Act 2017 (c. 10), Sch. 4 para. 13(8)(b)

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 schemeU.K.

(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.

F168(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F168(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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)[F169On an appeal that is notified to the tribunal, the tribunal] must consider whether the recognised overseas pension scheme ought to have been excluded from being a qualifying recognised overseas pension scheme.

(7)If [F170the tribunal decides] that the recognised overseas pension scheme ought to have been excluded from being a qualifying recognised overseas pension scheme, [F171the tribunal must] dismiss the appeal.

(8)If [F172the tribunal decides] 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 F173...).

Textual Amendments

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 paymentsU.K.

(1)A “scheme administration member payment” is a payment by a registered pension scheme to or in respect of a [F174person 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 [F175person 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.

Textual Amendments

F174Words in s. 171(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 7

F175Words 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 paymentsU.K.

172AssignmentU.K.

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

[F176(a)any benefit, other than an excluded pension, to which the member (or any dependant[F177, nominee or successor] 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

[F178(a)any benefit, other than an excluded pension, to which the person has [F179a] 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 [F180a member of the pension scheme] 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 [F181 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 [F182or right] assigned (or agreed to be assigned) are not unauthorised payments.

[F183(6A)References in this section to a benefit to which the member or a person has an entitlement under the pension scheme includes rights to payments under—

(a)a scheme pension or dependants' scheme pension provided by the scheme administrator or as a result of the application of sums or assets held for the purposes of the pension scheme, or

(b)a lifetime annuity or dependants' annuity[F184, or nominees' annuity or successors' annuity,] purchased by the application of sums or assets held for the purposes of the pension scheme.]

[F185(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.

Textual Amendments

F176S. 172(1)(a)(b) substituted for words (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(2), 64(1)

F177Words in s. 172(1)(a) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 5

F178S. 172(3)(a)(b) substituted for words (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(3), 64(1)

F179Word in s. 172(3)(a) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(1) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 2(2)(a)

F180Words in s. 172(3)(b) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(1) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 2(2)(b)

F181Words in s. 172(5)(b) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(4), 64(1)

F182Words in s. 172(6) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 37(5), 64(1)

F183S. 172(6A) inserted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(1) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 2(3)

F184Words in s. 172(6A)(b) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 8

F185S. 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

[F186172ASurrenderU.K.

(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[F187, nominee or successor] of the member) has a prospective entitlement under an arrangement under the pension scheme,

[F188(aa)any rights to payments under a lifetime annuity or dependants' annuity[F189, or nominees' annuity or successors' annuity,] purchased by the application of sums or assets held for the purposes of 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 [F190in respect of] 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[F191, or nominee,] of an entitlement to benefits after the member's death,

[F192(ba)a surrender (or agreement to surrender) by a dependant, nominee or successor of the member (“the beneficiary”) in return for the conferring, on a successor of the member, of an entitlement to benefits after the beneficiary'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[F193, dependant, nominee or successor],

[F194(ca)a surrender of (or agreement to surrender) rights to payments under an annuity in any case covered by regulations under paragraph 3(2B) or 17(3) of Schedule 28;]

F195(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F196(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 [F197Part 5 of the Equality Act 2010, so far as relating to age, or the] Employment Equality (Age) Regulations (Northern Ireland) 2006 (or any regulations amending or replacing [F198those Regulations])]

(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.

[F199(5A)Subsection (5)(b) applies only if the entitlement is held (or is to be held) by the dependant[F200, or nominee,] under an arrangement under the pension scheme relating to the member or dependant [F201or nominee].]

[F202(5B)Subsection (5)(ba) applies only if the entitlement is held (or is to be held) by the successor under an arrangement under the pension scheme relating to the beneficiary or successor.]

(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 [F203or nominee or successor] 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[F204, or nominee or successor,] 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.

[F205(9A)References in this section to a benefit to which the member or a person has an entitlement under the pension scheme includes rights to payments under—

(a)a scheme pension or dependants' scheme pension provided by the scheme administrator or as a result of the application of sums or assets held for the purposes of the pension scheme, or

(b)a lifetime annuity or dependants' annuity[F206, or nominees' annuity or successors' annuity,] purchased by the application of sums or assets held for the purposes of the pension scheme.]

(10)[F207For 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.

[F208(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.]

[F209(11)For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]

Textual Amendments

F186Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

F187Words in s. 172A(1)(a) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 6

F188S. 172A(1)(aa) inserted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 3(2)

F189Words in s. 172A(1)(aa) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 9(2)

F190Words in s. 172A(3)(a) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 3(3)

F191Words in s. 172A(5)(b) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 7(a)

F192S. 172A(5)(ba) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 7(b)

F193Words in s. 172A(5)(c) substituted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 7(c)

F194S. 172A(5)(ca) inserted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 3(4)

F195S. 172A(5)(d) omitted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 7 para. 10(2)

F196S. 172A(5)(da)(db) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 6(2), 24(3)

F197Words in s. 172A(5)(db) substituted by 2010 c. 15, Sch. 26 Pt. 1 para. 58(a) (as inserted (E.W.S.) (1.10.2010) by The Equality Act 2010 (Consequential Amendments, Saving and Supplementary Provisions) Order 2010 (S.I. 2010/2279), art. 1(2), Sch. 1 para. 5 (see S.I. 2010/2317, art. 2))

F198Words in s. 172A(5)(db) substituted by 2010 c. 15, Sch. 26 Pt. 1 para. 58(b) (as inserted (E.W.S.) (1.10.2010) by The Equality Act 2010 (Consequential Amendments, Saving and Supplementary Provisions) Order 2010 (S.I. 2010/2279), art. 1(2), Sch. 1 para. 5 (see S.I. 2010/2317, art. 2))

F199S. 172A(5A) inserted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 para. 10(3)

F200Words in s. 172A(5A) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 8(a)

F201Words in s. 172A(5A) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 8(b)

F202S. 172A(5B) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 9

F203Words in s. 172A(7) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 10(a)

F204Words in s. 172A(7)(a) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 10(b)

F205S. 172A(9A) inserted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 3(5)

F206Words in s. 172A(9A)(b) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 9(3)

F207Words in s. 172A(10) substituted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 6(3), 24(3)

F208S. 172A(10A) inserted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 6(4), 24(3)

F209S. 172A(11) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 469 (with Sch. 2)

172BIncrease in rights of connected person on deathU.K.

(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 [F210or nominee or successor] of the member) has a prospective entitlement under an arrangement under the pension scheme,

[F211(aa)rights to payments under a scheme pension or dependants' scheme pension provided by the scheme administrator or as a result of the application of sums or assets held for the purposes of the pension scheme or under a lifetime annuity or dependants' annuity[F212, or nominees' annuity or successors' annuity,] purchased by the application of sums or assets held for the purposes of the pension scheme,] F213...

[F214(ab)rights representing the nominee's flexi-access drawdown fund or successor's flexi-access drawdown fund in respect of an arrangement under the pension scheme,]

(b)rights representing the [F215member's drawdown pension fund or dependant's drawdown pension fund] in respect of an arrangement under the pension scheme[F216, or

(c)rights representing the member's flexi-access drawdown fund or dependant's flexi-access drawdown 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 [F217has an actual or prospective entitlement] 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 [F218(5)])).

(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—

F219(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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—

F220(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)the benefits to which each of [F221at least 20 members of the pension scheme] [F222has an actual or prospective entitlement] under the pension scheme are increased at the same rate in consequence of the death.

[F223(7A)This section does not apply if—

(a)the increase mentioned in subsection (1)(a) is an increase in the rate of a dependants' annuity[F224, nominees' annuity, successors' annuity] or dependants' scheme pension or in rights representing a [F225nominee's flexi-access drawdown fund, successor's flexi-access drawdown fund,] [F226dependant's drawdown pension fund] [F227or dependant's flexi-access drawdown fund], and

(b)the increase is attributable to rights of the dead member to payments under a dependants' annuity[F224, nominees' annuity, successors' annuity] or dependants' scheme pension or rights representing a [F225nominee's flexi-access drawdown fund, successor's flexi-access drawdown fund,] [F228dependant's drawdown pension fund] [F227or dependant's flexi-access drawdown fund].

