http://www.legislation.gov.uk/id/ukpga/2004/12

C1 C56 C57 C54 C70Part 4Pension schemes etc

Annotations:

Modifications etc. (not altering text)

Pt. 4 modified (N.I.) (1.4.2006) by The Firemens Pension Scheme Order (Northern Ireland) 2006 (S.R. 2006/210), arts. 1(2), 103

C56

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 12

C57

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 13(5)

C54

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 9, 10

C70

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 26

C56 C57 C54 C70Chapter 1Introduction

Introductory

149Overview of Part 4

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.

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

6

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

7

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

a

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

b

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

8

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

a

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

b

satisfies any requirements so prescribed.

C50 C56 C57 C54 C70151C56 C57 C54 C70Meaning of “member”

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 creditsF12; 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.

C56 C57 C54 C51 C70152C56 C57 C54 C70Meaning of “arrangement”

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

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

a

cash balance benefits,

b

other money purchase benefits, and

c

defined benefits.

9

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

C52 C56 C57 C54 C70Chapter 2Registration of pension schemes

Annotations:

Modifications etc. (not altering text)

C52

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.

F138A

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).

154Persons by whom registered pension scheme may be established

F1521

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.

F1512A

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.

F1533

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

4

The Treasury may by order amend this section F154....

F175155Persons by whom scheme may be established: supplementary

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

156Appeal against decision not to register

1

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

2

The scheme administrator may appeal against the decision.

3

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

4

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

5

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

6

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

7

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

8

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

De-registration

157De-registration

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-registration

1

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

a

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

b

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

c

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

d

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

e

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

f

that there is no scheme administrator.

2

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

3

The scheme chargeable payments percentage is—

a

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

b

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

4

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

\frac{SCP}{AA} \times 100

where—

SCP is the amount of the scheme chargeable payment, and

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

5

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

a

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

b

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

159Appeal against decision to de-register

1

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

2

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

3

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

4

5

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

6

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

7

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

8

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

C56 C57 C54 C70Chapter 3Payments by registered pension schemes

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.

F157A

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 F23and the receipt of income and gains from taxable property.

9

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

I2 C39 C56 C57 C54 C70161C56 C57 C54 C70Meaning of “payment” etc

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.

C404

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 F30or in respect of a person who—

a

is connected with a F24person who is or has been a member or sponsoring employer (or was connected with F25such a person at the date of the person's death), and

b

is not a F24person who is or has been a member or sponsoring employer,

is to be treated as made in respect of the F24person who is or has been a member or sponsoring employer.

6

Any asset held by a person connected with a F26person who is or has been a member or sponsoring employer (or who was connected with F27such a person at the date of the person's death) is to be treated as held for the benefit of the F26person 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 F28person who is or has been a member or sponsoring employer (or who was connected with F29such a person at the date of the person's death) is to be treated as an increase or reduction for the benefit of the F28person who is or has been a member or sponsoring employer.

F1908

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

I3 C56 C57 C54 C70162C56 C57 C54 C70Meaning of “loan”

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 F189section 1005 of ITA 2007), or

b

offered to the public.

3

A guarantee of a loan made to or in respect of a F33person who is or has been a member or sponsoring employer of a registered pension scheme F31, or to or in respect of a person who is connected with a F33person who is or has been a member or sponsoring employer of a registered pension scheme but is not F34such a person, is to be treated as a loan to or in respect of the F33person who is or has been a member or sponsoring employer of an amount equal to the amount guaranteed.

4

If a F35person who is or has been a member or sponsoring employer of a registered pension scheme F32or a person who is connected with a F35person who is or has been a member or sponsoring employer of a registered pension scheme but is not F36such 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 F35person 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.

F1886

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

I4 C56 C57 C54 C70163C56 C57 C54 C70Meaning of “borrowing” etc

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.

Authorised member payments

I5 C53 C56 C57 C54 C70164C56 C57 C54 C70Authorised member payments

The only payments a registered pension scheme is authorised to make to or in respect of a F37person 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 F38to 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 F39to 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.

I6 C56 C74 C57 C54 C70165C56 C57 C54 C70Pension rules

C411

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

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

a

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

b

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

F40and, for this purpose, the abatement of a scheme pension under a public service pension scheme is not to be taken to affect the right to receive it.

4

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

I7 C55 C56 C57 C54 C70166C56 C57 C54 C70Lump sum rule

C481

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

Lump sum rule

No lump sum may be paid other than—

a

a pension commencement lump sum,

b

a serious ill-health lump sum,

c

a short service refund lump sum,

d

a refund of excess contributions lump sum,

e

a trivial commutation lump sum,

f

a winding-up lump sum, or

g

a lifetime allowance excess lump sum.

2

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

a

in the case of a pension commencement lump sum, immediately before the person becomes entitled to the pension in connection with which it is paid F41(or, if the person dies before becoming entitled to the pension in connection with which it was anticipated it would be paid, immediately before death), and

b

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

3

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

4

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

I8 C56 C57 C54 C75 C70167C56 C57 C54 C70Pension death benefit rules

C421

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

Pension death benefit rule 1

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

Pension death benefit rule 2

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

Pension death benefit rule 3

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

a

a dependants' scheme pension,

b

a dependants' annuity, or

c

dependants' unsecured pension,

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

Pension death benefit rule 4

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

Pension death benefit rule 5

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

a

a dependants' scheme pension,

b

a dependants' annuity, or

c

dependants' alternatively secured pension,

Pension death benefit rule 6

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

2

F42In this part “pension death benefit” means a pension payable on the death of the member (other than a member’s pension payable after the member’s death under pension rule 2: see section 165).

3

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

I9 C56 C58 C57 C54 C70168C56 C57 C54 C70Lump sum death benefit rule

C431

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

Lump sum death benefit rule

No lump sum death benefit may be paid other than—

a

a defined benefits lump sum death benefit,

b

a pension protection lump sum death benefit,

c

an uncrystallised funds lump sum death benefit,

d

an annuity protection lump sum death benefit,

e

an unsecured pension fund lump sum death benefit,

f

a charity lump sum death benefit,

g

a transfer lump sum death benefit,

h

a trivial commutation lump sum death benefit, or

i

a winding-up lump sum death benefit.

2

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

3

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

4

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

I10 C56 C57 C54 C70169C56 C57 C54 C70Recognised transfers

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.

F431A

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

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

c

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

d

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

3

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

4

In this section “prescribed information requirements” means—

a

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

b

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

5

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

a

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

b

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

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

6

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

a

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

b

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

7

The Inland Revenue—

a

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

b

must notify the scheme manager of the decision.

I11 C56 C57 C54 C70170C56 C57 C54 C70Appeal against decision to exclude recognised overseas pension scheme

1

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

2

The scheme manager may appeal against the decision.

3

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

4

5

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

6

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

7

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

8

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

I12 C56 C57 C54 C70171C56 C57 C54 C70Scheme administration member payments

F507

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.

the rights surrendered and the rights conferred under the new arrangement are not significantly different.

F19111

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

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

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

4

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

5

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

a

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

b

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

c

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

6

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

7

This section does not apply if—

a

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

b

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

8

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

F1508A

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

F1929

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

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—

\frac{PM}{N}

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.

F1937

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

172DLimit on increase in benefits

1

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

a

a sponsoring employer, or

b

a person connected with a sponsoring employer.

are connected persons.

2

If—

a

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

b

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

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

3

A relevant arrangement is an arrangement under the pension scheme that is—

a

a defined benefits arrangement,

b

a cash balance arrangement, or

c

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

4

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

a

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

b

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

c

section 237 if it is a hybrid arrangement,

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

5

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

a

a sponsoring employer, or

b

a person connected with a sponsoring employer,

at no time during the pension input period.

F1946

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

In this section—

“the benefits code” has the meaning given by section 63(1) of ITEPA 2003,
“director” has the meaning given by section 67 of that Act,
“excluded employment” has the meaning given by section 63(4) of that Act, and
“material interest” has the meaning given by section 68 of that Act.

11

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

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).

I16 C56 C57 C54 C59 C70175C56 C57 C54 C70Authorised employer payments

The only payments which a registered pension scheme that is an occupational pension scheme is authorised to make to or in respect of a F66person 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.

I17 C56 C57 C54 C59 C70176C56 C57 C54 C70Public service scheme payment

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.

I18 C56 C57 C54 C59 C70177C56 C57 C54 C70Authorised surplus payment

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.

I19 C56 C57 C54 C59 C70178C56 C57 C54 C70Compensation payments

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.

I20 C56 C57 C54 C59 C70179C56 C57 C54 C70Authorised employer loan

1

A loan made to or in respect of a F67person 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 F68person 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 F69person 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.

I21 C56 C57 C54 C59 C70180C56 C57 C54 C70Scheme administration employer payments

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 F70person who is or has been a sponsoring employer,

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

4 Borrowing

I23 C60 C56 C57 C54 C70182C56 C57 C54 C70Unauthorised borrowing: money purchase arrangements

1

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

2

The arrangement borrowing condition is met if—

(APB + PB) < \frac{VA}{2}

where—

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

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

VA is the value of the arrangement.

3

The value of the arrangement is the aggregate of—

a

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

b

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

c

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

d

the value of the uncrystallised rights under the arrangement.

4

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

RVF \times ARP

where—

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

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

5

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

6

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

7

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

8

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

a

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

b

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

I24 C60 C56 C57 C54 C70183C56 C57 C54 C70Effect of unauthorised borrowing: money purchase arrangements

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—

APB < \frac{VA}{2}

4

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

APB + AB - \frac{VA}{2}

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.

I25 C60 C56 C57 C54 C70184C56 C57 C54 C70Unauthorised borrowing: other arrangements

1

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

2

The scheme borrowing condition is met if—

(APB + PB) < \frac{AARA}{2}

where—

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

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

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

3

The aggregate amount of the relevant sums and assets is the aggregate of—

a

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

b

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

I26 C60 C56 C57 C54 C70185C56 C57 C54 C70Effect of unauthorised borrowing: other arrangements

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—

APB < \frac{AARA}{2}

4

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

APB + AB - \frac{AARA}{2}

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.

F144Income and gains from taxable property

Annotations:

Amendments (Textual)

F144

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

C85185AIncome from taxable property

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.

C85185BAnnual profits and deemed profits

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—

\frac{DMV}{10} \times \frac{DTP}{DY}

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.

C85185CDeemed market value

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—

(MV + UP) \times (1 + RPI)

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.

C85185DApportionment to pension scheme

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.

C85185ECredit for tax paid

1

b

when such a disposal takes place, and

c

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.

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).

C56 C57 C54 C70Chapter 4Registered pension schemes: tax reliefs and exemptions

Scheme investments

I27 C61 C56 C57 C54 C70186C56 C57 C54 C70Income

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 F75which 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).

F742A

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.

I28 C56 C57 C54 C70187C56 C57 C54 C70Chargeable gains

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.

b

any transfer lump sum death benefit,

is not to be treated as a contribution.

6

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

a

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

b

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

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

7

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

8

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

section 189 (relevant UK individual),
section 190 (annual limit for relief),
sections 191 to 194 (methods of giving relief), and
section 195 (transfer of certain shares to be treated as payment of contribution).

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.

I31 C56 C57 C54 C70190C56 C57 C54 C70Annual limit for relief

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.

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.

I34 C56 C57 C54 C62 C70193C56 C57 C54 C70Relief under net pay arrangements

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 F184in calculating the net income of the individual for the tax year F185(see Step 2 of the calculation in section 23 of ITA 2007).

7

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.

I35 C56 C57 C54 C70194C56 C57 C54 C70Relief on making of claim

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 F186in calculating the net income of the individual for the tax year in which the payment is made F187(see Step 2 of the calculation in section 23 of ITA 2007).

2

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.

I36 C56 C57 C54 C70195C56 C57 C54 C70Transfer of certain shares to be treated as payment of contribution

1

For the purposes of sections 188 to 194 (relief for contributions) references to contributions paid by an individual include contributions made in the form of the transfer by the individual of eligible shares in a company within the permitted period.

2

For the purposes of those sections the amount of a contribution made by way of a transfer of shares is the market value of the shares at the date of the transfer.

3

“Eligible shares”, in relation to a contribution made by an individual, means shares—

a

which the individual has exercised a right to acquire in accordance with the provisions of an SAYE option scheme, or

b

which have been appropriated to the individual in accordance with the provisions of a share incentive plan.

4

“The permitted period”—

a

in relation to shares which the individual has exercised a right to acquire in accordance with the provisions of an SAYE option scheme, is the period of 90 days following the exercise of that right, and

b

in relation to shares which have been appropriated to the individual in accordance with the provisions of a share incentive plan, is the period of 90 days following the date when the individual directed the trustees of the share incentive plan to transfer the ownership of the shares to the individual.

5

In this section—

“SAYE option scheme” has the same meaning as in the SAYE code (see section 516 of ITEPA 2003 (approved SAYE option schemes)), and
“share incentive plan” has the same meaning as in the SIP code (see section 488 of ITEPA 2003 (approved share incentive plans)).

a

section 8 of the Pension Schemes Act 1993 (c. 48), or

b

section 4 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

other than any part recovered from a member of the pension scheme under regulations made under subsection (3) of either of those sections.

6

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

196AF8Power to restrict relief

1

The Board of Inland Revenue may make regulations for restricting the extent to which contributions paid by an employer under a registered pension scheme in respect of an individual are subject to relief in circumstances in which subsection (2) or (3) applies (or both do).

2

This subsection applies where any of the benefits which will or may be payable to or in respect of the individual under the registered pension scheme will be payable only if relevant benefits expected to be so paid under an employer-financed retirement benefits scheme are not so paid.

3

This subsection applies where, because relevant benefits are or may be payable to or in respect of the individual under an employer-financed retirement benefits scheme, the aggregate of the amount of any sums and the market value of any assets—

a

held for the purposes of, or

b

representing accrued rights under,

the registered pension scheme which may be transferred by way of a recognised transfer in respect of the individual will or may be less than it otherwise would be.

