Search Legislation

Finance Act 2004

 Help about what version

What Version

 Help about advanced features

Advanced Features

Changes to legislation:

There are outstanding changes not yet made by the legislation.gov.uk editorial team to Finance Act 2004. Any changes that have already been made by the team appear in the content and are referenced with annotations. Help about Changes to Legislation

Close

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. Changes and effects are recorded by our editorial team in lists which can be found in the ‘Changes to Legislation’ area. Where those effects have yet to be applied to the text of the legislation by the editorial team they are also listed alongside the legislation in the affected provisions. Use the ‘more’ link to open the changes and effects relevant to the provision you are viewing.

View outstanding changes

Changes and effects yet to be applied to the whole Act associated Parts and Chapters:

Whole provisions yet to be inserted into this Act (including any effects on those provisions):

Part 1U.K.Lump sum rule

Modifications etc. (not altering text)

C4Sch. 29 Pt. 1 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 11

Pension commencement lump sumU.K.

1(1)For the purposes of this Part a lump sum is a pension commencement lump sum if—U.K.

F1[F2(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(aa)the member becomes entitled to it in connection with becoming entitled to a relevant pension (or dies after becoming entitled to it but before becoming entitled to the relevant pension in connection with which it was anticipated that the member would become entitled to it)]

(b)it is paid when all or part of the member’s lifetime allowance is available [F3(but see sub-paragraph (3A))],

(c)it is paid within the period [F4beginning six months before, and ending one year after,] the day on which the member becomes entitled to it,

(d)it is paid when the member has reached normal minimum pension age (or the ill-health condition is satisfied),

F5(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . and

(f)it is not an excluded lump sum (see sub-paragraph (4)).

(2)But if a lump sum falling within sub-paragraph (1) exceeds the permitted maximum, the excess is not a pension commencement lump sum.

(3)A pension is a relevant pension if—

(a)it is income withdrawal, a lifetime annuity or a scheme pension, and

(b)the member becomes entitled to it F6[F7... under the pension scheme] under which the member becomes entitled to the lump sum.

[F8(3A)In a case where—

(a)the member becomes entitled to a lump sum before reaching the age of 75, but

(b)it is not paid to the member until after the member has reached that age,

the reference in sub-paragraph (1)(b) to the lump sum being paid is to be read as a reference to the member becoming entitled to it.]

(4)A lump sum is an excluded lump sum if—

(a)the pension in connection with which the member becomes entitled to it is a scheme pension the rate of which is to reduce (or which is to cease to be payable) in accordance with paragraph 2(4)(c) of Schedule 28 F9..., and

(b)the sole or main purpose of making provision for the pension to be such a pension was to increase the member’s entitlement to a lump sum on which there is no liability to income tax.

(5)Paragraph 2 defines the permitted maximum.

[F10(6)The Board of Inland Revenue may by regulations provide that, where incorrect income tax has been paid by the scheme administrator in relation to the member by way of the lifetime allowance charge in circumstances prescribed by the regulations, a lump sum subsequently paid to the member in circumstances so prescribed is to be treated as a pension commencement lump sum [F11even though the condition in sub-paragraph (1)(c) is not met.]]

Textual Amendments

F1Sch. 29 para. 1(1)(a) omitted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 24(2)(a)

F2Sch. 29 para. 1(1)(a)(aa) substituted (retrospective to 6.4.2006) for Sch. 29 para. 1(1)(a) by Finance Act 2007 (c. 11), Sch. 20 paras. 11(2)(a), 24(3)

F3Words in Sch. 29 para. 1(1)(b) inserted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 24(2)(b)

F4Words in Sch. 29 para. 1(1)(c) substituted (retrospective to 6.4.2006) by Finance Act 2007 (c. 11), Sch. 20 paras. 11(2)(b), 24(3)

F5Words in Sch. 29 para. 1(1)(e) omitted (retrospective to 6.4.2006) by virtue of Finance Act 2007 (c. 11), Sch. 20 paras. 11(2)(c), 24(3)

F6Words in Sch. 29 para. 1(3)(b) omitted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 79(2)

F7Words in Sch. 29 para. 1(3)(b) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 34(2), 64(1)

F8Sch. 29 para. 1(3A) inserted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 24(3)

F9Words in Sch. 29 para. 1(4)(a) omitted (with effect in accordance with s. 51(5) of the amending Act) by virtue of Finance Act 2013 (c. 29), s. 51(3)

F10Sch. 29 para. 1(6) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 34(3), 64(1)

F11Words in Sch. 29 para. 1(6) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 24(4)

Modifications etc. (not altering text)

C6Sch. 29 para. 1 modified (27.7.2010) by Finance (No. 2) Act 2010 (c. 31), Sch. 3 para. 7

[F121A(1)Paragraph 1(1)(c) is to be omitted when deciding whether a lump sum to which this paragraph applies is a pension commencement lump sum.U.K.

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

(a)the sum is paid in respect of a money purchase arrangement,

(b)the sum is paid before the member becomes entitled to the sum,

(c)either—

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

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

(d)the member becomes entitled to the sum before 6 October 2015.