(7B)References in this section to a benefit to which the member or a person has an entitlement under the pension scheme includes rights to payments under—

(a)a scheme pension or dependants' scheme pension provided by the scheme administrator or as a result of the application of sums or assets held for the purposes of the pension scheme, or

(b)a lifetime annuity or dependants' annuity[F229, or nominees' annuity or successors' annuity,] purchased by the application of sums or assets held for the purposes of the pension scheme.]

(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.

F230(8A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F231(9)For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]

Textual Amendments

F186Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

F210Words in s. 172B(2)(a) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 11(a)

F211S. 172B(2)(aa) inserted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(2)

F212Words in s. 172B(2)(aa) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 10(2)

F213Word in s. 172B(2)(aa) omitted (17.12.2014) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 9(a)

F214S. 172B(2)(ab) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 11(b)

F215Words in s. 172B(2)(b) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 67(2)

F216S. 172B(2)(c) and preceding word inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 9(b)

F217Words in s. 172B(3)(a) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(3)

F218Word in s. 172B(4) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 19 para. 12(3)

F219S. 172B(5)(a) repealed (19.7.2007) (with effect in accordance with Sch. 19 para. 29(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 6, Sch. 27 Pt. 3(1)

F220S. 172B(7)(a) omitted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 28 para. 4(4)(a)

F221Words in s. 172B(7)(b) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(4)(b)

F222Words in s. 172B(7)(b) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(3)

F223S. 172B(7A)(7B) inserted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(5)

F224Words in s. 172B(7A) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 10(3)

F225Words in s. 172B(7A) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 12

F226Words in s. 172B(7A)(a) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 67(3)(a)

F227Words in s. 172B(7A) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 10

F228Words in s. 172B(7A)(b) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 67(3)(b)

F229Words in s. 172B(7B)(b) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 10(4)

F230S. 172B(8A) omitted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 67(4)

F231S. 172B(9) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 470 (with Sch. 2)

F232172BAIncrease in rights on death arising from alternatively secured pension fund etcU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F186Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

F232S. 172BA omitted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 68

172CAllocation of unallocated employer contributionsU.K.

(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 [F233or a collective money purchase 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 [F234that are not cash balance benefits or collective money purchase 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.

[F235(7)For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]

Textual Amendments

F186Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

F235S. 172C(7) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 471 (with Sch. 2)

172DLimit on increase in benefitsU.K.

(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 [F236236A] 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.

[F237(6)For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]]

Textual Amendments

F186Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

F236Word in s. 172D(4)(b) substituted (with effect in accordance with Sch. 17 Pt. 2 of the amending Act) by Finance Act 2011 (c. 11), Sch. 17 para. 2

F237S. 172D(6) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 472 (with Sch. 2)

173BenefitsU.K.

(1)A registered pension scheme is to be treated as having made an unauthorised payment to a [F238person 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 [F239person], or

(b)a member of the [F240person's] family or household.

(2)If the benefit is received by reason of an employment which is not [F241lower-paid employment as a minister of religion], subsection (1) does not apply.

(3)If the benefit is received by reason of [F242an employment which is lower-paid employment as a minister of religion], 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 [F243lower-paid employment as a minister of religion],

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

(c)the [F244person], or a member of the [F245person'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 [F246person who is or has been a] member of the pension scheme if, after the [F247person'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 [F247person's] death, was a member of the [F247person'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 [F248lower-paid employment as a minister of religion], subsections (4) and (5) do not apply.

(7)If the benefit is received by reason of [F249an employment which is lower-paid employment as a minister of religion], subsections (4) and (5) only apply if—

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

(b)at the date of the [F250person's] death the [F251person], or a member of the [F250person's] family or household, was a director of, and had a material interest in, a sponsoring employer.

[F252(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 [F253person 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,

  • [F254lower-paid employment as a minister of religion” has the meaning given by section 290D 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.

Textual Amendments

F238Words 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)

F239Word 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)

F240Word 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)

F241Words in s. 173(2) substituted (with effect in accordance with s. 13(4) of the amending Act) by Finance Act 2015 (c. 11), Sch. 1 para. 25(2)

F242Words in s. 173(3) substituted (with effect in accordance with s. 13(4) of the amending Act) by Finance Act 2015 (c. 11), Sch. 1 para. 25(3)(a)

F243Words in s. 173(3)(a) substituted (with effect in accordance with s. 13(4) of the amending Act) by Finance Act 2015 (c. 11), Sch. 1 para. 25(3)(b)

F244Word 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)

F245Word 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)

F246Words 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)

F247Word 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)

F248Words in s. 173(6) substituted (with effect in accordance with s. 13(4) of the amending Act) by Finance Act 2015 (c. 11), Sch. 1 para. 25(4)

F249Words in s. 173(7) substituted (with effect in accordance with s. 13(4) of the amending Act) by Finance Act 2015 (c. 11), Sch. 1 para. 25(5)

F250Word 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)

F251Word 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)

F252S. 173(7A) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 4

F253Words 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)

F254Words in s. 173(10) substituted (with effect in accordance with s. 13(4) of the amending Act) by Finance Act 2015 (c. 11), Sch. 1 para. 25(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 shiftingU.K.

(1)A registered pension scheme is to be treated as having made an unauthorised payment to a [F255person 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 [F256person] is increased, a liability of the [F256person] is reduced, or a liability of another person is reduced for the benefit of the [F256person].

(2)But if the event or the change in the value of the currency occurs after the [F257person's] death—

(a)the pension scheme is to be treated as having made an unauthorised payment in respect of the [F258person] (rather than to the [F258person]), 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).

Textual Amendments

F255Words 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)

F256Word 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)

F257Word 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)

F258Word 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

[F259174ATaxable property held by investment-regulated pension schemesU.K.

(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.]

Textual Amendments

F259S. 174A inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 158(2), Sch. 21 para. 5

Authorised employer paymentsU.K.

175Authorised employer paymentsU.K.

The only payments which a registered pension scheme that is an occupational pension scheme is authorised to make to or in respect of a [F260person 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.

Textual Amendments

F260Words 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 paymentU.K.

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.

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 paymentU.K.

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.

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 paymentsU.K.

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.

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 loanU.K.

(1)A loan made to or in respect of a [F261person 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 [F262person 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 [F263person 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.

Textual Amendments

F261Words in s. 179(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 11

F262Words in s. 179(5) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 11

F263Words 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 paymentsU.K.

(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 [F264person 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 [F265person 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.

Textual Amendments

F264Words in s. 180(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 12

F265Words 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)

C45S. 180 modified (with effect in accordance with reg. 1(2) of the amending S.I.) by The Finance Act 2004, Section 180(5) (Modification) Regulations 2012 (S.I. 2012/1258), regs. 1, 2

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 paymentsU.K.

181Value shiftingU.K.

(1)A registered pension scheme that is an occupational pension scheme is to be treated as having made an unauthorised payment to a [F266person 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 [F267person] is increased, a liability of the [F267person] is reduced, or a liability of another person is reduced for the benefit of the [F267person].

(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).

Textual Amendments

F266Words in s. 181(1) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 13(a)

F267Word 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

[F268Alternatively secured pensions]U.K.

Textual Amendments

F268S. 181A and cross-heading inserted (19.7.2007) (with effect in accordance with Sch. 19 para. 29(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 14

F269181AMinimum level of paymentU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F269S. 181A omitted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 69

BorrowingU.K.

182Unauthorised borrowing: money purchase arrangements [F270other than collective money purchase arrangements] U.K.