4

The reference in subsection (1) to contributions paid by an employer being subject to relief is to—

a

their being deductible in computing the amount of the profits of the employer for the purposes of Part 2 of ITTOIA 2005 (trading income) or Case I or II of Schedule D,

b

their being expenses of management of the employer for the purposes of section 75 of ICTA (expenses of management: companies with investment business), or

c

their being brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies) in respect of the employer,

(depending on which is appropriate in relation to the employer).

5

In this section—

“employer-financed retirement benefits scheme”, and
“relevant benefits”,

have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).

I38 C56 C57 C54 C63 C70197C56 C57 C54 C70Spreading of relief

1

This section applies where—

a

contributions are paid by an employer under a registered pension scheme in two consecutive chargeable periods (“the previous chargeable period” and “the current chargeable period”), and

b

the amount of the contributions paid in the current chargeable period otherwise than for an excepted purpose (“CCCP”) exceeds 210% of the amount of the contributions paid in the previous chargeable period (“CPCP”).

2

Relief under section 196 (relief for employers in respect of contributions paid) is to be given in respect of so much of CCCP as exceeds 110% of CPCP (“the amount of the relevant excess contributions”) in accordance with subsections (4) and (5).

3

But subsection (2)—

a

does not apply if the amount of the relevant excess contributions is less than £500,000, and

b

has effect subject to section 198 (cessation of business).

4

A fraction of the whole of the amount of the relevant excess contributions is to be treated for the purposes of section 196 as if it had been paid in the chargeable period, or in each of the two or three chargeable periods, immediately after the current chargeable period (leaving only the remainder to be treated as paid in the current chargeable period).

5

The following table specifies (by reference to the amount of the relevant excess contributions)—

a

the fraction of the whole of the amount of the relevant excess contributions which is to be treated as paid in the chargeable period, or in each of the two or three chargeable periods, immediately after the current chargeable period, and

b

the chargeable period or periods in which it is to be treated as paid.

AMOUNT OF THE RELEVANT EXCESS CONTRIBUTIONS	FRACTION AND CHARGEABLE PERIOD OR PERIODS
500,000 or more but less than 1,000,000	One-half of the whole of the amount of the relevant excess contributions is to be treated as paid in the chargeable period immediately after the current chargeable period
1,000,000 or more but less than 2,000,000	One-third of the whole of the amount of the relevant excess contributions is to be treated as paid in each of the two chargeable periods immediately after the current chargeable period
2,000,000 or more	One-quarter of the whole of the amount of the relevant excess contributions is to be treated as paid in each of the three chargeable periods immediately after the current chargeable period

6

Subsection (7) specifies for the purposes of subsection (1) when contributions paid by the employer in the current chargeable period are paid for an excepted purpose.

7

They are paid for an excepted purpose if paid with a view to funding—

a

an increase in the amount of pensions paid to pensioner members of the pension scheme to reflect increases in the cost of living, or

b

benefits which may accrue under the pension scheme to or in respect of individuals who become members of the pension scheme in the current chargeable period as a result of future service as employees of the employer.

8

Where the previous chargeable period and the current chargeable period are not of equal length, this section has effect as if CPCP were the amount it would otherwise be as adjusted by being multiplied by the appropriate factor.

9

The appropriate factor is—

\frac{DCCP}{DPCP}

where—

DCCP is the number of days in the current chargeable period, and

DPCP is the number of days in the previous chargeable period.

10

In this section “chargeable period” means—

a

in a case where the contributions are deducted in computing profits to be charged under F78Part 2 of ITTOIA 2005 (trading income) or Case I or II of Schedule D, a period of account, and

b

in a case where relief in respect of the contributions is given under section 75 or 76 of ICTA (expenses of management: companies with investment business and expenses of insurance companies), an accounting period.

beginning with the current chargeable period, and

b

ending with the day on which the employer ceases to carry on business,

(“the relevant period”).

5

The amount referred to in subsection (4) is—

\frac{UP}{DRP}

where—

UP is the amount of the unrelieved portion, and

DRP is the number of days in the relevant period.

6

Expressions used in this section and section 197 have the same meaning in this section as in that section.

I40 C65 C56 C57 C54 C70199C56 C57 C54 C70Deemed contributions

1

This section applies where a sum is paid to the trustees or managers of a registered pension scheme by an employer in or towards the discharge of any liability of the employer under—

a

section 75 of the Pensions Act 1995 (c. 26)(deficiencies in the assets of a pension scheme), or

b

Article 75 of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (corresponding provision for Northern Ireland).

2

The making of the payment is to be treated for the purposes of—

a

F79Part 2 of ITTOIA 2005 (trading income) or Case I and II of Schedule D,

b

section 75 of ICTA (expenses of management: companies with investment business), and

c

section 76 of ICTA (expenses of insurance companies),

as if it were the payment of a contribution by the employer under the pension scheme.

3

Subsections (4) and (5) apply if the employer’s trade, profession, vocation or business is discontinued before the making of the payment.

4

The payment is to be relieved—

a

to the same extent as it would have been but for the discontinuance, and

b

as if it had been made on the last day on which the trade, profession, vocation or business was carried on.

5

And for the purposes of section 76 of ICTA it is to be treated (to the extent that it would not otherwise be) as part of expenses payable falling to be brought into account at Step 1 in subsection (7) of that section.

I41 C56 C57 C54 C70200C56 C57 C54 C70No other relief for employers in connection with contributions

No sums other than contributions paid by an employer under a registered pension scheme—

a

are deductible in computing the amount of the profits of the employer for the purposes of F80Part 2 of ITTOIA 2005 (trading income) or Case I or II of Schedule D,

b

are expenses of management for the purposes of section 75 of ICTA (expenses of management: companies with investment business), or

c

are to be brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies),

in connection with the cost of providing benefits under the pension scheme.

I42 C56 C57 C54 C70201C56 C57 C54 C70Relief for employees

1

In section 307(1) of ITEPA 2003 (exemption for provision made by employer for retirement or death benefit), after “employer” insert “ under a registered pension scheme or otherwise ”.

2

For section 308 of ITEPA 2003 (exemption of contributions to approved personal pension arrangements) substitute—

308Exemption of contributions to registered pension scheme
No liability to income tax arises in respect of earnings where an employee’s employer makes contributions under a registered pension scheme.

Inland Revenue contributions

I43 C56 C57 C54 C70202C56 C57 C54 C70Minimum contributions under pensions legislation

1

This section applies where under—

a

section 43 of the Pension Schemes Act 1993 (c. 48), or

b

section 39 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

4

In section 151 (treatment of pension rights etc.)—

a

omit subsections (1) and (1A),

b

in subsections (2), (4) and (5), for “fund or scheme to which this section applies” substitute “ registered pension scheme or section 615(3) scheme ”, and

c

in subsection (2)(b), for the “fund or scheme” (in both places) substitute “ scheme ”.

5

In section 152 (cash options), for the words from the beginning to “or scheme” substitute “ Where on a person’s death an annuity becomes payable under a registered pension scheme or section 615(3) scheme to a widow, widowerF4, surviving civil partner or dependant of that person and under the terms of the scheme ”.

6

In section 272 (general interpretation), insert at the appropriate places—

“registered pension scheme” has the same meaning as in Part 4 of the Finance Act 2004;

“section 615(3) scheme” means a superannuation fund to which section 615(3)of the Taxes Act 1988 applies;

C56 C57 C54 C70Chapter 5Registered pension schemes: tax charges

Charges on authorised payments

I45 C56 C57 C54 C70204C56 C57 C54 C70Authorised pensions and lump sums

1

Schedule 31 contains provision about the taxation of pensions and lump sums which are authorised to be paid by this Part.

2

Schedule 36 contains (in Part 4) transitional provision about the taxation of annuities under existing retirement annuity contracts and other relevant transitional provision.

I46 C8 C82 C56 C57 C54 C70205C56 C57 C54 C70Short service refund lump sum charge

1

A charge to income tax, to be known as the short service refund lump sum charge, arises where a short service refund lump sum is paid by a registered pension scheme.

2

The person liable to the short service refund lump sum charge is the scheme administrator.

3

The scheme administrator is liable to the short service refund lump sum charge whether or not—

a

the scheme administrator, and

b

the person to whom the short service refund lump sum is paid,

are resident, ordinarily resident or domiciled in the United Kingdom.

4

The rate of the charge is—

a

20% in respect of so much of the lump sum as does not exceed £10,800, and

b

40% in respect of so much (if any) of it as exceeds that limit.

5

are resident, ordinarily resident or domiciled in the United Kingdom.

4

The rate of the charge is 35% in respect of the lump sum death benefit.

5

The Treasury may by order increase or decrease the rate for the time being specified in subsection (4).

6

7

No pension protection lump sum death benefit, annuity protection lump sum death benefit or unsecured pension fund lump sum death benefit is to be treated as income for any purpose of the Tax Acts.

I48 C56 C57 C54 C10 C70207C56 C57 C54 C70Authorised surplus payments charge

1

A charge to income tax, to be known as the authorised surplus payments charge, arises where an authorised surplus payment is made to a sponsoring employer by an occupational pension scheme that is a registered pension scheme.

2

The person liable to the authorised surplus payments charge is the scheme administrator.

3

The scheme administrator is liable to the authorised surplus payments charge whether or not—

a

the scheme administrator, and

b

the sponsoring employer,

the scheme administrator,

are resident, ordinarily resident or domiciled in the United Kingdom.

5

The rate of the charge is 40% in respect of the unauthorised payment.

6

The Treasury may by order increase or decrease the rate for the time being specified in subsection (5).

7

An unauthorised payment may also be subject to—

a

the unauthorised payments surcharge under section 209, and

b

the scheme sanction charge under section 239.

8

An unauthorised payment is not to be treated as income for any purpose of the Tax Acts.

any other person who is liable to the unauthorised payments surcharge, F88...

c

the scheme administrator, F89and

F87d

the sub-scheme administrator,

are resident, ordinarily resident or domiciled in the United Kingdom.

6

The rate of the charge is 15% in respect of the surchargeable unauthorised payment.

7

The Treasury may by order increase or decrease the rate for the time being specified in subsection (6).

I51 C56 C57 C54 C70210C56 C57 C54 C70Surchargeable unauthorised member payments

1

This section identifies which unauthorised member payments made by a registered pension scheme F90to or in respect of a person who is or has been a member of the pension scheme are surchargeable.

2

If the surcharge threshold is reached before the end of the period of 12 months beginning with a reference date, each unauthorised member payment made F91to or in respect of the person in the surcharge period is surchargeable.

3

The surcharge period is the period—

a

beginning with the reference date, and

b

ending with the day on which the surcharge threshold is reached.

4

The first reference date is the date on which the pension scheme first makes an unauthorised member payment F92to or in respect of the person.

5

Each subsequent reference date is the date, after the end of the previous reference period, on which the pension scheme next makes an unauthorised member payment F93to or in respect of the person.

6

The previous reference period is the period of 12 months beginning with the previous reference date or, if the surcharge threshold is reached in that period, is the surcharge period ending with the date on which it was reached.

7

The surcharge threshold is reached if the unauthorised payments percentage reaches 25%.

8

The unauthorised payments percentage is the aggregate of the percentages of the pension fund used up by each unauthorised member payment made by the pension scheme F94to or in respect of the person on or after the reference date.

9

The percentage of the pension fund used up on the occasion of an unauthorised member payment is—

\frac{UMP}{VR} \times 100

where—

UMP is the amount of the unauthorised member payment, and

VR is an amount equal to the F95aggregate of the value of the member's rights under arrangements relating to the member under the pension scheme when the unauthorised payment is made (or, if the unauthorised member payment is made after the member has died or has otherwise ceased to be a member of the pension scheme, at the date when the member died or otherwise ceased to be a member).

10

The value of the member’s rights under F96an arrangement on any date is the aggregate of—

a

the value of the member’s crystallised rights under the arrangement on that date, calculated in accordance with section 211, and

b

the value of the member’s uncrystallised rights under the arrangement on that date, calculated in accordance with section 212.

I52 C56 C57 C54 C70211C56 C57 C54 C70Valuation of crystallised rights for purposes of section 210

1

The value of the member’s crystallised rights under F97an arrangement on any date is the aggregate of—

a

the value of each scheme pension or lifetime annuity to which the member has an actual (rather than a prospective) entitlement under the arrangement on that date, and

b

the aggregate of the amount of the sums, and the market value of the assets, representing the member’s unsecured pension fund or alternatively secured pension fund in respect of the arrangement on that date (if any).

2

The value of a scheme pension or lifetime annuity is—

RVF \times ARP

where—

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

ARP is an amount equal to the annual rate of the pension or annuity on the date.

I53 C56 C57 C54 C44 C70212C56 C57 C54 C70Valuation of uncrystallised rights for purposes of section 210

1

Rights are uncrystallised if the member is not entitled to the present payment of benefits in respect of the rights.

2

The member is to be treated as entitled to the present payment of benefits in respect of the sums and assets representing the member’s unsecured pension fund or alternatively secured pension fund.

3

The value of the member’s uncrystallised rights under F98an arrangement on any date is to be calculated—

a

in accordance with subsection (4) if the arrangement is a cash balance arrangement,

b

in accordance with subsection (5) if the arrangement is a money purchase arrangement other than a cash balance arrangement,

c

in accordance with subsection (6) if the arrangement is a defined benefits arrangement, and

d

in accordance with subsection (7) if the arrangement is a hybrid arrangement.

4

If this subsection applies, the value of the member’s uncrystallised rights under the arrangement on the date is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits in respect of those rights if the member became entitled to benefits in respect of those rights on the date.

5

If this subsection applies, the value of the member’s uncrystallised rights under the arrangement on the date is the aggregate of—

a

the amount of such of the sums held for the purposes of the arrangement on the date as represent those rights, and

b

the market value of such of the assets held for the purposes of the arrangement on the date as represent those rights.