(1)A registered pension scheme is not authorised to borrow an amount in respect of a money purchase arrangement [F271that is not a collective 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 [F272member's drawdown pension fund] in respect of the arrangement (if any),

[F273(aa)the amount of such of the sums and the market value of such of the assets as represent the member's flexi-access drawdown 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 [F274dependants' drawdown pension funds] [F275or dependants' flexi-access drawdown funds] in respect of the arrangement (if any),

[F276(ba)the amount of such of the sums and the market value of such of the assets as represent nominees' flexi-access drawdown funds in respect of the arrangement (if any),

(bb)the amount of such of the sums and the market value of such of the assets as represent successors' flexi-access drawdown 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 [F277drawdown pension fund] [F278or the person's flexi-access drawdown 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 [F279or collective money purchase 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).

Textual Amendments

F272Words in s. 182(3)(a) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 70(2)(a)

F273S. 182(3)(aa) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 11(a)

F274Words in s. 182(3)(b) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 70(2)(b)

F275Words in s. 182(3)(b) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 11(b)

F276S. 182(3)(ba)(bb) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 13

F277Words in s. 182(5) substituted (with effect in accordance with Sch. 16 para. 85 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 70(3)

F278Words in s. 182(5) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 12

Modifications etc. (not altering text)

C47S. 182 modified (retrospective to 6.4.2011) by Finance Act 2011 (c. 11), s. 68(2)(6)

C48S. 182 restricted (retrospective to 6.4.2011) by Finance Act 2011 (c. 11), s. 68(1)(6)

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 arrangements [F280other than collective money purchase arrangements] U.K.

(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.

Textual Amendments

Modifications etc. (not altering text)

C49S. 183 modified (retrospective to 6.4.2011) by Finance Act 2011 (c. 11), s. 68(2)(6)

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 arrangementsU.K.

(1)A registered pension scheme is not authorised to borrow an amount in respect of any [F281relevant arrangement] unless the scheme borrowing condition is met.

[F282(1A)In this section “relevant arrangement” means an arrangement that—

(a)is not a money purchase arrangement, or

(b)is a collective money purchase arrangement.]

(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 [F283relevant 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 [F284relevant arrangements], and

(b)the market value of the assets held for the purposes of such of the arrangements under the pension scheme as are [F285relevant arrangements].

Textual Amendments

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 arrangementsU.K.

(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.

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

[F286Income and gains from taxable propertyU.K.

Textual Amendments

F286Ss. 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 propertyU.K.

(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.

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

185BAnnual profits and deemed profitsU.K.

(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.

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

185CDeemed market valueU.K.

(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.

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

185DApportionment to pension schemeU.K.

(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.

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

185ECredit for tax paidU.K.

(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).

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

185FGains from taxable propertyU.K.

(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).

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

185GDisposal by person holding directlyU.K.

(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 residentF287... and domiciled in the United Kingdom,

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

F288(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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.

Textual Amendments

F287Words in s. 185G(3)(a) omitted (with effect in accordance with Sch. 46 para. 132 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 46 para. 120

F288S. 185G(3)(c) omitted (21.7.2008) (with effect in accordance with Sch. 2 para. 56(3) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 53

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

185HDisposal of interest in vehicleU.K.

(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.

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

185ICredit for tax paidU.K.

(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).]

Modifications etc. (not altering text)

C50Ss. 185A-185I restricted by S.I. 2006/207, reg. 4B (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes)(Amendment) Regulations 2006 (S.I. 2006/1960), reg. 9)

[F289Repayments of lump sumsU.K.

Textual Amendments

F289S. 185J and cross-heading inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 3, 15

185JEffect of repayment of certain pre-6 April 2015 lump sumsU.K.

(1)For the purposes of this Part—

(a)a lump sum to which this section applies is treated as never having been paid, and

(b)the payment by which it is repaid is treated as not being a payment.

(2)This section applies to a lump sum if—

(a)the sum is paid by a registered pension scheme to a member of the scheme in respect of a money purchase arrangement,

(b)the sum is paid to the member in connection with a pension under the scheme to which it is expected that the member will become entitled (“the expected pension”),

(c)the expected pension is income withdrawal, a lifetime annuity or a scheme pension,

(d)the sum is paid before the member becomes entitled to the expected pension,

(e)either—

(i)the sum is paid on or after 19 September 2013 but before 6 April 2015, or

(ii)the sum is paid before 19 September 2013, a contract for a lifetime annuity is entered into to provide the expected pension, and on or after 19 March 2014 the contract is cancelled,

(f)before the member becomes entitled to the expected pension, the member repays the sum to the pension scheme that paid it, and

(g)the repayment is made before 6 October 2015.

(3)For the purposes of subsection (2), if the circumstances are as described in subsection (2)(e)(ii), the member is treated as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.]

Chapter 4U.K.Registered pension schemes: tax reliefs and exemptions

Scheme investmentsU.K.

186IncomeU.K.

(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 [F290which 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).

[F291(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.

Textual Amendments

F291S. 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)

C51S. 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 gainsU.K.

(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) ”.

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' contributionsU.K.

188Relief for contributionsU.K.

(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) [F292or (3A)] applies.

(3)This subsection applies to—

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

[F293(aa)any contributions which are life assurance premium contributions (see section 195A),]

(b)any contributions paid by an employer of the individual (as to which see sections 196 to 201), F294...

F294(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F295(3A)This subsection applies to a contribution if the contribution results from the transfer of property or money, or the payment of a sum, towards the pension scheme pursuant to a relevant order in a case where—

(a)section 266A (members' liability in respect of unauthorised member payments) applies, and

(b)relief is claimed under that section in respect of the liability mentioned in subsection (1)(a) of that section.

(3B)In the case of a contribution which is greater than UMP (see section 266A(5)), subsection (3A) does not apply to the contribution so far as it is greater than UMP.

(3C)In subsection (3A) “relevant order” means an order under any of the following—

(a)section 16(1), 19(4) or 21(2)(a) of the Pensions Act 2004 (orders for money etc to be restored to pension schemes), or

(b)Article 12(1), 15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order 2005 (corresponding provision for Northern Ireland).]

(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, F296...

F296(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

is not to be treated as a contribution.

F297(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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).

Textual Amendments

F292Words in s. 188(2) inserted (with effect in accordance with Sch. 7 para. 16 of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 para. 13(2)

F293S. 188(3)(aa) inserted (19.7.2007) (with effect in accordance with Sch. 18 paras. 4-7 of the amending Act) by Finance Act 2007 (c. 11), Sch. 18 para. 2

F294S. 188(3)(c) and word omitted (6.4.2015) by virtue of Finance Act 2013 (c. 29), s. 52(2)(11)

F295S. 188(3A)-(3C) inserted (with effect in accordance with Sch. 7 para. 16 of the amending Act) by Finance Act 2014 (c. 26), Sch. 7 para. 13(3)

F296S. 188(5)(b) and preceding word repealed (19.7.2007) (with effect in accordance with Sch. 19 para. 29(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 7, Sch. 27 Pt. 3(1)

F297S. 188(6) omitted (retrospective to 6.4.2013) by virtue of Finance Act 2013 (c. 29), s. 52(3)(10)

Modifications etc. (not altering text)

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 individualU.K.

(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 [F298or 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 [F299Part 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), F300...

[F301(ba)income which is chargeable under Part 3 of ITTOIA 2005 and is immediately derived from the carrying on of a UK furnished holiday lettings business (whether individually or as a partner acting personally in a partnership), F302...]

[F303(bb)income which is chargeable under Part 3 of ITTOIA 2005 and is immediately derived from the carrying on of an EEA furnished holiday lettings business (whether individually or as a partner acting personally in a partnership), and]

[F304(c)income to which subsection (2A) applies.]

[F305(2A)This subsection applies to income if—

(a)it is patent income, and

(b)the individual, alone or jointly, devised the invention for which the patent in question was granted.]

[F306(2B)The income covered by subsection (2)(b) includes—

(a)an amount treated as a profit under section 863J(2) of ITTOIA 2005, and

(b)income treated as received under section 863J(4) of that Act.]

(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 [F307under section 2(1) of the Taxation (International and Other Provisions) Act 2010] (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.

[F308(5)UK furnished holiday lettings business” means a UK property business so far as consisting of the commercial letting of furnished holiday accommodation (within the meaning of Chapter 6 of Part 3 of ITTOIA 2005).

(6)If there is a letting of accommodation only part of which is holiday accommodation, just and reasonable apportionments are to be made for the purpose of determining what is comprised in a UK furnished holiday lettings business.

[F309(6A)EEA furnished holiday lettings business” means an overseas property business so far as consisting of the commercial letting of furnished holiday accommodation (within the meaning of Chapter 6 of Part 3 of ITTOIA 2005) in one or more EEA states.

(6B)If there is a letting of accommodation only part of which is holiday accommodation, just and reasonable apportionments are to be made for the purpose of determining what is comprised in an EEA furnished holiday lettings business.]

(7)Patent income” means—

(a)royalties or other sums paid in respect of the use of a patent charged to tax under section 579 of ITTOIA 2005,

(b)amounts on which tax is payable under section 587 or 593 of ITTOIA 2005, or

(c)amounts on which tax is payable under—

(i)section 472(5) of the Capital Allowances Act, or

(ii)paragraph 100 of Schedule 3 to that Act.]

Textual Amendments

F298Words 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

F300Word in s. 189(2) repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 473(2)(a), Sch. 3 Pt. 1 (with Sch. 2)

F301S. 189(2)(ba) inserted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 473(2)(b) (with Sch. 2)

F302Word in s. 189(2)(ba) omitted (with effect in accordance with Sch. 14 para. 4 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 14 para. 1(2)

F303S. 189(2)(bb) inserted (with effect in accordance with Sch. 14 para. 4 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 1(2)

F304S. 189(2)(c) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 473(2)(c) (with Sch. 2)

F305S. 189(2A) inserted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 473(3) (with Sch. 2)

F306S. 189(2B) inserted (with effect in accordance with Sch. 17 para. 21 of the amending Act) by Finance Act 2014 (c. 26), Sch. 17 para. 18

F307Words in s. 189(3) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 63 (with Sch. 9 paras. 1-9, 22)

F308S. 189(5)-(7) inserted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 473(4) (with Sch. 2)

F309S. 189(6A)(6B) inserted (with effect in accordance with Sch. 14 para. 4 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 1(3)

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 reliefU.K.

(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.

F310(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F310S. 190(5) omitted (retrospective to 6.4.2013) by virtue of Finance Act 2013 (c. 29), s. 52(4)(10)

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 reliefU.K.

(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.

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 sourceU.K.

(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 [F311at the relevant rate] .

[F312(1A)For the purposes of this section and sections 192A and 192B “the relevant rate” is—

(a)if the Commissioners for Her Majesty’s Revenue and Customs so notify the scheme administrator, the Scottish basic rate for the tax year in which the payment is made;

[F313(aa)if the Commissioners for Her Majesty’s Revenue and Customs so notify the scheme administrator, the Welsh basic rate for the tax year in which the payment is made;] and

(b)the basic rate for that tax year in all other cases.]

(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.

[F314(4)If (apart from this section) income tax at the higher rate [F315[F316or] the additional rate F317...] is chargeable in respect of any part of the individual's total income for the tax year, on the making of a claim the basic rate limit and the higher rate limit for the tax year in the individual's case are increased by the amount of the contribution.]

[F318(4A)Where—

(a)the individual is a Scottish taxpayer for the tax year,

(b)(apart from this section) income tax is chargeable in respect of any part of that individual’s total income for the tax year at a Scottish rate, and

(c)that rate is higher than the Scottish basic rate for that year,

on the making of a claim, the Scottish basic rate limit, and any other Scottish rate limit for the tax year in the individual’s case [F319that is above the Scottish basic rate limit] , are increased by the amount of the contribution.]

[F320(4B)Where—

(a)the individual is a Welsh taxpayer for the tax year, and

(b)(apart from this section) income tax is chargeable in respect of any part of that individual’s total income for the tax year at the Welsh higher rate or Welsh additional rate,

on the making of a claim, the basic rate limit and the higher rate limit for the tax year in the individual’s case, are increased by the amount of the contribution.]

F321(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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.

[F322(11)Subsection (10) does not apply to prevent the giving of relief in respect of the contribution in accordance with subsection 192A.]

Textual Amendments

F311Words in s. 192(1) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Scottish Rate of Income Tax (Consequential Amendments) Order 2015 (S.I. 2015/1810), arts. 1(1), 3(2)

F312S. 192(1A) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Scottish Rate of Income Tax (Consequential Amendments) Order 2015 (S.I. 2015/1810), arts. 1(1), 3(3)

F313S. 192(1A)(aa) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 4(2)

F314S. 192(4) substituted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 11

F315Words in s. 192(4) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Scottish Rate of Income Tax (Consequential Amendments) Order 2015 (S.I. 2015/1810), arts. 1(1), 3(4)

F316Word in s. 192(4) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Scotland Act 2016 (Income Tax Consequential Amendments) Regulations 2017 (S.I. 2017/468), regs. 1(1), 3(2)(a)

F317Words in s. 192(4) omitted (with effect in accordance with reg. 1(2) of the amending S.I.) by virtue of The Scotland Act 2016 (Income Tax Consequential Amendments) Regulations 2017 (S.I. 2017/468), regs. 1(1), 3(2)(b)

F318S. 192(4A) inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Scotland Act 2016 (Income Tax Consequential Amendments) Regulations 2017 (S.I. 2017/468), regs. 1(1), 3(3)

F320S. 192(4B) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 4(3)

F321S. 192(5) repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 474, Sch. 3 Pt. 1 (with Sch. 2)

F322S. 192(11) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Scottish Rate of Income Tax (Consequential Amendments) Order 2015 (S.I. 2015/1810), arts. 1(1), 3(5)

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

[F323192A.Relief at source: additional reliefU.K.

(1)An individual to whom relief is given in accordance with section 192 in respect of a contribution is entitled to a tax reduction for the tax year in which the payment of the contribution is made if the conditions in subsection (2) [F324, (3A)] or (4) are met.

(2)The conditions are that—

(a)the relevant rate [F325is not the Scottish basic rate] for the tax year in which the payment of the contribution is made,

(b)the individual is a Scottish taxpayer for that tax year, and

(c)the Scottish basic rate for that tax year is higher than [F326the relevant rate].

(3)If the conditions in subsection (2) are met, the amount of the tax reduction is an amount equal to the difference between the amount of relief which would have been given if the relevant rate were the Scottish basic rate for the tax year in which the payment is made and the amount of relief given under section 192.

[F327(3A)The conditions are that—

(a)the relevant rate is not the Welsh basic rate for the tax year in which the payment of the contribution is made,

(b)the individual is a Welsh taxpayer for that tax year, and

(c)the Welsh basic rate for that tax year is higher than the relevant rate.

(3B)If the conditions in subsection (3A) are met, the amount of the tax reduction is an amount equal to the difference between the amount of relief which would have been given if the relevant rate were the Welsh basic rate for the tax year in which the payment is made and the amount of relief given under section 192.]

[F328(4)The conditions are that—

(a)the relevant rate is not the basic rate for the tax year in which the payment of the contribution is made,

(b)the individual is neither a Scottish taxpayer nor a Welsh taxpayer for that tax year, and

(c)the basic rate for that tax year is higher than the relevant rate.]