6

If this subsection applies, the value of the member’s uncrystallised rights under the arrangement on the date is—

(RVF \times ARP) + LS

where—

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

ARP is the annual rate of pension to which the member would, on the valuation assumptions, be entitled under the arrangement on the date if, on the date, the member acquired an actual (rather than a prospective) right to receive a pension in respect of the rights, and

LS is the amount of any lump sum to which the member would, on the valuation assumptions, be entitled under the arrangement on the date (otherwise than by way of commutation of pension) if, on the date, the member acquired an actual (rather than a prospective) right to payment of a lump sum in respect of the rights.

7

If this subsection applies, the value of the member’s uncrystallised rights under the arrangement on the date is—

a

if each of subsections (4), (5) and (6) is relevant, the greatest of the values of the rights calculated in accordance with each of those subsections, or

b

if only two of those subsections are relevant, the greater of the values of the rights calculated in accordance with each of the two subsections.

8

Subsection (4) is relevant if, in any circumstances, cash balance benefits may be provided to or in respect of the member under the arrangement.

9

Subsection (5) is relevant if, in any circumstances, money purchase benefits other than cash balance benefits may be provided to or in respect of the member under the arrangement.

10

Subsection (6) is relevant if, in any circumstances, defined benefits may be provided to or in respect of the member under the arrangement.

I54 C56 C57 C54 C66 C70213C56 C57 C54 C70Surchargeable unauthorised employer payments

1

This section identifies which unauthorised employer payments made by a registered pension scheme to or in respect of a F99person who is or has been a sponsoring employer are surchargeable.

2

If the surcharge threshold is reached before the end of the period of 12 months beginning with a reference date, each unauthorised employer payment made to or in respect of the F100person in the surcharge period is surchargeable.

3

The surcharge period is the period—

a

beginning with the reference date, and

b

ending with the day on which the surcharge threshold is reached.

4

The first reference date is the date on which the pension scheme first makes an unauthorised employer payment to or in respect of the F101person.

5

Each subsequent reference date is the date, after the end of the previous reference period, on which the pension scheme next makes an unauthorised employer payment to or in respect of the F102person.

6

7

The surcharge threshold is reached if the unauthorised payments percentage reaches 25%.

8

The unauthorised payments percentage is the aggregate of the percentages of the pension fund used up by each unauthorised employer payment made by the pension scheme to or in respect of the F103person on or after the reference date.

9

The percentage of the pension fund used up on the occasion of an unauthorised employer payment is—

\frac{UEP}{AA} \times 100

where—

UEP is the amount of the unauthorised employer payment, and

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

Lifetime allowance charge

I55 C56 C57 C54 C83 C70214C56 C57 C54 C70Lifetime allowance charge

1

A charge to income tax, to be known as the lifetime allowance charge, arises where—

a

a benefit crystallisation event occurs in relation to an individual who is a member of one or more registered pension schemes, and

b

either the first lifetime allowance charge condition or the second lifetime allowance charge condition is met.

2

The first lifetime allowance charge condition is that—

a

the whole or any part of the individual’s lifetime allowance is available on the benefit crystallisation event, but

b

the amount crystallised by the benefit crystallisation event exceeds the amount of the individual’s lifetime allowance which is available on the benefit crystallisation event.

3

The second lifetime allowance charge condition is that none of the individual’s lifetime allowance is available on the benefit crystallisation event.

4

The following sections make further provision about the lifetime allowance charge—

section 215 (amount of charge),
section 216 and Schedule 32 (benefit crystallisation events and amounts crystallised),
section 217 (persons liable to charge),
section 218 (individual’s lifetime allowance and standard lifetime allowance),
section 219 (availability of individual’s lifetime allowance), and
sections 220 to 226 (lifetime allowance enhancement factors).

5

In sections 215 to 219—

a

references to “the individual”, in relation to the lifetime allowance charge, are to the individual in relation to whom the benefit crystallisation event giving rise to the charge occurs, and

b

references to “the pension scheme”, in relation to the lifetime allowance charge, are to the pension scheme to which the benefit crystallisation event giving rise to the charge, or the amount crystallised by it, relates.

6

Schedule 36 contains (in Part 2) transitional provision about the lifetime allowance charge.

1

This table sets out—

a

the events which are benefit crystallisation events in relation to the individual, and

b

the amount which is crystallised by each of those events.

BENEFIT CRYSTALLISATION EVENTS	AMOUNT CRYSTALLISED
1. The designation of sums or assets held for the purposes of a money purchase arrangement under any of the relevant pension schemes as available for the payment of unsecured pension to the individual	The aggregate of the amount of the sums and the market value of the assets designated
2. The individual becoming entitled to a scheme pension under any of the relevant pension schemes	RVF × P
3. The individual, having become so entitled, becoming entitled to payment of the scheme pension, otherwise than in excepted circumstances, at an increased annual rate which F109— a exceeds the threshold annual rate, and b exceeds by more than the permitted margin the rate at which it was payable on the day on which the individual became entitled to it	RVF × XP
4. The individual becoming entitled to a lifetime annuity purchased under a money purchase arrangement under any of the relevant pension schemes	The aggregate of the amount of such of the sums, and the market value of such of the assets, representing the individual’s rights under the arrangement as are applied to purchase the lifetime annuity F107and any related dependants' annuity
5. The individual reaching the age of 75 when prospectively entitled to a scheme pension or a lump sum (or both) under a defined benefits arrangement under any of the relevant pension schemes	(RVF × DP) + DSLS
F1065A. The individual reaching the age of 75 having designated sums or assets held for the purposes of a money purchase arrangement under any of the relevant pension schemes as available for the payment of unsecured pension to the individual	The aggregate of the amount of the sums and the market value of the assets representing the individual's unsecured pension fund under the arrangement less the aggregate of amounts crystallised by benefit crystallisation event 1 in relation to the arrangement and the individual
6. The individual becoming entitled to a relevant lump sum under any of the relevant pension schemes	The amount of the lump sum F108paid to the individual
7. A person being paid a relevant lump sum death benefit in respect of the individual under any of the relevant pension schemes	The amount of the lump sum death benefit
8. The transfer of sums or assets held for the purposes of, or representing accrued rights under, any of the relevant pension schemes so as to become held for the purposes of or to represent rights under a qualifying recognised overseas pension scheme in connection with the individual’s membership of that pension scheme	The aggregate of the amount of any sums transferred and the market value of any assets transferred

2

Schedule 32 gives the meaning of expressions used in the table in subsection (1).

I58 C12 C56 C57 C54 C83 C70217C56 C57 C54 C70Persons liable to charge

1

The persons liable to the lifetime allowance charge are—

a

the individual, and

b

the scheme administrator of the pension scheme,

and their liability is joint and several.

2

But where the liability arises by reason of the payment of a relevant lump sum death benefit it is a liability of the person to whom the lump sum death benefit is paid.

3

Subsection (4) applies if—

a

more than one relevant lump sum death benefit is paid in respect of an individual, and

b

tax is not chargeable on the whole amount of all of them.

4

In that case each of the persons to whom any of the relevant lump sum death benefits is paid is liable under subsection (2) to such portion of the total amount of the tax payable by reason of their having been paid as appears to the Inland Revenue to be just and reasonable.

5

A person is liable to the lifetime allowance charge whether or not—

a

that person,

b

any other person who is liable to the lifetime allowance charge, and

c

the scheme administrator (if not so liable),

are resident, ordinarily resident or domiciled in the United Kingdom.

I59 C56 C57 C54 C83 C70218C56 C57 C54 C70Individual’s lifetime allowance and standard lifetime allowance

1

Subject as follows, the individual’s lifetime allowance is the standard lifetime allowance.

2

The standard lifetime allowance for the tax year 2006-07 is £1,500,000.

3

The standard lifetime allowance for each subsequent tax year is such amount, not being less than the standard lifetime allowance for the immediately preceding tax year, as is specified by order made by the Treasury.

4

Where one or more lifetime allowance enhancement factors operate in relation to a benefit crystallisation event occurring in relation to the individual, the individual’s lifetime allowance at the time of the benefit crystallisation event is—

SLA + (SLA \times LAEF)

where—

SLA is the standard lifetime allowance at the time of the benefit crystallisation event, and

LAEF is the lifetime allowance enhancement factor which operates with respect to the benefit crystallisation event and the individual or (where more than one so operates) the aggregate of them.

5

The following make provision for the operation of lifetime allowance enhancement factors—

section 220 (pension credits from previously crystallised rights),
sections 221 to 223 (individuals who are not always relevant UK individuals),
sections 224 to 226 (transfers from recognised overseas pension schemes),
paragraphs 7 to 11 of Schedule 36 (primary protection), and
paragraph 18 of that Schedule (pre-commencement pension credits).

6

Paragraph 19 of that Schedule makes provision for the reduction of what would otherwise be the individual’s lifetime allowance in certain cases where the individual is permitted to take pension before normal minimum pension age.

7

In this Part references (however expressed) to a person’s lifetime allowance at any time are to what would be the person’s lifetime allowance, calculated in accordance with this section, if a benefit crystallisation event occurred in relation to the person at that time.

The adjustment of the F113relevant untaxed amount in relation to a previous benefit crystallisation event referred to in subsection (4)(a) and (b) is the multiplication of that amount by—

\frac{CSLA}{PSLA}

where—

CSLA is the standard lifetime allowance at the time of the current benefit crystallisation event, and

PSLA is the standard lifetime allowance at the time of the previous benefit crystallisation event.

6

Where more than one benefit crystallisation event occurs in relation to an individual on the same day, it is for the individual to decide the order in which they are to be treated as occurring for the purposes of this section; but this subsection is subject to section 166(2) (entitlement to pension commencement lump sum to arise immediately before entitlement to associated pension).

7

Where more than one benefit crystallisation event occurs by reason of the payment of lump sum death benefits in respect of an individual the benefit crystallisation events are to be treated for the purposes of this section as occurring immediately before the individual’s death F114but immediately after any benefit crystallisation event occurring immediately before the individual's death by virtue of section 166(2).

8

Paragraph 20 of Schedule 36 makes provision affecting this section in relation to pre-commencement pensions.

9

In this Part references (however expressed) to the portion of a person’s lifetime allowance that is available at any time are to the portion of the person’s lifetime allowance that would be available, calculated in accordance with this section, if a benefit crystallisation event occurred in relation to the person at that time.

I61 C56 C57 C54 C83 C70220C56 C57 C54 C70Pension credits from previously crystallised rights

1

This section makes provision for the operation of a lifetime allowance enhancement factor with respect to a benefit crystallisation event occurring in relation to an individual where—

a

the individual has (at any time after 5th April 2006 but before the benefit crystallisation event) acquired rights under a registered pension scheme by reason of having become entitled to a pension credit,

b

the pension credit derived from the same or another registered pension scheme, and

c

the rights under that registered pension scheme which became subject to the corresponding pension debit consisted of or included rights to a post-commencement pension in payment.

2

“Post-commencement pension in payment” means a pension to which a person became (actually) entitled on or after 6th April 2006.

3

The lifetime allowance enhancement factor is the pension credit factor.

4

The pension credit factor is—

\frac{APC}{SLA}

where—

APC is F116the post-commencement pension in payment portion of the amount which is the appropriate amount for the purposes of section 29(1) of WRPA 1999 or Article 26(1) of WRP(NI)O 1999 in relation to the pension credit, and

SLA is the standard lifetime allowance at the time when the rights were acquired.

F1154A

The post-commencement pension in payment portion of the appropriate amount referred to in the definition of APC—

a

in a case where the appropriate amount is arrived at under section 29(2) or (3)(b) of WRPA 1999 or Article 26(2) or (3)(b) of WRP(NI)O 1999, is so much of that amount as is attributable to rights to a post-commencement pension in payment, and

b

in a case where the appropriate amount is arrived at under section 29(3)(a) of WRPA 1999 or Article 26(3)(a) of WRP(NI)O 1999, is so much of that amount as is just and reasonable.

5

This section only applies if notice of intention to rely on it is given to the Inland Revenue in accordance with regulations made by the Board of Inland Revenue.

I62 C56 C57 C54 C83 C70221C56 C57 C54 C70Non-residence: general

1

This section makes provision for the operation of a lifetime allowance enhancement factor with respect to a benefit crystallisation event occurring in relation to an individual where, during any part of the period that is the active membership period in relation to an arrangement relating to the individual under a registered pension scheme, the individual is a relevant overseas individual.

2

Section 222 provides the lifetime allowance enhancement factor in the case of an arrangement that is a money purchase arrangement; and section 223 provides the lifetime allowance enhancement factor in the case of any other arrangement.

3

For the purposes of this Part an individual is a relevant overseas individual at any time if, at that time, the individual either is not a relevant UK individual or—

a

is a relevant UK individual only by virtue of paragraph (c) of section 189(1) (individuals resident in UK at some time in previous five tax years), and

b

is not employed by a person resident in the United Kingdom.

4

In this section and sections 222 and 223 “the active membership period”, in relation to a benefit crystallisation event occurring in relation to an arrangement relating to the individual, is the period—

a

beginning with the date on which the benefits first began to accrue to or in respect of the individual under the arrangement or, if later, 6th April 2006, and

b

ending immediately before the benefit crystallisation event.

5

But if benefits ceased to accrue to or in respect of the individual under the arrangement before the benefit crystallisation event, the active membership period is to be treated as having ended then.

6

This section only applies if notice of intention to rely on it is given to the Inland Revenue in accordance with regulations made by the Board of Inland Revenue.

I63 C45 C56 C57 C54 C83 C70222C56 C57 C54 C70Non-residence: money purchase arrangements

1

This section applies in the case of an arrangement that is a money purchase arrangement.

2

The lifetime allowance enhancement factor is—

a

if the arrangement is a cash balance arrangement, the cash balance arrangement non-residence factor (see subsections (3) to (5)), and

b

if the arrangement is any other sort of money purchase arrangement, the other money purchase arrangement non-residence factor (see subsections (6) and (7)).

3

The cash balance arrangement non-residence factor is—

a

the factor arrived at by the application of subsection (4) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or

b

if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of subsection (4) in relation to each of those parts of that period.