(5)If the conditions in subsection (4) are met, the amount of the tax reduction is an amount equal to the difference between the amount of relief which would have been given if the relevant rate were the basic rate for the tax year in which the payment is made and the amount of relief given under section 192.

(6)A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.

Textual Amendments

F323Ss. 192A, 192B inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Scottish Rate of Income Tax (Consequential Amendments) Order 2015 (S.I. 2015/1810), arts. 1(1), 4

F324Word in s. 192A(1) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 5(2)

F325Words in s. 192A(2)(a) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 5(3)(a)

F326Words in s. 192A(2)(c) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 5(3)(b)

F327S. 192A(3A)(3B) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 5(4)

F328S. 192A(4) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 5(5)

192B.Relief at source: excessive relief givenU.K.

(1)If relief is given to an individual in accordance with section 192 in respect of a contribution and the conditions in subsection (2) [F329, (3A)] or (4) [F330are met], an amount of excessive relief given is treated as an amount of tax for which the individual is liable for the tax year in which the payment of the contribution is made.

(2)The conditions are that—

(a)the relevant rate [F331is not the Scottish basic rate] for the tax year in which the payment of the contribution is made,

(b)the individual is a Scottish taxpayer for that tax year, and

(c)the Scottish basic rate for that tax year is lower than [F332the relevant rate].

(3)If the conditions in subsection (2) [F333are met], the amount of excessive relief given is an amount equal to the difference between the amount of relief given and the amount of relief which would have been given if the relevant rate were the Scottish basic rate for the tax year in which the payment is made.

[F334(3A)The conditions are that—

(a)the relevant rate is not the Welsh basic rate for the tax year in which the payment of the contribution is made,

(b)the individual is a Welsh taxpayer for that tax year, and

(c)the Welsh basic rate for that tax year is lower than the relevant rate.

(3B)If the conditions in subsection (3A) are met, the amount of excessive relief given is an amount equal to the difference between the amount of relief given and the amount of relief which would have been given if the relevant rate were the Welsh basic rate for the tax year in which the payment is made.]

[F335(4)The conditions are that—

(a)the relevant rate is not the basic rate for the tax year in which the payment of the contribution is made, and

(b)the individual is neither a Scottish taxpayer nor a Welsh taxpayer for that tax year, and

(c)the basic rate for that tax year is lower than the relevant rate.]

(5)If the conditions in subsection (4) [F336are met], the amount of excessive relief given is an amount equal to the difference between the amount of relief given and the amount of relief which would have been given if the relevant rate were the basic rate for the tax year in which the payment is made.

(6)An amount of excessive relief treated as an amount of tax under this section is added at Step 7 of the calculation in section 23 of ITA 2007.]

Textual Amendments

F323Ss. 192A, 192B inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Scottish Rate of Income Tax (Consequential Amendments) Order 2015 (S.I. 2015/1810), arts. 1(1), 4

F329Word in s. 192B(1) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 6(2)

F330Words in s. 192B(1) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 6(3)

F331Words in s. 192B(2)(a) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 6(4)(a)

F332Words in s. 192B(2)(c) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 6(4)(b)

F333Words in s. 192B(3) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 6(3)

F334S. 192B(3A)(3B) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 6(5)

F335S. 192B(4) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 6(6)

F336Words in s. 192B(5) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Devolved Income Tax Rates (Consequential Amendments) Order 2019 (S.I. 2019/201), arts. 1(1), 6(3)

193Relief under net pay arrangementsU.K.

(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 [F337in calculating the net income] of the individual for the tax year [F338(see Step 2 of the calculation in section 23 of ITA 2007)].

(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.

Textual Amendments

F337Words in s. 193(6) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 475(a) (with Sch. 2)

F338Words in s. 193(6) inserted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 475(b) (with Sch. 2)

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

[F339193A Net pay arrangements: relief where no income tax liabilityU.K.

(1)This section applies where—

(a)an individual is entitled to be given relief in accordance with section 193 in respect of the payment of a contribution under a pension scheme,

(b)the individual is entitled to a personal allowance, in accordance with section 35(1) of ITA 2007 (personal allowance), for the tax year in which the payment is made (“the relevant tax year”), and

(c)the amount of the individual’s total income for the relevant tax year does not exceed the personal allowance specified in section 35(1) of ITA 2007 for the relevant tax year.

(2)The Commissioners for His Majesty’s Revenue and Customs must make arrangements to secure that, so far as reasonably practicable and subject to provision made under subsection (5), they pay to the individual the appropriate amount in relation to the contribution.

(3)The appropriate amount is—

(a)where the individual’s total income for the relevant tax year plus the contribution does not exceed the personal allowance specified in section 35(1) of ITA 2007 for the relevant tax year, an amount equal to income tax at the relevant rate on the whole of the contribution, and

(b)where the individual’s total income for the relevant tax year plus the contribution does exceed the personal allowance specified in section 35(1) of ITA 2007 for the relevant tax year, an amount equal to income tax at the relevant rate on an amount calculated in accordance with this formula—

C minus E

where—

  • C equals the whole of the contribution, and

  • E equals the amount by which the personal allowance is exceeded by the individual’s total income for the relevant tax year plus the contribution.

(4)The arrangements must secure that an amount which the Commissioners are required to pay in relation to a contribution is paid as soon as reasonably practicable after the tax year in which the contribution is paid.

(5)The arrangements must include a procedure for the purposes of allowing an individual to whom an amount would otherwise have to be paid under subsection (2) to decline to receive that amount.

(6)For the purposes of income tax, apart from determining whether this section applies or calculating the appropriate amount in accordance with subsection (3), an amount paid to an individual in accordance with the arrangements is to be treated as if it were earnings within Chapter 1 of Part 3 of ITEPA 2003—

(a)from an employment in the relevant tax year, and

(b)in respect of duties performed in the United Kingdom.

(7)In subsection (3), “the relevant rate” is—

(a)where the individual is a Scottish taxpayer for the relevant tax year, the Scottish basic rate for that year,

(b)where the individual is a Welsh taxpayer for the relevant tax year, the Welsh basic rate for that year, and

(c)in all other cases, the basic rate for that tax year.

(8)In this section, “total income” has the meaning given by section 23 of ITA 2007 (the calculation of income tax liability).

(9)The Treasury may by regulations amend or otherwise modify this section.

(10)Regulations under subsection (9) may make different provision for different purposes.]

Textual Amendments

F339S. 193A inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 25

194Relief on making of claimU.K.

(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 [F340in calculating the net income] of the individual for the tax year in which the payment is made [F341(see Step 2 of the calculation in section 23 of ITA 2007)].

(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.

Textual Amendments

F340Words in s. 194(1) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 476(a) (with Sch. 2)

F341Words in s. 194(1) inserted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 476(b) (with Sch. 2)

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 contributionU.K.

(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 (F342... SAYE option schemes)), and

  • share incentive plan” has the same meaning as in the SIP code (see section 488 of ITEPA 2003 (F343... share incentive plans)).

Textual Amendments

F342Word in s. 195(5) omitted (6.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 8 paras. 139, 146 (with Sch. 8 paras. 147-157)

F343Word in s. 195(5) omitted (6.4.2014) by virtue of Finance Act 2014 (c. 26), Sch. 8 paras. 52, 89 (with Sch. 8 paras. 90-96)

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

[F344195ALife assurance premium contributionsU.K.

(1)Contributions paid by or on behalf of an individual under a registered pension scheme are life assurance premium contributions for the purposes of section 188(3)(aa) if—

(a)rights under a non-group life policy (see subsection (2)) are (or later become) held for the purposes of the pension scheme, and

(b)the contributions are treated by this section as paid in respect of premiums under the non-group life policy (see subsections (3) to (5)).