4

The factor arrived at by the application of this subsection in relation to any part of the active membership period is—

\frac{CV - OV}{SLA}

where—

CV is the closing value of the individual’s rights under the arrangement,

OV is the opening value of the individual’s rights under the arrangement, and

SLA is the standard lifetime allowance at the time when that part of that period ended.

5

For the purposes of subsection (4)—

a

the closing value of the individual’s rights under the arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the end of that part of that period, and

b

the opening value of the individual’s rights under the arrangement is the amount which would, on the valuation assumptions, be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the beginning of that part of that period.

6

The other money purchase arrangement non-residence factor is—

a

the factor arrived at by the application of subsection (7) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or

b

if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of subsection (7) in relation to each of those parts of that period.

7

The factor arrived at by the application of this subsection in relation to any part of the active membership period is—

\frac{ROIC}{SLA}

where—

ROIC is the amount of the contributions made under the arrangement by or in respect of the individual in any part of the active membership period during which the individual is a relevant overseas individual, and

SLA is the standard lifetime allowance at the time when that part of that period ended.

I64 C56 C57 C54 C46 C83 C70223C56 C57 C54 C70Non-residence: other arrangements

1

This section applies in the case of an arrangement that is not a money purchase arrangement.

2

The lifetime allowance enhancement factor is—

a

if the arrangement is a defined benefits arrangement, the defined benefits arrangement non-residence factor (see subsections (3) and (4)), and

b

if the arrangement is a hybrid arrangement, the hybrid arrangement non-residence factor (see subsections (5) to (7)).

3

The defined benefits arrangement non-residence factor is—

a

the factor arrived at by the application of subsection (4) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or

b

4

The factor arrived at by the application of this subsection in relation to any part of the active membership period is—

\frac{(RVF \times PE + LSE) - (RVF \times PB + LSB)}{SLA}

where—

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

PE is the amount of the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the arrangement if the individual became entitled to payment of it at the end of that part of that period,

LSE is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the end of that part of that period,

PB is the amount of the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of that part of that period,

LSB is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the beginning of that part of that period, and

SLA is the standard lifetime allowance at the time when that part of that period ended.

5

The hybrid arrangement non-residence factor is the greater or greatest of such of—

a

what would be the cash balance arrangement non-residence factor (under section 222) if the arrangement were a cash balance arrangement,

b

what would be the other money purchase arrangement non-residence factor (under that section) if the arrangement were any other sort of money purchase arrangement, and

c

what would be the defined benefits arrangement non-residence factor (under subsections (3) and (4)) if the arrangement were a defined benefits arrangement,

as are relevant factors in relation to the arrangement.

6

A factor is a relevant factor in relation to a hybrid arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under the arrangement may be benefits linked to that factor.

7

For that purpose—

a

cash balance benefits are linked to the cash balance arrangement non-residence factor,

b

other money purchase benefits are linked to the other money purchase arrangement non-residence factor, and

c

defined benefits are linked to the defined benefits arrangement non-residence factor.

I65 C56 C57 C54 C83 C70224C56 C57 C54 C70Transfers from recognised overseas pension scheme: general

1

This section makes provision for the operation of a lifetime allowance enhancement factor with respect to a benefit crystallisation event occurring in relation to an individual where (at any time after 5th April 2006 but before the benefit crystallisation event) there has been a recognised overseas scheme transfer.

2

There is a “recognised overseas scheme transfer” if any sums or assets—

a

held for the purposes of an arrangement under a recognised overseas pension scheme, or

b

representing accrued rights under such an arrangement,

are transferred so as to become held for the purposes of, or to represent rights under, an arrangement under a registered pension scheme relating to the individual.

3

The arrangement specified in subsection (2)(a) or (b) is referred to in this section and sections 225 and 226 as the “recognised overseas scheme arrangement”.

4

The lifetime allowance enhancement factor is the recognised overseas scheme transfer factor.

5

The recognised overseas scheme transfer factor is—

\frac{AAT - RRA}{SLA}

where—

AAT is the aggregate of the amount of any sums transferred, and the market value of any assets transferred, on the recognised overseas scheme transfer,

RRA is the relevant relievable amount, and

SLA is the standard lifetime allowance at the time when the recognised overseas scheme transfer took place.

6

Section 225 specifies the relevant relievable amount in the case of a recognised overseas scheme arrangement that was a money purchase arrangement; and section 226 specifies the relevant relievable amount in the case of an recognised overseas scheme arrangement that was any other sort of arrangement.

7

In this section and sections 225 and 226 “overseas arrangement active membership period” is the period—

a

beginning with the date on which the benefits first began to accrue to or in respect of the individual under the recognised overseas scheme arrangement or, if later, 6th April 2006, and

b

ending immediately before the recognised overseas scheme transfer.

8

But if benefits ceased to accrue to or in respect of the individual under the recognised overseas scheme arrangement before the recognised overseas scheme transfer, the overseas arrangement active membership period is to be treated as having ended then.

9

This section only applies if notice of intention to rely on it is given to the Inland Revenue in accordance with regulations made by the Board of Inland Revenue.

I66 C56 C57 C54 C83 C70225C56 C57 C54 C70Overseas scheme transfers: money purchase arrangements

1

This section applies in the case of a recognised overseas scheme arrangement that was a money purchase arrangement.

2

The relevant relievable amount is—

a

if the recognised overseas scheme arrangement was a cash balance arrangement, the cash balance relevant relievable amount (see subsections (3) to (5)), and

b

if the recognised overseas scheme arrangement was any other sort of money purchase arrangement, the other money purchase relevant relievable amount (see subsections (6) and (7)).

3

The cash balance relevant relievable amount is—

a

the amount arrived at by the application of subsection (4) in relation to the part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual, or

b

if there have been two or more parts of that period during which the individual was not a relevant overseas individual, the aggregate of the amounts arrived at by the application of subsection (4) in relation to each of those parts of that period.

4

The amount arrived at by the application of this subsection in relation to any part of the overseas arrangement active membership period is—

CV - OV

where—

if the recognised overseas scheme arrangement was a defined benefits arrangement, the defined benefits relevant relievable amount (see subsections (3) and (4)), and

b

if the recognised overseas scheme arrangement was a hybrid arrangement, the hybrid relevant relievable amount (see subsections (5) to (7)).

3

The defined benefits relevant relievable amount is—

a

b

4

The amount arrived at by the application of this subsection in relation to any part of the overseas arrangement active membership period is—

(RVF \times PE + LSE) - (RVF \times PB + LSB)

where—

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

PE is the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the recognised overseas scheme arrangement if the individual became entitled to payment of it at the end of that part of that period,

PB is the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of that part of that period, and

5

The hybrid relevant relievable amount is the greater or greatest of such of—

a

what would be the cash balance relevant relievable amount (under section 225) if the recognised overseas scheme arrangement had been a cash balance arrangement,

b

what would be the other money purchase relevant relievable amount (under that section) if that arrangement had been any other sort of money purchase arrangement, and

c

what would be the defined benefits relevant relievable amount (under subsections (3) and (4)) if that arrangement had been a defined benefits arrangement,

the individual, and

b

the scheme administrator of the pension scheme or schemes concerned,

are resident, ordinarily resident or domiciled in the United Kingdom.

4

The annual allowance charge is a charge at the rate of 40% in respect of the amount by which the total pension input amount exceeds the amount of the annual allowance.

5

That excess is not to be treated as income for any purpose of the Tax Acts.

6

The following sections make further provision about the annual allowance charge—

section 228 (annual allowance),
section 229 (total pension input amount to be aggregate of pension input amounts for pension input periods ending in tax year),
sections 230 to 237 (pension input amounts), and
section 238 (pension input period).

7

Schedule 36 contains (in Part 4) transitional provision about the annual allowance charge.

I69 C56 C57 C54 C70228C56 C57 C54 C70Annual allowance

1

The annual allowance for the tax year 2006-07 is £215,000.

2

The annual allowance for each subsequent tax year is such amount, not being less than the annual allowance for the immediately preceding tax year, as is specified by order made by the Treasury.

I70 C56 C57 C54 C70229C56 C57 C54 C70Total pension input amount

1

The total pension input amount is arrived at by aggregating the pension input amounts in respect of each arrangement relating to the individual under a registered pension scheme of which the individual is a member.

2

The pension input amount in respect of an arrangement—

a

is the amount arrived at under sections 230 to 232 if it is a cash balance arrangement,

b

is the amount arrived at under section 233 if it is any other sort of money purchase arrangement,

c

is the amount arrived at under sections 234 to 236 if it is a defined benefits arrangement, and

d

is the amount arrived at under section 237 if it is a hybrid arrangement.

3

But there is no pension input amount in respect of an arrangement if, before the end of the tax year, the individual—

a

has become entitled to all the benefits which may be provided to the individual under the arrangement, or

b

has died.

I71 C2 C56 C57 C54 C70230C56 C57 C54 C70Cash balance arrangements

1

The pension input amount in respect of a cash balance arrangement is the amount of any increase in the value of the individual’s rights under the arrangement during the pension input period of the arrangement that ends in the tax year.

2

5

The aggregate of the amount of any sums transferred and the market value of any assets transferred is to be added.

6

Subsection (7) applies if, during the pension input period, the rights of the individual under the arrangement have been increased by virtue of a transfer of any sums or assets held for the purposes of, or representing accrued rights under, any pension scheme so as to become held for the purposes of, or to represent rights under, the arrangement.

7

The aggregate of the amount of any sums transferred and the market value of any assets transferred is to be subtracted.

8

If, during the pension input period, a benefit crystallisation event occurs in relation to the individual and the arrangement, the amount crystallised is to be added (but this is subject to section 229(3)).

9

If, during the pension input period, minimum payments are made under—

a

section 8 of the Pension Schemes Act 1993 (c. 48), or

b

section 4 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

in relation to the individual in connection with the arrangement, the amount paid is to be subtracted.

I74 C4 C56 C57 C54 C70233C56 C57 C54 C70Other money purchase arrangements

1

The pension input amount in respect of a money purchase arrangement other than a cash balance arrangement is the total of—

a

any relievable pension contributions paid by or on behalf of the individual under the arrangement, and

b

contributions paid in respect of the individual under the arrangement by an employer of the individual,

during the pension input period of the arrangement that ends in the tax year.

2

The references to contributions in subsection (1)(a) and (b) do not include minimum payments under—

a

section 8 of the Pension Schemes Act 1993, or

b

section 4 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

or any amount recovered under regulations made under subsection (3) of either of those sections.

3

When at any time contributions paid under a pension scheme by an employer otherwise than in respect of any individual become held for the purposes of the provision under an arrangement under the pension scheme of benefits to or in respect of an individual, they are to be treated as being contributions paid at that time in respect of the individual under the arrangement.

I75 C56 C5 C57 C54 C70234C56 C57 C54 C70Defined benefits arrangements

1

The pension input amount in respect of a defined benefits arrangement is the amount of any increase in the value of the individual’s rights under the arrangement during the pension input period of the arrangement that ends in the tax year.

2

There is an increase in the value of the individual’s rights under the arrangement during the pension input period if—

a

the opening value of the individual’s rights under the arrangement, is exceeded by

b

the closing value of the individual’s rights under the arrangement.

3

The amount of the increase in the value of the individual’s rights under the arrangement during the pension input period is the amount of that excess.

4

The opening value of the individual’s rights under the arrangement is—

(10 \times PB) + LSB

where—

PB is the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of the pension input period, and

5

The closing value of the individual’s rights under the arrangement is—

(10 \times PE) + LSE

where—

PE is the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the end of the pension input period, and

6

Section 235 (uprating of opening value) and section 236 (adjustments of closing value) supplement this section.

I76 C78 C56 C57 C54 C70235C56 C57 C54 C70Defined benefits arrangements: uprating of opening value

1

This section applies for adjusting the opening value of the individual’s rights as calculated under section 234(4) in a case where rights do not accrue to the individual under the arrangement during the pension input period.

2

The opening value is to be increased by the appropriate percentage.

3

The appropriate percentage is whichever is the greatest of—

a

5%,

b

the percentage (if any) by which the retail prices index for the month in which the pension input period ends is higher than it was for the month in which it began, and

c

if provision made by regulations made by the Board of Inland Revenue applies in relation to the arrangement, the percentage to which the regulations refer.

I77 C56 C6 C57 C54 C70236C56 C57 C54 C70Defined benefits arrangements: adjustments of closing value

1

This section applies for adjusting the closing value of the individual’s rights as calculated under section 234(5).

2

If, during the pension input period, the rights of the individual under the arrangement have been reduced by having become subject to a pension debit, the amount of the debit is to be added.

3

4

Subsection (5) applies if, during the pension input period, there is a transfer relating to the individual of any sum or asset held for the purposes of, or representing accrued rights under, the arrangement so as to become held for the purposes of, or to represent rights under, any other pension scheme that is—

a

a registered pension scheme, or

b

a qualifying recognised overseas pension scheme.

5

The aggregate of the amount of any sums transferred and the market value of any assets transferred is to be added.

6

Subsection (7) applies if, during the pension input period, there is a transfer relating to the individual of any sums or assets held for the purposes of, or representing accrued rights under, any pension scheme so as to become held for the purposes of, or to represent rights under, the arrangement.

7

The aggregate of the amount of any sums transferred and the market value of any assets transferred is to be subtracted.

8

9

If, during the pension input period, minimum payments are made under—

a

section 8 of the Pension Schemes Act 1993 (c. 48), or

b

section 4 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49),

in relation to the individual in connection with the arrangement, the amount paid is to be subtracted.

I78 C7 C56 C57 C54 C70237C56 C57 C54 C70Hybrid arrangements

1

The pension input amount in respect of a hybrid arrangement is the greater or greatest of such of input amounts A, B and C as are relevant input amounts.

2

An input amount is a relevant input amount in the case of a hybrid arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under the arrangement may be benefits of the variety mentioned in the definition of that input amount.

3

Input amount A is what would be the pension input amount under sections 230 to 232 if the benefits provided to or in respect of the individual under the arrangement were cash balance benefits.

4

Input amount B is what would be the pension input amount under section 233 if the benefits provided to or in respect of the individual under the arrangement were other money purchase benefits.