(2)For the purposes of this section a “non-group life policy” is a policy of insurance under which the only benefits which may become payable are benefits payable in consequence, or in anticipation, of—

(a)the death of the individual or one of a group of individuals which includes the individual, or

(b)the deaths of more than one of a group of individuals—

(i)which includes the individual, and

(ii)the other members of which are connected with the individual.

(3)Contributions paid by or on behalf of the individual under the pension scheme are treated as paid in respect of premiums under the non-group life policy if—

(a)the payment of the contributions constitutes the payment of premiums under the policy, or

(b)the person by whom the contributions are paid intends the contributions (or an amount equivalent to them) to be applied towards paying premiums under the policy.

(4)Where the amount of the premiums under the policy in a tax year exceeds the amount of any contributions treated as paid in respect of the premiums by subsection (3), other contributions paid by or on behalf of the individual under the pension scheme in the tax year are treated as paid in respect of premiums under the policy to the extent that their amount does not exceed the difference between the amount of the premiums and the amount of any contributions treated as paid in respect of the premiums by subsection (3).

(5)But where—

(a)the benefits under the policy relate to the death of one or more of a group of individuals, and

(b)contributions are also paid under the pension scheme in the tax year by or on behalf of another member or other members of the group,

the amount of the contributions paid by or on behalf of the individual which are treated as paid in respect of premiums under the policy by subsection (4) does not exceed what is just and reasonable having regard to the operation of section 188(3)(aa) in relation to the contributions paid by or on behalf of another member or other members of the group.

(6)The Commissioners for Her Majesty's Revenue and Customs may by regulations amend subsections (2) to (5).

(7)Regulations under subsection (6) which limit—

(a)the policies of insurance which are non-group life assurance policies for the purposes of this section, or

(b)the contributions which are treated by this section as paid in respect of premiums under such policies,

may be made so as to have effect in relation to times before they are made.

(8)For the purposes of this section an individual (“A”) is connected with another individual (“B”) if—

(a)A is B's spouse or civil partner,

(b)A is a relative of B,

(c)A is the spouse or civil partner of a relative of B,

(d)A is a relative of B's spouse or civil partner, or

(e)A is the spouse or civil partner of a relative of B's spouse or civil partner;

and for the purposes of this subsection “relative” means brother, sister, ancestor or lineal descendant.]

Textual Amendments

F344S. 195A inserted (19.7.2007) (with effect in accordance with Sch. 18 paras. 4-7 of the amending Act) by Finance Act 2007 (c. 11), Sch. 18 para. 3

Employers' contributionsU.K.

196Relief for employers in respect of contributions paidU.K.

(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 [F345Part 2 of ITTOIA 2005] [F346or Part 3 of CTA 2009 (trading income)]

(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 [F347Chapter 2 of Part 16 of CTA 2009] (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 [F348section 76 of FA 2012] (expenses of insurance companies), the contributions—

(a)are to be [F349treated as meeting the conditions in section 77(2)(a) and (c) of that Act to the extent that they would otherwise not meet them], and

(b)are referable to the accounting period in which they are paid.

F350(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)This section is subject to sections 197 and 198 (spreading of relief) (and to transitional provision contained in Part 4 of Schedule 36).

Textual Amendments

F346Words in s. 196(2) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 573(2) (with Sch. 2 Pts. 1, 2)

F347Words in s. 196(3) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 573(3) (with Sch. 2 Pts. 1, 2)

F348Words in s. 196(4) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 113(a)

F349Words in s. 196(4)(a) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 113(b)

F350S. 196(5) omitted (retrospective to 6.4.2013) by virtue of Finance Act 2013 (c. 29), s. 52(5)(10)

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

[F351196APower to restrict reliefU.K.

(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 [F352or Part 3 of CTA 2009 (trading income)],

(b)their being expenses of management of the employer for the purposes of [F353section 1219 of CTA 2009] (expenses of management: companies with investment business), or

(c)their being [F354ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012],

(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).]

Textual Amendments

F351S. 196A inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 39, 64(1)

F352Words in s. 196A(4)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 574(a) (with Sch. 2 Pts. 1, 2)

F353Words in s. 196A(4)(b) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 574(b) (with Sch. 2 Pts. 1, 2)

F354Words in s. 196A(4)(c) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 114

[F355196BEmployer asset-backed contributions: denial of relief (1)U.K.

(1)An employer (“E”) is not to be given relief in respect of a contribution (“E's contribution”) paid by E under a registered pension scheme if conditions A, B and C are met.

(2)Condition A is that—

(a)under an arrangement (“the asset-backed arrangement”)—

(i)a person (“the borrower”) receives money or another asset (“the advance”) from another person (“the lender”),

(ii)the borrower, or a person connected with the borrower, makes a disposal of an asset (“the security”) to or for the benefit of the lender or a person connected with the lender, and

(iii)the lender, or a person connected with the lender, is entitled to payments in respect of the security,

(b)the borrower is E or a person connected with E, and

(c)the advance is (wholly or partly) paid or provided by the lender out of E's contribution (directly or indirectly),

and the case is not one in relation to which either condition A in section 196D or condition A in section 196F is met.

(3)For the purposes of subsection (2)(a)(iii) it does not matter if an entitlement of the lender, or a person connected with the lender, is subject to any condition.

(4)Condition B is that the asset-backed arrangement is not an acceptable structured finance arrangement (see section 196C).

(5)Condition C is that it is reasonable to suppose that the amount of one or more of the payments mentioned in subsection (2)(a)(iii) has been, or is to be, determined (wholly or partly) on the basis that, in essence, the whole or a part of the advance represents a loan which is (wholly or partly) to be repaid by way of one or more of those payments.

(6)For the purposes of subsection (5) it does not matter—

(a)that the repayment of the loan might be subject to any condition, or

(b)that the accounts of any person do not record a financial liability in respect of the whole or a part of the advance or that the whole or a part of the advance is not otherwise treated as representing a loan for the purposes of the accounts of any person,

but, subject to that, all relevant circumstances are to be taken into account in order to get to the essence of the matter.

(7)For the purposes of this section—

(a)the borrower and the lender are not connected with one another if that would otherwise be the case,

(b)if the borrower is not E, references to a person connected with the borrower include a person connected with E who would not otherwise be connected with the borrower, and

(c)loan” includes any advance of money.

Textual Amendments

F355Ss. 196B-196L inserted (with effect in accordance with Sch. 13 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 15 (with Sch. 13 Pt. 4) (and see also, as to denial of relief for contributions paid during the period 29.11.2011 to 21.2.2012, the ss. 196B-196J inserted by Finance Act 2012 (c. 14), Sch. 13 paras. 1, 3 (with Sch. 13 Pt. 2))

196CEmployer asset-backed contributions: “acceptable structured finance arrangement” (1)U.K.

(1)For the purposes of section 196B the asset-backed arrangement is an “acceptable structured finance arrangement” if conditions M to Q are met.

(2)Condition M is that—

(a)in accordance with generally accepted accounting practice, the borrower's accounts for the period in which the advance is received record a financial liability (“the recorded financial liability”) in respect of the advance, and

(b)the asset-backed arrangement is a type 1 finance arrangement for the purposes of Chapter 5B of Part 13 of ITA 2007 or Chapter 2 of Part 16 of CTA 2010 (finance arrangements).

(3)Condition N is that—

(a)the lender is a responsible authority,

(b)the advance is money which is paid by the lender directly to the borrower wholly and directly out of E's contribution, and

(c)the advance and the recorded financial liability (as originally recorded) are both of an amount equal to the amount of E's contribution.