5

Input amount C is what would be the pension input amount under sections 234 to 236 if the benefits provided to or in respect of the individual under the arrangement were defined benefits.

in relation to the period beginning with the relevant commencement date, or

b

in relation to a tax year following that in which the pension input period beginning with that date ends,

the date nominated first is the nominated date.

6

“The appropriate date” means the earlier of—

a

a nominated date falling in the tax year immediately after that in which the last pension input period ended, and

b

the anniversary of the date on which that period ended.

7

Once the individual has become entitled to all the benefits which may be provided to the individual under an arrangement, the last pension input period in the case of the arrangement is to be treated as having ended when that was first so.

Scheme sanction charge

I80 C56 C57 C54 C70 C16239C56 C57 C54 C70Scheme sanction charge

1

A charge to income tax, to be known as the scheme sanction charge, arises where in any tax year one or more scheme chargeable payments are made by a registered pension scheme.

2

The person liable to the scheme sanction charge is the scheme administrator.

3

But in the case of a payment treated by virtue of section 161(3) and (4) (payments under investments acquired with scheme assets) as having been made by a pension scheme which has been wound up, the person liable to the scheme sanction charge is the person who was, or each of the persons who were, the scheme administrator immediately before the pension scheme was wound up.

4

A person liable to the scheme sanction charge is liable whether or not—

a

that person, and

b

any other person who is liable to the scheme sanction charge,

are resident, ordinarily resident or domiciled in the United Kingdom.

5

The following sections make further provision about the scheme sanction charge—

section 240 (amount of charge), and
section 241 (scheme chargeable payment).

c

a scheme chargeable payment which the pension scheme is to be treated as having made by section 185A (income from taxable property) or 185F (gains from taxable property).

2

An unauthorised payment is exempt from being scheme chargeable if—

a

it is treated as having been made by section 173 (use of scheme assets to provide benefits) and the asset used to provide the benefit in question is not a wasting asset,

b

it is a compensation payment (see section 178),

c

it is made to comply with an order of a court or of a person or body with power to order the making of the payment,

d

it is made on the ground that a court or any such person or body is likely to order the making of the payment (or would be were it asked to do so), or

e

it is of a description prescribed by regulations made by the Board of Inland Revenue.

3

“Wasting asset” has the same meaning as in section 44 of TCGA 1992.

4

Schedule 36 contains (in Part 3) transitional provision about scheme chargeable payments.

De-registration charge

I83 C56 C57 C68 C54 C70242C56 C57 C54 C70De-registration charge

1

A charge to income tax, to be known as the de-registration charge, arises where the registration of a registered pension scheme is withdrawn.

2

The liability to the de-registration charge is a liability of the person who was, or each of the persons who were, the scheme administrator immediately before the registration was withdrawn.

3

That person, or each of those persons, is liable to the de-registration charge whether or not—

a

that person, and

b

any other person who is liable to the de-registration charge,

are resident, ordinarily resident or domiciled in the United Kingdom.

4

The de-registration charge is a charge at the rate of 40% in respect of the aggregate of—

a

the amount of any sums held for the purposes of the pension scheme immediately before it ceased to be a registered pension scheme, and

b

the market value at that time of any assets held for the purposes of the pension scheme.

C56 C57 C54 C69 C70Chapter 6Schemes that are not registered pension schemes

Annotations:

Modifications etc. (not altering text)

C69

Pt. 4 Ch. 6 excluded (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 25

Non-UK schemes

I84 C56 C57 C54 C69 C70243C56 C57 C54 C69 C70Overseas pension schemes: migrant member relief

Schedule 33 contains provision about migrant member relief in respect of contributions under overseas pension schemes.

I85 C56 C57 C54 C69 C70244C56 C57 C54 C69 C70Non-UK schemes: application of certain charges

Schedule 34 contains provision applying certain charges under this Part in relation to non-UK schemes.

Employer-financed retirement benefit schemes

I86 C56 C47 C57 C54 C69 C70245C56 C57 C54 C69 C70Restriction of deduction for contributions by employer

1

Schedule 24 to the Finance Act 2003 (c. 14) (restriction of deductions for employee benefit contributions) is amended as follows.

2

In paragraph 1(2)(b) (when employer makes “employee benefit contribution”), after “benefits to” insert “or in respect of present or former”.

3

In sub-paragraph (1) of paragraph 2 (“qualifying benefits”), insert at the end

or
c
is made under an employer-financed retirement benefits scheme.

4

In sub-paragraph (5) of that paragraph (when qualifying benefit treated as provided), after “payment of money” insert “otherwise than under an employer-financed retirement benefits scheme”.

5

In paragraph 8 (deductions to which Schedule does not apply), for paragraphs (b) and (c) substitute—

b
in respect of contributions under a registered pension scheme or a section 615(3) scheme,
c
in respect of contributions under a qualifying overseas pension scheme in respect of an individual who is a relevant migrant member of the pension scheme in relation to the contributions,

6

In sub-paragraph (1) of paragraph 9 (interpretation), in the definition of “employee benefit scheme”, after “include,” insert “present or former”.

7

In that sub-paragraph, after the definition of “the employer” insert—

“employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 of the Income Tax (Earnings and Pensions) Act 2003 (see section 393A of that Act);

8

In that sub-paragraph, after the definition of “qualifying expenses” insert—

“qualifying overseas pension scheme” has the same meaning as in Schedule 33 to the Finance Act 2004 (see paragraphs 5 and 6 of that Schedule);
“registered pension scheme” has the same meaning as in Part 4 of that Act (see section 150 of that Act);
“relevant migrant member” has the same meaning as in Schedule 33 to that Act (see paragraph 4 of that Schedule);
“section 615(3) scheme” means a superannuation fund to which section 615(3) of the Taxes Act 1988 applies;

1

An employer's expenses of providing relevant benefits to or in respect of a present or former employee (“the employee”) under an employer-financed retirement benefits scheme (whether or not by the making of contributions under the scheme) are not subject to relief if subsection (2) applies.

2

This subsection applies where—

a

the provision of the relevant benefits results in a reduction in the benefits payable to or in respect of the employee under a registered pension scheme, or

b

a reduction in the benefits payable to or in respect of the employee under a registered pension scheme results in the provision of the relevant benefits.

3

But if the extent to which contributions paid by the employer under the registered pension scheme in respect of the employee are subject to relief has been restricted in accordance with regulations under section 196A, the employer's expenses of providing the relevant benefits are not prevented from being subject to relief to the extent that is just and reasonable.

4

The references in this section to expenses of an employer being subject to relief are to—

a

their being deductible in computing the amount of the profits of the employer for the purposes of Part 2 of ITTOIA 2005 (trading income) or Case I or II of Schedule D,

b

their being expenses of management of the employer for the purposes of section 75 of ICTA (expenses of management: companies with investment business), or

c

their being brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies) in respect of the employer,

(depending on which is appropriate in relation to the employer).

5

In this section—

“employer-financed retirement benefits scheme”, and
“relevant benefits”,

have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).

I88 C56 C57 C54 C69 C70247C56 C57 C54 C69 C70Abolition of income tax charge in respect of employer payments

In Part 6 of ITEPA 2003, omit Chapter 1 (payments by employer for the provision of benefits for an employee under certain schemes to count as employment income of employee).

I89 C56 C57 C54 C69 C70248C56 C57 C54 C69 C70Employer’s cost of insuring against non-payment of benefit

1

Section 307 of ITEPA 2003 (no liability to income tax in respect of chargeable benefit on provision made by employer for a retirement or death benefit) is amended as follows.

2

After subsection (1) insert—

1A
Subsection (1) does not apply to provision made for insuring against the risk that a retirement or death benefit under an employer-financed retirement benefits scheme cannot be paid or given because of the employer’s insolvency.
1B
In subsection (1A) “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 (see section 393A).

3

In subsection (2), for “subsection (1)” substitute “this section”.

I90 C56 C57 C54 C69 C70249C56 C57 C54 C69 C70Taxation of non-pension benefits

1

Chapter 2 of Part 6 of ITEPA 2003 (taxation of non-pension benefits from certain pension schemes) is amended as follows.

2

In the heading of the Chapter, for “non-approved pension” substitute “employer-financed retirement benefits”.

3

For section 393 substitute—

393Application of this Chapter
1
This Chapter applies to relevant benefits provided under an employer-financed retirement benefits scheme.
2
Section 393A defines “employer-financed retirement benefits scheme” and section 393B defines “relevant benefits”.
393AEmployer-financed retirement benefits scheme
1
In this Chapter “employer-financed retirement benefits scheme” means a scheme for the provision of benefits consisting of or including relevant benefits to or in respect of employees or former employees of an employer.
2
But neither—
a
a registered pension scheme, nor
b
a section 615(3) scheme,
is an employer-financed retirement benefits scheme.
3
“Section 615(3) scheme” means a superannuation fund to which section 615(3) of ICTA applies.
4
“Scheme” includes a deed, agreement, series of agreements, or other arrangements.
393BRelevant benefits
1
In this Chapter “relevant benefits” means any lump sum, gratuity or other benefit (including a non-cash benefit) provided (or to be provided)—
a
on or in anticipation of the retirement of an employee or former employee,
b
on the death of an employee or former employee,
c
after the retirement or death of an employee or former employee in connection with past service,
d
on or in anticipation of, or in connection with, any change in the nature of service of an employee, or
e
to any person by virtue of a pension sharing order or provision relating to an employee or former employee.
2
But—
a
benefits charged to tax under Part 9 (pension income),
b
benefits chargeable to tax by virtue of Schedule 34 to FA 2004 (which applies certain charges under Part 4 of that Act in relation to non-UK schemes), and
c
excluded benefits,
are not relevant benefits.
3
The following are “excluded benefits”—
a
benefits in respect of ill-health or disablement of an employee during service,
b
benefits in respect of the death by accident of an employee during service,
c
benefits under a relevant life policy, and
d
benefits of any description prescribed by regulations made by the Board of Inland Revenue.
4
In subsection (3)(c) “relevant life policy” means—
F121a
an excepted group life policy as defined in section 480 of ITTOIA 2005,
b
a policy of life insurance the terms of which provide for the payment of benefits on the death of a single individual and with respect to whichF122—
i
condition A in section 481 of that Act would be met if paragraph (a) in that condition referred to the death, in any circumstances or except in specified circumstances, of that individual (rather than the death in any circumstances of each of the individuals insured under the policy) and if the condition did not include paragraph (b), and
ii
conditions C and D in that section and conditions A and C in section 482 of that Act are met, or
c
a policy of life insurance that would be within paragraph (a) or (b) but for the fact that it provides for a benefit which is an excluded benefit under or by virtue of paragraph (a), (b) or (d) of subsection (3).
5
In subsection (1)(e) “pension sharing order or provision” means any such order or provision as is mentioned in section 28(1) of WRPA 1999 or Article 25(1) of WRP(NI)O 1999.

4

Section 394 (charge on benefit) is amended as follows.

5

After subsection (1) insert—

1A
Subsection (1) does not apply in relation to the benefit if the total amount of the benefits to which this Chapter applies received by the individual in the relevant tax year does not exceed £100.

6

In subsection (2), for “administrator of” substitute “person who is (or persons who are) the responsible person in relation to”.

7

In subsection (3), for “subsections (1) and (2)” substitute “this section”.

8

For sections 395 to 397 substitute—

395Reduction where employee has contributed
1
This section applies in relation to a relevant benefit under an employer-financed retirement benefits scheme in the form of a lump sum where, under the scheme, an employee has paid any sum or sums by way of contribution to the provision of the lump sum.
2
The amount which, by virtue of section 394, counts as employment income, or is chargeable to tax under F123subsection (2) of that section, is the amount of the lump sum reduced by the sum, or the aggregate of the sums, paid by the employee by way of contribution to the provision of the lump sum.
3
A reduction under this section may not be claimed in respect of the same contribution in relation to more than one lump sum.
4
It is to be assumed, unless the contrary is shown, that no reduction is applicable under this section.

9

In subsection (1) of section 399 (valuation of benefit in form of loan), for “administrator of” substitute “person who is (or any of the persons who are) the responsible person in relation to”.

10

In subsection (2) of that section, for “administrator” substitute “responsible person”.

11

For section 400 substitute—

399AResponsible person
1
The following heads specify the person who is, or persons who are, the responsible person in relation to an employer-financed retirement benefits scheme for the purposes of this Chapter.
2
But if a person is, or persons are, the responsible person in relation to the scheme by virtue of being specified under one head, no-one is the responsible person in relation to the scheme by virtue of being specified under a later head.
Head 1
If there are one or more trustees of the scheme who are resident in the United Kingdom, that trustee or each of those trustees.
Head 2
If there are one or more persons who control the management of the scheme, that person or each of those persons.
Head 3
If alive or still in existence, the employer, or any of the employers, who established the scheme and any person by whom that employer, or any of those employers, has been directly or indirectly succeeded in relation to the provision of benefits under the scheme.
Head 4
Any employer of employees to or in respect of whom benefits are, or are to be, provided under the scheme.
Head 5
If there are one or more trustees of the scheme who are not resident in the United Kingdom, that trustee or each of those trustees.
400Interpretation
In this Chapter—
“employer-financed retirement benefits scheme” has the meaning given by section 393A;
“relevant benefits” has the meaning given by section 393B; and
“responsible person” has the meaning given by section 399A.

12

In Part 2 of Schedule 1 to ITEPA 2003 (defined expressions), insert at the appropriate places—

employer-financed retirement benefits scheme (in Chapter 2 of Part 6)
section 393A

relevant benefits (in Chapter 2 of Part 6)
section 393B

responsible person (in Chapter 2 of Part 6)
section 399A

C56 C57 C54 C70Chapter 7Compliance

8

If, in a case within paragraph (b) of subsection (7), the winding-up of the pension scheme has been completed before 31st October in the next tax year, the return must be delivered before the end of the period of three months beginning with the day on which the winding-up is completed.

9

But subsection (8) does not apply if the end of that period is before the end of the period of three months beginning with the day on which the notice is given; and in that case the return must be delivered before the end of that period.

I92 C56 C57 C54 C70251C56 C57 C54 C70Information: general requirements

1

The Board of Inland Revenue may by regulations make provision requiring persons of a prescribed description—

a

to provide to the Inland Revenue, in a form specified by the Board of Inland Revenue, information of a prescribed description relating to any of the matters mentioned in subsection (2), and

b

to preserve for a prescribed period any documents relating to such information.

2

Those matters are—

a

any matter relating to a registered pension scheme,

b

any matter relating to a pension scheme which has ceased to be a registered pension scheme,

c

any matter relating to a pension scheme in relation to which an application for registration has been made,

d

any matter relating to an annuity purchased with sums or assets held for the purposes of a registered pension scheme,

e

the coming into operation of an employer-financed retirement benefits scheme, and

f

the provision of relevant benefits under an employer-financed retirement benefits scheme.

3

In subsection (2)—

“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).

4

The Board of Inland Revenue may by regulations make provision—

a

requiring scheme administrators of registered pension schemes or other persons of a prescribed description to provide information of a prescribed description to persons of such of the descriptions mentioned in subsection (5) as are prescribed F124or to the scheme administrators of other registered pension schemes, or

b

requiring persons of such of the descriptions specified in subsection (5) as are prescribed to provide information of a prescribed description to the scheme administrators of registered pension schemes.

5

Those persons are—

a

members of a registered pension scheme,

any matter relating to an annuity purchased with sums or assets held for the purposes of a registered pension scheme,

e

the coming into operation of an employer-financed retirement benefits scheme, and

f

the provision of relevant benefits under an employer-financed retirement benefits scheme.

4

In subsection (3)—

“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).

5

A notice under this section must specify the period within which it is to be complied with; and that period may not end earlier than the period of 30 days beginning with the day on which the notice is given.

6

A notice under subsection (2) must specify the pension scheme or employer-financed retirement benefits scheme to which it relates.

7

The Inland Revenue must notify the scheme administrator of the pension scheme, or the responsible person in relation to theemployer-financed retirement benefits scheme, to which such a notice relates that the notice has been given no later than the end of the period of 30 days beginning with the day on which it is given.

8

In subsection (7) “responsible person” has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see section 399A of that Act).

9

A person may comply with a notice under this section requiring the production of a document by producing a copy of the document.

10

But where a person produces a copy of a document in compliance with a notice under this section the Inland Revenue may by notice require the production of the original for inspection within a period specified in the notice; and that period may not end earlier than the period of 30 days beginning with the day on which the notice is given.

11

The Inland Revenue may take copies of, or make extracts from, any document produced in compliance with a notice under this section.

12

A notice under this section does not require a person—

a

to produce or make available for inspection any document, or

b

to provide any particulars,

relating to any pending appeal by the person relating to tax.

I94 C56 C73 C57 C54 C70253C56 C57 C54 C70Appeal against notices

1

The person to whom a notice under section 252(1) or (2) (notices requiring documents or particulars) is given may appeal against any requirement imposed by the notice.

2

The appeal must be brought within the period of 30 days beginning with the date on which the notice is given.

3

4

5

An appeal under this section against a requirement imposed by a notice must be brought within the period of 30 days beginning with the day on which the notice was given.

6

The Commissioners before whom an appeal under this section is brought must consider whether the production of the document, or provision of the particulars, to which the appeal relates was reasonably required by the Inland Revenue.

7

If they decide that it was, they must confirm the notice so far as relating to that requirement.

8

If they decide that it was not, they must set aside the notice so far as relating to that requirement.

9

If the notice is confirmed it has effect in relation to the requirement to which the appeal relates as if it specified as the period within which it must be complied with the period of 30 days beginning with the day on which the appeal was determined.

10

The determination of the Commissioners is final and conclusive.

Accounting and assessment

I95 C18 C56 C57 C54 C70254C56 C57 C54 C70Accounting for tax by scheme administrators

1

A scheme administrator of a registered pension scheme must make returns to the Inland Revenue of the income tax to which the scheme administrator is liable under this Part.

2

A return is to be made for each period of three months ending with 31st March, 30th June, 30th September or 31st December if tax has been charged on the scheme administrator by virtue of this Part in that period.

3

A return for any period must be made before the end of the period of 45 days beginning with the day immediately following the end of that period.

4

A return must—

a

show the income tax to which the scheme administrator is liable, and

b

include such particulars of the events or other circumstances giving rise to the liability (including particulars as to the persons to whom the events or other circumstances relate) as are required to be included in returns under this section by regulations made by the Board of Inland Revenue.

5

The income tax required to be shown in a return is due at the time by which the return is to be made and is payable without the making of an assessment.

6

The Board of Inland Revenue may by regulations make provision for and in connection with—

a

the charging of interest on tax due under this section which is not paid on or before the due date,

b

the making of amended returns by scheme administrators in the event of error in a return under this section,

c

the making of assessments, repayments or adjustments in cases where the correct tax due under this section has not been paid on or before the due date, and

d

otherwise for supplementing this section.

7

The regulations 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 modifications).

8

References in this section to the income tax to which a scheme administrator is liable under this Part do not include any to which the scheme administrator is liable under section 239 (scheme sanction charge).

9

Where the registration of a registered pension scheme has been withdrawn, this section has effect as if references to the scheme administrator were to the person who was, or each of the persons who were, the scheme administrator immediately before the registration was withdrawn.

I96 C56 C57 C54 C70255C56 C57 C54 C70Assessments under this Part

1

The Board of Inland Revenue may by regulations make provision for and in connection with the making of assessments in respect of—

a

the unauthorised payments charge,

b

the unauthorised payments surcharge,

c

liability to the lifetime allowance charge under section 217(2) (person to whom lump sum death benefit paid),

d

the scheme sanction charge,

e

liability under section 272 (trustees etc. liable as scheme administrator),

f

liability under section 273 (member liable as scheme administrator), and

g

liability under section 394 of ITEPA 2003 (benefit under employer-financed retirement benefits scheme: charge on responsible person).

2

The provision that may be made by the regulations includes (in particular) provision for the charging of interest on tax due under such assessments which remains unpaid.

3

The regulations 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).

F10Payment

Annotations:

Amendments (Textual)

F10

Ss. 255A, 255B and cross-heading inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 48, 64(1)

In this section—

“the Inland Revenue” includes any person who for the purposes of the electronic means of payment is acting under the authority of the Board of Inland Revenue, and
“specified” means specified in a direction under this section.

255BPayments to be cleared payments

1

A payment made to the Board of Inland Revenue or the Inland Revenue under or by virtue of this Part (otherwise than in cash) is to be treated as not having been made until the earliest date on or before which all the transactions that need to be completed before the whole amount of the payment becomes available to the Board are capable of being completed.

2

In this section “the Inland Revenue” includes any person who is acting under the authority of the Board of Inland Revenue.

Registration regulations

I97 C56 C57 C54 C70256C56 C57 C54 C70Enhanced lifetime allowance regulations

4

If the scheme administrator of a registered pension scheme fraudulently or negligently—

a

makes an incorrect return required by a notice under section 250, or

b

delivers any incorrect accounts, statements or other documents with such a return,

the scheme administrator is liable to a penalty not exceeding £3,000.

I99 C56 C57 C54 C70258C56 C57 C54 C70Information required by regulations

C201

In section 98 of TMA 1970 (penalties for failure to provide information and providing false information), in the second column of the Table, insert at the appropriate place— “regulations under section 251(1)(a) or (4) of the Finance Act 2004;”.

C212

A person who fails to comply with regulations under section 251(1)(b) (preservation of documents) is liable to a penalty not exceeding £3,000.

I100 C56 C57 C54 C70259C56 C57 C54 C70Documents and particulars required by notice

C221

A person who fails to comply with a notice under section 252 (notice requiring documents or particulars) is liable to a penalty not exceeding £300.

2

If the failure continues after a penalty is imposed under subsection (1), the person is liable to a further penalty not exceeding £60 for each day on which the failure continues after the day on which that penalty was imposed (but excluding any day for which a penalty under this subsection has already been imposed).

3

No penalty may be imposed under subsection (1) or (2) in respect of a failure after it has been remedied.

4

If a person fraudulently or negligently—

a

produces or makes available for inspection any incorrect documents, or

b

provides any incorrect particulars,

in response to a notice under section 252, the person is liable to a penalty not exceeding £3,000.

I101 C56 C57 C54 C70260C56 C57 C54 C70Accounting return

C231

If the scheme administrator of a registered pension scheme fails to make a return for a quarter in accordance with section 254 (return of tax charged), the scheme administrator is liable—

a

to a penalty or penalties of the relevant quarterly amount for each quarter (or part of a quarter) for which the failure continues, excluding any quarter after the fourth or for which a penalty under this paragraph has already been imposed, and

b

if the failure continues beyond the fourth quarter (whether or not any penalty under paragraph (a) is imposed), to a penalty not exceeding the amount of income tax to which the scheme administrator is liable (otherwise than under section 239: scheme sanction charge) for the quarter for which the return is not made.

2

In subsection (1)—

“quarter” means a period of three months ending with 31st March, 30th June, 30th September or 31st December, and
“the relevant quarterly amount”—
1. a
  if the number of persons in respect of whom particulars should be included in the return by virtue of section 254(4)(b) is ten or less, is £100, and
2. b
  if that number is greater than ten, is £100 for each ten such persons and an additional £100 where that number is not a multiple of ten.

3

The Treasury may from time to time by order amend the amounts specified in the definition of “the relevant quarterly amount” in subsection (2).

C244

No penalty under subsection (1)(b) may be imposed unless—

a

the amount of income tax to which the scheme administrator is liable (otherwise than under section 239) for the quarter concerned has been determined by the Inland Revenue, and

b

the scheme administrator has been notified of that amount.

5

In section 100(6)(a) of TMA 1970 (excessive penalty), after “1998” insert “or section 260(1)(b) of the Finance Act 2004”.

C256

If the scheme administrator of a registered pension scheme fraudulently or negligently makes an incorrect return under section 254, the scheme administrator is liable to a penalty not exceeding the difference between—

a

the amount of the tax shown in the return, and

b

the amount of the tax which should have been shown in the return,

or, if no tax is shown in the return, the amount of the tax which should have been shown in the return.

7

Where the registration of a registered pension scheme has been withdrawn, this section has effect as if references to the scheme administrator were to the person who was or the persons who were the scheme administrator immediately before the registration was withdrawn.

I102 C56 C57 C54 C70261C56 C57 C54 C70Enhanced lifetime allowance regulations: documents and information

1

This section applies where an individual fraudulently or negligently—

a

produces or makes available an incorrect document, or produces an incorrect certificate, in connection with any matter registered in accordance with enhanced lifetime allowance regulations, or

b

provides false information in connection with any such matter,

and the condition in subsection (2) is met.

2

The condition is that—

a

the amount of the individual’s lifetime allowance at the time which is relevant for the purposes of this paragraph, or

b

2

If the individual fails to notify the Inland Revenue of the relevant benefit accrual within the period of 90 days beginning with the day on which it occurs, the individual is liable to a penalty not exceeding £3,000.

I105 C56 C57 C54 C70264C56 C57 C54 C70False statements etc

1

A person who fraudulently or negligently makes a false statement or representation is liable to a penalty not exceeding £3,000 if, in consequence of the statement or representation—

a

that person or any other person obtains relief from, or repayment of, tax chargeable under this Part, or

b

a registered pension scheme makes a payment which is an unauthorised payment.

2

A person who assists in or induces the preparation of any document which the person knows—

a

is incorrect, and

b

will, or is likely to, cause a registered pension scheme to make an unauthorised payment,

is liable to a penalty not exceeding £3,000.

I106 C56 C57 C54 C70265C56 C57 C54 C70Winding-up to facilitate payment of lump sums

1

This section applies where the winding-up of a registered pension scheme has begun and the Inland Revenue considers the pension scheme is being wound up wholly or mainly for the purpose specified in subsection (2).

2

That purpose is facilitating the payment of winding-up lump sums or winding-up lump sum death benefits (or both) under the pension scheme.

C263

The scheme administrator is liable to a penalty not exceeding the relevant amount.

4

The relevant amount is £3,000 in respect of—

a

each member to whom a winding-up lump sum is paid under the pension scheme, and

b

each member in respect of whom a winding-up lump sum death benefit is paid under the pension scheme.

I107 C56 C57 C54 C70266C56 C57 C54 C70Transfers to insured schemes

1

This section applies where sums held for the purposes of, or representing accrued rights under, a registered pension scheme (“the transferor scheme”) are transferred so as to become held for the purposes of, or to represent rights under, a registered pension scheme that is an insured scheme (“the transferee scheme”).

C272

The scheme administrator of the transferor scheme is liable to a penalty not exceeding £3,000 unless the sums are transferred either to the scheme administrator of the transferee scheme or to a relevant insurance company.

3

In this section—

“insured scheme” means a pension scheme all the income and other assets of which are invested in policies of insurance, and
“relevant insurance company” means an insurance company that issued any of the policies of insurance.

F146Relief from liability in respect of returned unauthorised member payments

Annotations:

Amendments (Textual)

F146

Ss. 266A, 266B and cross-heading inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 4, 64(1)

has been received by (or on behalf of) the member or a person connected with the member, or

b

has been held for more than 180 days by a person or succession of persons, other than the member or a person connected with the member, involved in any transaction by which the unauthorised member payment was made.

5

The relevant proportion of the unauthorised payments charge or the unauthorised payments surcharge is—

\frac{ASO}{UMP}

where—

ASO is the amount subject to the order, that is the aggregate of the market value of any property and the amount of any money transferred, or the amount of the sum paid, towards a registered pension scheme pursuant to the order 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 in respect of the unauthorised member payment, and

UMP is the amount of the unauthorised member payment.

6

But if ASO is greater than UMP, the relevant proportion of the unauthorised payments charge or the unauthorised payments surcharge is the whole of it.