(4)Condition O is that, as at the time the advance is paid, the position of the lender is as follows—

(a)it is the lender (and not any person connected with the lender) who is entitled to the payments mentioned in section 196B(2)(a)(iii),

(b)those payments are to arise at times which have been fixed and fall at intervals of no more than one year (but allowing for payments otherwise due to arise on a non-working day to arise on the next working day),

(c)the lender is to receive each payment no later than 3 months after the day on which the payment arises (but allowing for payments otherwise due to be received on a non-working day to be received on the next working day),

(d)on receipt by the lender, each payment is directly to become part of the sums held for the purposes of the registered pension scheme,

(e)the payments are all to be of the same amount,

(f)the total amount of the payments is not to be less than the amount of E's contribution, and

(g)all the payments are to be received by the lender within a period (“the payment period”) ending no later than the end of the period of 25 years beginning with the day on which E's contribution is paid.

(5)For the purposes of subsection (4)(b) the first payment is to arise no later than one year after the day on which the advance is paid.

(6)For the purposes of subsection (4)(e) the following are to be ignored—

(a)negligible differences in the amounts of payments;

(b)differences in the amounts of payments which would be caused by a term of the asset-backed arrangement that requires the amounts of all outstanding payments to be increased periodically by a percentage which cannot be higher than the highest of the following—

(i)the percentage increase in the consumer prices index for the reference period, being a period determined, in relation to each periodic increase, under the term of the asset-backed arrangement in question;

(ii)the percentage increase in the retail prices index for the reference period;

(iii)the percentage for the reference period which corresponds to 5% per annum.

(7)For the purposes of subsection (4), in determining the lender's position, regard must be had (in particular) to any arrangements connected (directly or indirectly) to the asset-backed arrangement.

(8)Condition P is that, as at the time the advance is paid, in accordance with generally accepted accounting practice the recorded financial liability is to be reduced to nil by the end of the payment period by (and only by) the payments mentioned in section 196B(2)(a)(iii).

(9)Condition Q is that, as at the time the advance is paid, no commitment to which subsection (10) applies has been given.

(10)This subsection applies to a commitment (whether or not legally enforceable and whether or not subject to any conditions) if—

(a)it is given (directly or indirectly) to a relevant person,

(b)it is a commitment to secure that a person receives money or another asset, and

(c)it is linked (directly or indirectly) to the receipt by the lender of a payment mentioned in section 196B(2)(a)(iii).

(11)In subsection (10)(a) “relevant person” means—

(a)E;

(b)a person connected with E;

(c)a person acting (directly or indirectly) at the direction or request, or with the agreement, of E or a person connected with E;

(d)a person chosen (directly or indirectly) by E or a person connected with E;

(e)a person within a class of person chosen (directly or indirectly) by E or a person connected with E;

(f)a partnership;

but does not include a responsible authority.

(12)In this section “responsible authority” means—

(a)the persons who from time to time are the trustees of the registered pension scheme, or

(b)the persons who from time to time are the persons controlling the management of the registered pension scheme,

in their capacity as such.

Textual Amendments

F355Ss. 196B-196L inserted (with effect in accordance with Sch. 13 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 15 (with Sch. 13 Pt. 4) (and see also, as to denial of relief for contributions paid during the period 29.11.2011 to 21.2.2012, the ss. 196B-196J inserted by Finance Act 2012 (c. 14), Sch. 13 paras. 1, 3 (with Sch. 13 Pt. 2))

196DEmployer asset-backed contributions: denial of relief (2)U.K.

(1)An employer (“E”) is not to be given relief in respect of a contribution (“E's contribution”) paid by E under a registered pension scheme if conditions A and B are met.

(2)Condition A is that—

(a)under an arrangement (“the asset-backed arrangement”) a person (“the transferor”) makes a disposal of an asset (“the security”) to a partnership,

(b)the transferor is E or a person connected with E,

(c)the transferor, or a person connected with the transferor, is a member of the partnership immediately after the disposal (whether or not a member immediately before it),

(d)under the asset-backed arrangement the partnership receives money or another asset (“the advance”) from a person (“the lender”) other than the transferor,

(e)the advance is (wholly or partly) paid or provided by the lender out of E's contribution (directly or indirectly),

(f)there is a relevant change in relation to the partnership (see section 196H), and

(g)under the asset-backed arrangement the share in the partnership's profits of the person involved in the relevant change (see section 196H) is determined by reference (wholly or partly) to payments in respect of the security.

(3)If the transferor is not E, for the purposes of this section references to a person connected with the transferor include a person connected with E who would not otherwise be connected with the transferor.

(4)For the purposes of subsection (2)(g) it does not matter if any determination of the share in the partnership's profits of the person involved in the relevant change as mentioned is subject to any condition.

(5)Condition B is that the asset-backed arrangement is not an acceptable structured finance arrangement (see section 196E).

Textual Amendments

F355Ss. 196B-196L inserted (with effect in accordance with Sch. 13 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 15 (with Sch. 13 Pt. 4) (and see also, as to denial of relief for contributions paid during the period 29.11.2011 to 21.2.2012, the ss. 196B-196J inserted by Finance Act 2012 (c. 14), Sch. 13 paras. 1, 3 (with Sch. 13 Pt. 2))

196EEmployer asset-backed contributions: “acceptable structured finance arrangement” (2)U.K.

(1)For the purposes of section 196D the asset-backed arrangement is an “acceptable structured finance arrangement” if conditions M to Q are met.

(2)Condition M is that—

(a)in accordance with generally accepted accounting practice, the partnership's accounts for the period in which the advance is received record a financial liability (“the recorded financial liability”) in respect of the advance, and

(b)the asset-backed arrangement is a type 2 finance arrangement for the purposes of Chapter 5B of Part 13 of ITA 2007 or Chapter 2 of Part 16 of CTA 2010 (finance arrangements).

(3)Condition N is that—

(a)the lender is a responsible authority,

(b)the advance is money which is paid by the lender directly to the partnership wholly and directly out of E's contribution, and

(c)the advance and the recorded financial liability (as originally recorded) are both of an amount equal to the amount of E's contribution.

(4)Condition O is that, as at the time the advance is paid, the position of the lender is as follows—

(a)it is the lender (and not any person connected with the lender) who is or is to be the person involved in the relevant change in relation to the partnership,

(b)the lender's share in the partnership's profits is to be determined wholly by reference to the payments mentioned in section 196D(2)(g),

(c)determinations of the lender's share in the partnership's profits are to be made at times which have been fixed and fall at intervals of no more than one year (but allowing for determinations otherwise due to be made on a non-working day to be made on the next working day),

(d)no later than 3 months after the day on which a determination of the lender's share in the partnership's profits is made, the lender is to make a drawing from the partnership on account of its determined share (but allowing for drawings otherwise due to be made on a non-working day to be made on the next working day),

(e)on its making, each drawing is directly to become part of the sums held for the purposes of the registered pension scheme,

(f)the drawings are all to be of the same amount,

(g)the total amount of the drawings is not to be less than the amount of E's contribution, and

(h)all of the lender's share in the partnership's profits is to be drawn by the lender from the partnership within a period (“the drawing period”) ending no later than the end of the period of 25 years beginning with the day on which E's contribution is paid.

(5)For the purposes of subsection (4)(c) the first determination is to be made no later than one year after the day on which the advance is paid.

(6)For the purposes of subsection (4)(f) the following are to be ignored—

(a)negligible differences in the amounts of drawings;

(b)differences in the amounts of drawings which would be caused by a term of the asset-backed arrangement that requires the amounts of all outstanding drawings to be increased periodically by a percentage which cannot be higher than the highest of the following—

(i)the percentage increase in the consumer prices index for the reference period, being a period determined, in relation to each periodic increase, under the term of the asset-backed arrangement in question;

(ii)the percentage increase in the retail prices index for the reference period;

(iii)the percentage for the reference period which corresponds to 5% per annum.

(7)In determining the lender's position for the purposes of subsection (4), regard must be had (in particular) to any arrangements connected (directly or indirectly) to the asset-backed arrangement.

(8)Condition P is that, as at the time the advance is paid, in accordance with generally accepted accounting practice the recorded financial liability is to be reduced to nil by the end of the drawing period by (and only by) the payments mentioned in section 196D(2)(g).