F1967

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

C84266BScheme's liability

1

This section applies where—

a

the scheme administrator of a registered pension scheme has become liable to the scheme sanction charge in respect of an unauthorised member payment, and

b

2

The scheme administrator may, within the period of one year beginning with the day on which the property or money is transferred, or the sum paid, claim relief from the relevant proportion of the scheme sanction charge.

3

The relevant proportion of the scheme sanction charge is—

\frac{ASO}{UMP}

where—

UMP is the amount of the unauthorised member payment.

4

But if ASO is greater than UMP, the relevant proportion of the scheme sanction charge is the whole of it.

Discharge of tax liability: good faith

I108 C28 C56 C57 C54 C70267C56 C57 C54 C70Lifetime allowance charge

1

This section applies where the scheme administrator of a registered pension scheme is liable to the lifetime allowance charge in respect of a benefit crystallisation event.

2

The scheme administrator may apply to the Inland Revenue for the discharge of the scheme administrator’s liability to the lifetime allowance charge in respect of the benefit crystallisation event on the ground mentioned in subsection (3).

3

The ground is that—

a

the scheme administrator reasonably believed that there was no liability to the lifetime allowance charge in respect of the benefit crystallisation event, and

b

in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the lifetime allowance charge in respect of the benefit crystallisation event.

4

On receiving an application under subsection (2), the Inland Revenue must decide whether to discharge the scheme administrator’s liability to the lifetime allowance charge in respect of the benefit crystallisation event.

5

The scheme administrator may apply to the Inland Revenue for the discharge of part of the scheme administrator’s liability to the lifetime allowance charge in respect of the benefit crystallisation event on the ground mentioned in subsection (6).

6

The ground is that—

a

the scheme administrator reasonably believed that the amount of the lifetime allowance charge in respect of the benefit crystallisation event was less than the actual amount, and

b

in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to an amount (“the excess amount”) equal to the difference between the amount which the scheme administrator believed to be the amount of the charge and the actual amount.

7

On receiving an application under subsection (5), the Inland Revenue must decide whether to discharge the scheme administrator’s liability to the lifetime allowance charge in respect of the excess amount (or part of the excess amount).

8

The discharge of the scheme administrator’s liability to the lifetime allowance charge (or to the excess amount or part of the excess amount) does not affect the liability of any other person to the lifetime allowance charge.

9

The Inland Revenue must notify the scheme administrator of the decision on an application under this section.

10

Regulations made by the Board of Inland Revenue may make provision supplementing this section; and the regulations may in particular make provision as to the time limits for the making of an application.

I109 C29 C56 C57 C54 C70268C56 C57 C54 C70Unauthorised payments surcharge and scheme sanction charge

1

This section applies where—

a

a person is liable to the unauthorised payments surcharge in respect of an unauthorised payment, or

b

the scheme administrator of a registered pension scheme is liable to the scheme sanction charge in respect of a scheme chargeable payment.

2

The person liable to the unauthorised payments surcharge may apply to the Inland Revenue for the discharge of the person’s liability to the unauthorised payments surcharge in respect of the unauthorised payment on the ground mentioned in subsection (3).

3

The ground is that in all the circumstances of the case, it would be not be just and reasonable for the person to be liable to the unauthorised payments surcharge in respect of the payment.

4

On receiving an application by a person under subsection (2) the Inland Revenue must decide whether to discharge the person’s liability to the unauthorised payments surcharge in respect of the payment.

5

The scheme administrator may apply to the Inland Revenue for the discharge of the scheme administrator’s liability to the scheme sanction charge in respect of a scheme chargeable payment on the ground mentioned in subsection (6) or (7).

6

In the case of a scheme chargeable payment which is treated as being an unauthorised member payment by section 172F197, 172A, 172B, 172BA, 172C or 172D or arises under section 181A, the ground is that, in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge.

7

In any other case, the ground is that—

a

the scheme administrator reasonably believed that the unauthorised payment was not a scheme chargeable payment, and

b

in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment.

8

On receiving an application under subsection (5), the Inland Revenue must decide whether to discharge the scheme administrator’s liability to the scheme sanction charge in respect of the unauthorised payment.

9

The Inland Revenue must notify the applicant of the decision on an application under this section.

10 I110 C56 C57 C54 C70269C56 C57 C54 C70Appeal against decision on discharge of liability

1

This section applies where the Inland Revenue—

a

decides to refuse an application under section 267(2) (discharge of liability to lifetime allowance charge) or section 268 (discharge of liability to unauthorised payments surcharge or scheme sanction charge), or

b

on an application under section 267(5), decides to refuse the application or to discharge the applicant’s liability to the lifetime allowance charge in respect of part only of the excess amount.

2

The applicant may appeal against the decision.

3

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

4

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 applicant was given notification of the decision.

6

The Commissioners before whom an appeal under subsection (1)(a) is brought must consider whether the applicant’s liability to the lifetime allowance charge, unauthorised payments surcharge or scheme sanction charge ought to have been discharged.

7

If they consider that the applicant’s liability ought not to have been discharged, they must dismiss the appeal.

8

If they consider that the applicant’s liability ought to have been discharged, they must grant the application.

9

The Commissioners before whom an appeal under subsection (1)(b) is brought must consider whether the applicant’s liability to the lifetime allowance charge ought to have been discharged in respect of the excess amount or a greater part of the excess amount.

10

If they consider that the applicant’s liability ought not to have been discharged in respect of the excess amount or a greater part of the excess amount, they must dismiss the appeal.

11

If they consider that the applicant’s liability ought to have been discharged in respect of the excess amount or a greater part of the excess amount, they must discharge the applicant’s liability in respect of the excess amount or that part of the excess amount.

Scheme administrator

I111 C56 C57 C54 C70270C56 C57 C54 C70Meaning of “scheme administrator”

1

References in this Part to the scheme administrator, in relation to a pension scheme, are to the person who is, or persons who are, appointed in accordance with the rules of the pension scheme to be responsible for the discharge of the functions conferred or imposed on the scheme administrator of the pension scheme by and under this Part.

C342

But a person cannot be the person who is, or one of the persons who are, the scheme administrator of a pension scheme unless the person—

a

is resident in the United Kingdom or another state which is a member State or a non-member EEA State, and

b

has made the required declaration to the Inland Revenue.

C353

“The required declaration”is a declaration that the person—

a

understands that the person will be responsible for discharging the functions conferred or imposed on the scheme administrator of the pension scheme by and under this Part, and

b

intends to discharge those functions at all times, whether resident in the United Kingdom or another state which is a member State or a non-member EEA State.

4

“Non-member EEA State” means a State which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 (as adjusted by the Protocol signed at Brussels on 17th March 1993) but which is not a member State.

I112 C56 C57 C54 C30 C70271C56 C57 C54 C70Liability of scheme administrator

1

Any liability of a person who is, or of any of the persons who are, the scheme administrator of a registered pension scheme ceases to be a liability of that person on the person ceasing to be, or to be one of the persons who is, the scheme administrator of the pension scheme.

This subsection does not apply to a liability to pay a penalty and is subject to subsection (4).

2

Where a person becomes, or becomes one of the persons who is, the scheme administrator of a registered pension scheme, the person assumes any existing liabilities of the scheme administrator of the pension scheme, other than any liability to pay a penalty.

3

Subsection (4) applies where, on the person who is or the persons who are the scheme administrator of a registered pension scheme ceasing to be the scheme administrator, there is no scheme administrator of the pension scheme.

4

Any liability of the person or persons as scheme administrator remains a liability of that person or those persons as if still the scheme administrator (unless dead or having ceased to exist) until another person becomes, or other persons become, the scheme administrator of the pension scheme.

5

But a person who retains, or persons who retain, any liability by virtue of subsection (4) may apply to the Inland Revenue to be released from the liability.

6

On receipt of the application the Inland Revenue must decide whether or not to release the applicant or applicants from the liability and must notify the applicant, or each of the applicants, of the decision.

7

If the decision is not to release the applicant or applicants from the liability the applicant or applicants may appeal against the decision.

8

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

9

The appeal must be brought within the period of 30 days beginning with the day on which the applicant was notified of the decision.

10

11

The Commissioners before whom an appeal under this section is brought must consider whether the applicant or applicants ought to have been released from the liability.

12

If they decide that the applicant or applicants ought not to have been released from the liability, they must dismiss the appeal.

13

If they decide that the applicant or applicants ought to have been released from the liability, the applicant is, or applicants are, to be treated as having been released from the liability (but subject to any further appeal or any determination on, or in consequence of, a case stated).

a person assumes, or persons assume, liability by virtue of being specified under one head, and

b

that person, or any of those persons, can be traced and is not in default,

no-one assumes liability by virtue of being specified under a later head.

Head 1

If there are one or more trustees of the pension scheme who are resident in the United Kingdom, that trustee or each of those trustees.

Head 2

If there are one or more persons who control the management of the pension scheme, that person or each of those persons.

Head 3

If alive or still in existence, the person, or any of the persons, who established the pension scheme and any person by whom that person, or any of those persons, has been directly or indirectly succeeded in relation to the provision of benefits under the pension scheme.

Head 4

“The relevant three-year period” is the period of three years ending with the date on which the liability to pay the tax arose.

4

The “appropriate share of the unpaid amount”, in the case of a person, is—

\frac{AAP}{AA} \times UT

where—

AA is an amount equal to 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 liability to pay the tax arose,

AAP is an amount equal to so much of AA as is held for the purposes of such of the arrangements under the pension scheme as relate to the person or a person connected with the person, and

UT is so much of the tax (and any interest on it) as remains unpaid.

5

The conditions referred to in subsection (2)(a) are—

a

that the pension scheme F182... was not an occupational pension scheme,

b

that at any time during the relevant three-year period the pension scheme received a transfer value in which there were represented relevant personal pension contributions made by or in respect of the person,

c

that the pension scheme was an occupational pension scheme and at any time during the relevant three-year period the person was a controlling director of a company that was a sponsoring employer, and

d

that at any time during the relevant three-year period the pension scheme received a transfer value in which there were represented relevant controlling director contributions made by or in respect of the person.

6

A notification under subsection (2)(b) may be included in an assessment in respect of a liability under this section; and such an assessment made in relation to an amount is not out of time if made within the period of three years beginning with the date on which the person assessed first became liable to pay the amount.

7

“Relevant personal pension contributions” means contributions under a pension scheme (whether or not the pension scheme from which the transfer value was received) which F183... was not an occupational pension scheme.

8

“Relevant controlling director contributions” means contributions under an occupational pension scheme (whether or not the pension scheme from which the transfer value was received) made by reference to service (or remuneration in respect of service) as a controlling director of a company that was a sponsoring employer.

9

A person is a “controlling director” of a company if the person is a director of the company and is within section 417(5)(b) of ICTA (director able to control 20% of ordinary share capital) in relation to the company.

10

References to receipt of a transfer value by the pension scheme are to the transfer, so as to become held for the purposes of or to represent rights under the pension scheme, of any sums or assets held for the purposes of or representing accrued rights under any other pension scheme.

F18111

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

Where a liability imposed on the scheme administrator of a registered pension scheme falls to be satisfied by two or more persons (whether or not they constitute the scheme administrator), they are jointly and severally liable.

3

No liability to pay tax or interest, or other obligation, of any person in relation to a registered pension scheme arising—

a

by reason of the person being, or being one of the persons who is, the scheme administrator of the pension scheme concerned, or

b

under section 271(4), 272 or 273 F127or regulations under section 273A,

is affected by the termination of the pension scheme or by its ceasing to be a registered pension scheme.

C56 C57 C54 C70Chapter 8Supplementary

Interpretation

274AF11Power to split schemes

1

The Board of Inland Revenue may make regulations for and in connection with treating registered pension schemes to which this section applies as if they were a number of separate registered pension schemes for such of the purposes of this Part and of provision made under it as are prescribed by the regulations.

2

b

that the person’s right to receive the benefits had not been occasioned by physical or mental impairment.

278C56 C57 C54 C70Market value

1

For the purposes of this Part the market value of an asset held for the purposes of a pension scheme is to be determined in accordance with section 272 of TCGA 1992.

2

Where an asset held for the purposes of a pension scheme is a right or interest in respect of any money lent (directly or indirectly) to any relevant associated person, the value of the asset is to be treated as being the amount owing (including any unpaid interest) on the money lent.

3

The following are “relevant associated persons”—

a

any employer who has at any time (whether or not before the making of the loan) made contributions under the pension scheme,

b

any company connected (at the time of the making of the loan or subsequently) with any such employer,

c

any person who has at any time (whether or not before the making of the loan) been a member of the pension scheme, and

d

any person connected (at the time of the making of the loan or subsequently) with any such person.

F1283A

For the purposes of this Part the market value of taxable property, or of an interest in taxable property, is to be determined in accordance with section 272 of TCGA 1992.

3B

Subsection (3A) is subject to any provision made by regulations under paragraph 36(2) of Schedule 29A.

F1984

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

C81 C56 C57 C54 C70279C56 C57 C54 C70Other definitions

1

In this Part—

F129“abatement”, in relation to a scheme pension F130to which a person has become entitled under a public service pension scheme, means the reduction of the pension (including its reduction to nil) in accordance with the rules of the pension scheme by reason of F131the person's employment in public service,
“the Board of Inland Revenue” means the Commissioners of Inland Revenue,
F156...
“employee” and “employer” have the same meaning as in the employment income Parts of ITEPA 2003 (see sections 4 and 5 of that Act) but include (respectively) a former employee and a former employer (and “employment” is to be read accordingly),
“the Inland Revenue” means any officer of the Board of Inland Revenue,
“normal minimum pension age” means—
1. a
  before 6th April 2010, 50, and
2. b
  on and after that date, 55,
“pension credit” and “pension debit” have the same meaning as in Chapter 1 of Part 4 of WRPA (see section 46(1) of that Act) or Chapter 1 of Part 5 of WRP(NI)O 1999 (see Article 43(1) of that Order), F157and
“pension sharing order or provision” means any order or provision mentioned in section 28(1) of WRPA 1999 or Article 25(1) of WRP(NI)O 1999,
F158...