(9)Condition Q is that, as at the time the advance is paid, no commitment to which subsection (10) applies has been given.

(10)This subsection applies to a commitment (whether or not legally enforceable and whether or not subject to any conditions) if—

(a)it is given (directly or indirectly) to a relevant person,

(b)it is a commitment to secure that a person receives money or another asset, and

(c)it is linked (directly or indirectly) to any determination of the lender's share in the partnership's profits or any drawing from the partnership on account of that share.

(11)In subsection (10)(a) “relevant person” means—

(a)E;

(b)a person connected with E;

(c)a person acting (directly or indirectly) at the direction or request, or with the agreement, of E or a person connected with E;

(d)a person chosen (directly or indirectly) by E or a person connected with E;

(e)a person within a class of person chosen (directly or indirectly) by E or a person connected with E;

(f)a partnership;

but does not include a responsible authority.

(12)In this section—

(a)responsible authority” means—

(i)the persons who from time to time are the trustees of the registered pension scheme, or

(ii)the persons who from time to time are the persons controlling the management of the registered pension scheme,

in their capacity as such, and

(b)references to the making of drawings from the partnership include references to the receiving of distributions from the partnership.

Textual Amendments

F355Ss. 196B-196L inserted (with effect in accordance with Sch. 13 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 15 (with Sch. 13 Pt. 4) (and see also, as to denial of relief for contributions paid during the period 29.11.2011 to 21.2.2012, the ss. 196B-196J inserted by Finance Act 2012 (c. 14), Sch. 13 paras. 1, 3 (with Sch. 13 Pt. 2))

196FEmployer asset-backed contributions: denial of relief (3)U.K.

(1)An employer (“E”) is not to be given relief in respect of a contribution (“E's contribution”) paid by E under a registered pension scheme if conditions A and B are met.

(2)Condition A is that—

(a)a partnership holds an asset (“the security”) at any time before an arrangement (“the asset-backed arrangement”) is made,

(b)under the asset-backed arrangement the partnership receives money or another asset (“the advance”) from another person (“the lender”),

(c)the advance is (wholly or partly) paid or provided by the lender out of E's contribution (directly or indirectly),

(d)there is a relevant change in relation to the partnership (see section 196H), and

(e)under the asset-backed arrangement the share in the partnership's profits of the person involved in the relevant change (see section 196H) is determined by reference (wholly or partly) to payments in respect of the security.

(3)For the purposes of subsection (2)(e) it does not matter if any determination of the share in the partnership's profits of the person involved in the relevant change as mentioned is subject to any condition.

(4)Condition B is that the asset-backed arrangement is not an acceptable structured finance arrangement (see section 196G).

Textual Amendments

F355Ss. 196B-196L inserted (with effect in accordance with Sch. 13 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 15 (with Sch. 13 Pt. 4) (and see also, as to denial of relief for contributions paid during the period 29.11.2011 to 21.2.2012, the ss. 196B-196J inserted by Finance Act 2012 (c. 14), Sch. 13 paras. 1, 3 (with Sch. 13 Pt. 2))

196GEmployer asset-backed contributions: “acceptable structured finance arrangement” (3)U.K.

(1)For the purposes of section 196F the asset-backed arrangement is an “acceptable structured finance arrangement” if conditions M to Q are met.

(2)Condition M is that—

(a)in accordance with generally accepted accounting practice, the partnership's accounts for the period in which the advance is received record a financial liability (“the recorded financial liability”) in respect of the advance, and

(b)the asset-backed arrangement is a type 3 finance arrangement for the purposes of Chapter 5B of Part 13 of ITA 2007 or Chapter 2 of Part 16 of CTA 2010 (finance arrangements).

(3)Condition N is that—

(a)the lender is a responsible authority,

(b)the advance is money which is paid by the lender directly to the partnership wholly and directly out of E's contribution, and

(c)the advance and the recorded financial liability (as originally recorded) are both of an amount equal to the amount of E's contribution.

(4)Condition O is that, as at the time the advance is paid, the position of the lender is as follows—

(a)it is the lender (and not any person connected with the lender) who is or is to be the person involved in the relevant change in relation to the partnership,

(b)the lender's share in the partnership's profits is to be determined wholly by reference to the payments mentioned in section 196F(2)(e),

(c)determinations of the lender's share in the partnership's profits are to be made at times which have been fixed and fall at intervals of no more than one year (but allowing for determinations otherwise due to be made on a non-working day to be made on the next working day),

(d)no later than 3 months after the day on which a determination of the lender's share in the partnership's profits is made, the lender is to make a drawing from the partnership on account of its determined share (but allowing for drawings otherwise due to be made on a non-working day to be made on the next working day),

(e)on its making, each drawing is directly to become part of the sums held for the purposes of the registered pension scheme,

(f)the drawings are all to be of the same amount,

(g)the total amount of the drawings is not to be less than the amount of E's contribution, and

(h)all of the lender's share in the partnership's profits is to be drawn by the lender from the partnership within a period (“the drawing period”) ending no later than the end of the period of 25 years beginning with the day on which E's contribution is paid.

(5)For the purposes of subsection (4)(c) the first determination is to be made no later than one year after the day on which the advance is paid.

(6)For the purposes of subsection (4)(f) the following are to be ignored—

(a)negligible differences in the amounts of drawings;

(b)differences in the amounts of drawings which would be caused by a term of the asset-backed arrangement that requires the amounts of all outstanding drawings to be increased periodically by a percentage which cannot be higher than the highest of the following—

(i)the percentage increase in the consumer prices index for the reference period, being a period determined, in relation to each periodic increase, under the term of the asset-backed arrangement in question;

(ii)the percentage increase in the retail prices index for the reference period;

(iii)the percentage for the reference period which corresponds to 5% per annum.

(7)In determining the lender's position for the purposes of subsection (4), regard must be had (in particular) to any arrangements connected (directly or indirectly) to the asset-backed arrangement.

(8)Condition P is that, as at the time the advance is paid, in accordance with generally accepted accounting practice the recorded financial liability is to be reduced to nil by the end of the drawing period by (and only by) the payments mentioned in section 196F(2)(e).

(9)Condition Q is that, as at the time the advance is paid, no commitment to which subsection (10) applies has been given.

(10)This subsection applies to a commitment (whether or not legally enforceable and whether or not subject to any conditions) if—

(a)it is given (directly or indirectly) to a relevant person,

(b)it is a commitment to secure that a person receives money or another asset, and

(c)it is linked (directly or indirectly) to any determination of the lender's share in the partnership's profits or any drawing from the partnership on account of that share.

(11)In subsection (10)(a) “relevant person” means—

(a)E;

(b)a person connected with E;

(c)a person acting (directly or indirectly) at the direction or request, or with the agreement, of E or a person connected with E;

(d)a person chosen (directly or indirectly) by E or a person connected with E;

(e)a person within a class of person chosen (directly or indirectly) by E or a person connected with E;

(f)a partnership;

but does not include a responsible authority.

(12)In this section—

(a)responsible authority” means—

(i)the persons who from time to time are the trustees of the registered pension scheme, or

(ii)the persons who from time to time are the persons controlling the management of the registered pension scheme,

in their capacity as such, and

(b)references to the making of drawings from the partnership include references to the receiving of distributions from the partnership.

Textual Amendments

F355Ss. 196B-196L inserted (with effect in accordance with Sch. 13 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 15 (with Sch. 13 Pt. 4) (and see also, as to denial of relief for contributions paid during the period 29.11.2011 to 21.2.2012, the ss. 196B-196J inserted by Finance Act 2012 (c. 14), Sch. 13 paras. 1, 3 (with Sch. 13 Pt. 2))

196HEmployer asset-backed contributions: “relevant change in relation to the partnership” and “person involved in the relevant change”U.K.