F1551A

In this Part, so far as it forms part of the Corporation Tax Acts, expressions which are defined for the purposes of the Income Tax Acts are to be given the same meaning as they have in the Income Tax Acts.

2

In this Part references to payments made, or benefits provided, by a pension scheme are to payments made or benefits provided from sums or assets held for the purposes of the pension scheme.

3

For the purposes of this Part the sums and assets held for the purposes of an arrangement under a pension scheme are so much of the sums and assets held for the purposes of the pension scheme under which the arrangement is made as are properly attributable, in accordance with the provisions of the pension scheme and any just and reasonable apportionment, to the arrangement.

280C56 C57 C54 C70Abbreviations and general index

1

In this Part—

“NIA 1965” means the National Insurance Act 1965 (c. 51),
“NIA(NI) 1966” means the National Insurance Act (Northern Ireland) 1966 (c. 6 (N.I.)),
“TMA 1970” means the Taxes Management Act 1970 (c. 9),
“ICTA 1970” means the Income and Corporation Taxes Act 1970 (c. 10),
“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1),
“SSCBA 1992” means the Social Security Contributions and Benefits Act 1992 (c. 4),
“SSCB(NI)A 1992” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7),
“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12),
“WRPA 1999” means the Welfare Reform and Pensions Act 1999 (c. 30),
“WRP(NI)O 1999” means the Welfare Reform and Pensions (Northern Ireland) Order 1999 (S.I. 1999/ 3147 (N.I. 11)),
“FISMA 2000” means the Financial Services and Markets Act 2000 (c. 8), F1...
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1), F159F2...
“ITTOIA 2005” means the Income Tax (Trading and Other Income Act) 2005F160and
“ITA 2007” means the Income Tax Act 2007.

2

In this Part the following expressions are defined or otherwise explained by the provisions indicated—

F133abatement	section 279(1)
accounting period	section 834(1) of ICTA
F132acquiring an interest in property (for the purposes of the taxable property provisions)	paragraphs 12 and 27 to 29 of Schedule 29A
active member (of a pension scheme)	section 151(2)
active membership period (insections 221 to 223)	section 221(4) and (5)
amount crystallised	section 216
annual allowance	section 228
annual allowance charge	section 227(1)
annuity protection lump sum death benefit	paragraph 16 of Schedule 29
arrangement	section 152(1)
authorised surplus payment	section 177
available (in relation to a person’s lifetime allowance)	section 219
basic rate	F161section 6(2) of ITA 2007 (as applied by section 989 of that Act)
basic rate limit	F162section 20(2) of ITA 2007 (as applied by section 989 of that Act)
benefits (provided by pension scheme)	section 279(2)
benefit crystallisation event	section 216
the Board of Inland Revenue	section 279(1)
borrowing (in Chapter 3)	section 163
F132building (for the purposes of the taxable property provisions)	paragraph 7(2) of Schedule 29A
cash balance arrangement	section 152(3)
cash balance benefits	section 152(5)
chargeable gain	F163section 989 of ITA 2007
charity	F164section 989 of ITA 2007
company	F165section 992 of ITA 2007
compensation payment	section 178
contribution	sections188(4) to (6) and 195
defined benefits	section 152(7)
defined benefits arrangement	section 152(6)
defined benefits lump sum death benefit	paragraph 13 of Schedule 29
dependant’s alternatively secured pension fund	paragraph 25 of Schedule 28
F134dependants' annuity	paragraph 17 of Schedule 28
dependants' scheme pension	paragraph 16 of Schedule 28
F134dependants' short-term annuity	paragraph 20 of Schedule 28
dependant’s unsecured pension fund	paragraph 22 of Schedule 28
employee and employer (and employment)	section 279(1)
employment income	section 7(2) of ITEPA 2003
enhanced lifetime allowance regulations	section 256(2)
entitled (in relation to a lump sum)	section 166(2)
entitled (in relation to a pension)	section 165(3)
higher rate	F166section 6(2) of ITA 2007 (as applied by section 989 of that Act)
F132holding an interest in a person (for the purposes of the taxable property provisions)	paragraph 16(2) to (4) of Schedule 29A
F132holding an interest in property (for the purposes of the taxable property provisions)	paragraph 13 of Schedule 29A
F132holding directly an interest in a vehicle (for the purposes of the taxable property provisions)	paragraph 20(3) of Schedule 29A
F132holding directly an interest in property (for the purposes of the taxable property provisions)	paragraphs 14 and 15 of Schedule 29A
F132holding indirectly an interest in a vehicle (for the purposes of the taxable property provisions)	paragraph 20(4) of Schedule 29A
F132holding indirectly an interest in property (for the purposes of the taxable property provisions)	paragraph 16(1) of Schedule 29A
hybrid arrangement	section 152(8)
ill-health condition	paragraph 1 of Schedule 28
the individual (in sections 215 to 219)	section 214(5)
the Inland Revenue	section 279(1)
insurance company	section 275
F132investment-regulated pension scheme (for the purposes of the taxable property provisions)	paragraphs 1 to 3 of Schedule 29A
investments (in relation to a pension scheme)	section186(3) and (4)
liability (in Chapter 3)	section 163
lifetime allowance (in relation to a person)	section 218
lifetime allowance charge	section 214(1)
lifetime allowance enhancement factors	section 218(5)
lifetime allowance excess lump sum	paragraph 11 of Schedule 29
lifetime annuity	paragraph 3 of Schedule 28
loan (in Chapter 3)	section 162
lump sum death benefit	section 168(2)
market value	section 278
member (of a pension scheme)	section 151(1)
member’s alternatively secured pension fund	paragraph 11 of Schedule 28
member’s unsecured pension fund	paragraph 8 of Schedule 28
money purchase arrangement	section 152(2)
money purchase benefits	section 152(4)
F167net income	section 23 of ITA 2007 (as applied by section 989 of that Act),
net pay pension scheme	section 191(9)
normal minimum pension age	section 279(1)
occupational pension scheme	section 150(5)
overseas arrangement active membership period (in sections 224 to 226)	section 224(7) and (8)
overseas pension scheme	section 150(7)
payment (in Chapter 3)	section 161
payments (made by pension scheme)	section 279(2)
pension	section 165(2)
pension commencement lump sum	paragraph 1of Schedule 29
pension credit and pension debit	section 279(1)
F135pension death benefit	section 167(2)
pension input amount	section 229
pension input period	section 238
pension protection lump sum death benefit	paragraph 14 of Schedule 29
pension scheme	section 150(1)
the pension scheme (in sections 215 to 219)	section 214(5)
pension sharing order or provision	section 279(1)
pensioner member (of a pension scheme)	section 151(3)
period of account	F168section 989 of ITA 2007
personal representatives	F169section 989 of ITA 2007
property investment LLP	F170section 1004 of ITA 2007
public service pension scheme	section 150(3)
qualifying recognised overseas pension scheme	section 169(2)
recognised overseas pension scheme	section 150(8)
recognised overseas scheme arrangement (insections 224 to 226)	section 224(2) and (3)
registered pension scheme	section 150(2)
F137related dependants' annuity	paragraph 3(4A) of Schedule 29
F136related dependants' scheme pension	paragraph 3(7C) of Schedule 29
relevant overseas individual	section 221(3)
relevant UK earnings	section 189(2)
relevant UK individual	section 189
relevant valuation factor	section 276
relievable pension contributions	section 188(2) and (3)
F132residential property (for the purposes of the taxable property provisions)	paragraphs 7(1), 8 and 9 of Schedule 29A
retail prices index	F171section 989 of ITA 2007
scheme administrator	section 270 (but see also sections 271 to 274)
scheme chargeable payment	section 241
F132scheme-held taxable property	section 185B(3)
scheme manager	section 169(3)
scheme pension	paragraph 2 of Schedule 28
scheme sanction charge	section 239(1)
serious ill-health lump sum	paragraph 4 of Schedule 29
short service refund lump sum	paragraph 5 of Schedule 29
short service refund lump sum charge	section 205(1)
F134short-term annuity	paragraph 6 of Schedule 28
special lump sum death benefits charge	section 206(1)
sponsoring employer	section 150(6)
standard lifetime allowance	section 218(2) and (3)
sums and assets held for the purposes of an arrangement	section 279(3)
F132sums and assets held for the purposes of an arrangement (for the purposes of the taxable property provisions)	paragraph 5 of Schedule 29A
F132taxable property (for the purposes of the taxable property provisions)	paragraphs 6, 10 and 11 of Schedule 29A
F132the taxable property provisions	paragraph 1(3) of Schedule 29A
tax year	F172section 4(2) of ITA 2007 (as applied by section 989 of that Act)
the tax year 2006-07 etc.	F173section 4(4) of ITA 2007 (as applied by section 989 of that Act)
total income	F174section 23 of ITA 2007 (as applied by section 989 of that Act)
total pension input amount	section 229
transfer lump sum death benefit	paragraph 19 of Schedule 29
trivial commutation lump sum	paragraph 7 of Schedule 29
unauthorised employer payment	section 160(4)
unauthorised member payment	section 160(2)
unauthorised payment	section 160(5)
unauthorised payments charge	section 208(1)
unauthorised payments surcharge	section 209(1)
uncrystallised funds lump sum death benefit	paragraph 15 of Schedule 29
unsecured pension fund lump sum death benefit	paragraph17of Schedule 29
valuation assumptions (in relation to a person)	section 277
F132vehicle (in the taxable property provisions)	paragraph 20(2) of Schedule 29A
winding-up lump sum	paragraph 10 of Schedule 29
winding-up lump sum death benefit	paragraph 21 of Schedule 29

Other supplementary provisions

I116 C56 C57 C54 C70281C56 C57 C54 C70Minor and consequential amendments

1

Schedule 35 contains minor and consequential amendments of enactments in consequence of, or otherwise in connection with, this Part.

2

The Treasury may by order make such other amendments (including repeals and revocations) as may appear appropriate in consequence of, or otherwise in connection with, this Part—

a

in any enactment contained in an Act passed before 6th April 2006 or in the Session in which that date falls, and

b

in any instrument made before that date or in the Session in which that date falls.

F1382A

The Treasury may by order make in any relevant enactment such amendments (including repeals and revocations) as may appear appropriate in consequence of, or otherwise in connection with, any amendment (or repeal or revocation) made in this Part by any enactment contained in an Act passed after this Act (an “amending Act”).

2B

For this purpose a relevant enactment is—

a

an enactment contained in an Act passed, or

b

an instrument made,

before the passing of the amending Act or in the Session in which the amending Act is passed.

3

An order under subsection (2) F139or (2A) may include any transitional provisions or savings appearing to the Treasury to be appropriate.

F1404

An order under subsection (2) or (2A) may include provision having effect in relation to times before it is made if it does not increase any person's liability to tax.

282C56 C57 C54 C70Orders and regulations

1

Any power of the Treasury or the Board of Inland Revenue to make any order or regulations under this Part is exercisable by statutory instrument.

2

Any statutory instrument containing any order or regulations made by the Treasury or the Board of Inland Revenue under this Part is subject to annulment in pursuance of a resolution of the House of Commons.

283C56 C57 C54 C70Transitionals and savings

1

Schedule 36 contains miscellaneous transitional provisions and savings.

2

The Treasury may by order make any other transitional provision which may appear appropriate in consequence of, or otherwise in connection with, this Part or the repeals made by this Act in consequence of this Part.

3

An order under subsection (2) may, in particular, include savings from the effect of any amendment made by this Part or any repeal made by this Act in consequence of this Part.

F1413A

The Treasury may by order make any transitional provision which may appear appropriate in consequence of, or otherwise in connection with, any amendment (or repeal or revocation) made in this Part by any enactment contained in an Act passed after this Act (an “amending Act”).

3B

An order under subsection (3A) may, in particular, include savings from the effect of any amendment (or repeal or revocation) made by the amending Act.

3C

An order under subsection (2) or (3A) may include provision having effect in relation to times before it is made if it does not increase any person's liability to tax.

4

Nothing in Schedule 36 limits the power conferred by subsection (2) F142or (3A).

5

Nothing in that Schedule or in any provision made by virtue of subsection (2) F143or (3A) prejudices the operation of sections 16 and 17 of the Interpretation Act 1978 (c. 30) (effect of repeals).

284C56 C57 C54 C70Commencement

1

Chapters 3 to 7 and section 281 (with Schedule 35) do not come into force until 6th April 2006.

2

But any power to make an order or regulations under any of those provisions may be exercised at any time after this Act is passed.

C1C56C57C54C70Part 4Pension schemes etc

C56C57C54C70Chapter 1Introduction

Introductory

149Overview of Part 4

1

2

3

Main concepts

150C56C57C54C70Meaning of “pension scheme”

1

a

b

c

d

e

2

3

a

b

c

4

a

b

c

d

5

a

b

6

7

a

b

8

a

b

C50C56C57C54C70151C56C57C54C70Meaning of “member”

1

2

3

4

5

C56C57C54C51C70152C56C57C54C70Meaning of “arrangement”

1

2

3

4

5

6

7

8

a

b

c

9

C52C56C57C54C70Chapter 2Registration of pension schemes

Registration

153Registration of pension schemes

1

2

a

b

3

4

5

a

b

6

7

8

a

b

F138A

9

154Persons by whom registered pension scheme may be established

F1521

a

b

2

F1512A

F1533

C1 C56 C57 C54 C70Part 4Pension schemes etc

C56 C57 C54 C70Chapter 1Introduction

150C56 C57 C54 C70Meaning of “pension scheme”

C50 C56 C57 C54 C70151C56 C57 C54 C70Meaning of “member”

C56 C57 C54 C51 C70152C56 C57 C54 C70Meaning of “arrangement”

C52 C56 C57 C54 C70Chapter 2Registration of pension schemes

C56 C57 C54 C70Chapter 3Payments by registered pension schemes

I1 C56 C57 C54 C70160C56 C57 C54 C70Payments by registered pension schemes

I2 C39 C56 C57 C54 C70161C56 C57 C54 C70Meaning of “payment” etc