(3)Where—

(a)a lump sum to which this paragraph applies is a pension commencement lump sum but would not be a pension commencement lump sum if sub-paragraph (1) were omitted, and

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

no lump sum paid to the member out of the expected-pension fund is a pension commencement lump sum; and here “the expected-pension fund” means the sums and assets that from time to time represent the sums and assets that, when the lump sum mentioned in paragraph (a) was paid, were held for the purpose of providing the expected pension.

(4)For the purposes of sub-paragraph (2), if the circumstances are as described in sub-paragraph (2)(c)(ii), the member is treated as not having become entitled to the arranged pension as a result of the cancelled contract having been entered into; and here “the arranged pension” means the pension that would have been provided by that contract had it not been cancelled.]

Textual Amendments

F12Sch. 29 para. 1A inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 1, 15

[F131B(1)When deciding whether a lump sum to which this paragraph applies is a pension commencement lump sum—U.K.

(a)paragraph 1(1)(aa) and (c) and (3) are to be omitted,

(b)paragraph 1(4) is to be treated as referring to the actual pension (see sub-paragraph (2)(h) of this paragraph), and

(c)paragraph 2(2) is to be treated as referring to the arrangement under which the member was expected to become entitled to the expected pension (see sub-paragraph (2)(b) of this paragraph).

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

(a)the sum is paid in respect of a money purchase arrangement,

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

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

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

(e)either—

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

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

(f)the sum is not repaid at any time before 6 October 2015,

(g)before the member becomes entitled to the expected pension, there is a recognised transfer of the sums and assets that immediately before the transfer represent the sums and assets that when the sum was paid were held for the purpose of providing the expected pension,

(h)the member becomes entitled before 6 October 2015 to a pension under the scheme to which the recognised transfer is made ( “ the actual pension ”),

(i)the actual pension is income withdrawal, a lifetime annuity or a scheme pension, or some combination of them, and

(j)all of the sums and assets that represent the sums and assets transferred by the recognised transfer are used to provide the actual pension.

(3)If a lump sum to which this paragraph applies is a pension commencement lump sum, any lump sum paid—

(a)to the member,

(b)by the scheme to which the recognised transfer mentioned in sub-paragraph (2)(g) is made or by any other registered pension scheme (including the scheme from which the transfer was made), and

(c)in connection with the member's becoming entitled to the actual pension,

is not a pension commencement lump sum.

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

Textual Amendments

F13Sch. 29 para. 1B inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 2(1), 15

2(1)If sub-paragraph (2) applies, the permitted maximum is nil.U.K.

(2)This sub-paragraph applies if all the member’s rights under the arrangement under which the member becomes entitled to the relevant pension are attributable to a disqualifying pension credit.

(3)A pension credit is disqualifying if, when the member becomes entitled to it, the person subject to the corresponding pension debit has an actual (rather than a prospective) right to payment of a pension under the relevant arrangement.

(4)The relevant arrangement is the arrangement to which the pension sharing order or provision, by virtue of which the member becomes entitled to the pension credit, relates.

(5)If sub-paragraph (2) does not apply, the permitted maximum is the lower of—

(a)the available portion of the member’s lump sum allowance, and

(b)the applicable amount, calculated in accordance with paragraph 3.

[F14(5A)But if the member dies before becoming entitled to the relevant pension in connection with which it was anticipated that the member would become entitled to the lump sum, the permitted maximum is the available portion of the member's lump sum allowance.]

(6)The available portion of the member’s lump sum allowance is—

where—

CSLA is the current standard lifetime allowance, and

AAC is the aggregate of the [F15relevant amount in the case of] each benefit crystallisation event which has occurred in relation to the member before the member becomes entitled to the lump sum, as adjusted under sub-paragraph (7) (and if no such benefit crystallisation event has occurred, is nil).

[F16(6A)Subject to sub-paragraph (6B), the relevant amount in the case of a benefit crystallisation event is the amount crystallised by it.

(6B)If the benefit crystallisation event is becoming entitled to a scheme pension under a money purchase arrangement, the relevant amount in the case of the benefit crystallisation event is the aggregate of—

(a)the amount of such of the sums held for the purposes of the pension scheme, and

(b)the market value of such of the assets held for the purposes of the pension scheme,

as are applied in (or in connection with) the purchase or provision of the scheme pension and any related dependants' scheme pension.]

(7)The adjustment of [F17the relevant amount in the case of] a previous benefit crystallisation event referred to in the definition of AAC is the multiplication of the amount by—

where—

CSLA is the current standard lifetime allowance, and

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

[F18(7A)For the purposes of determining the available portion of the member's lump sum allowance—

(a)the fact that benefit crystallisation event 5 or benefit crystallisation event 5B has occurred in relation to the member is to be disregarded, and

(b)anything which, but for paragraph 2 or 15A of Schedule 32, would have been a benefit crystallisation event is to be treated as if it were such an event.]

(8)If the amount given by sub-paragraph (6) is negative, no portion of the member’s lump sum allowance is available.

[F19(9)Sub-paragraph (10) applies if the member is a protected individual (but not if this paragraph applies with the modifications set out in paragraph 27 or 28 of Schedule 36).

(10)Sub-paragraphs (6) and (7) have effect[F20

(a)where the member becomes entitled to the lump sum on or after 6 April 2014, as if PSLA in the case of any previous benefit crystallisation event which occurs on or after 6 April 2014 were £1,500,000 if that is greater than PSLA in that case, and

(b)]as if CSLA were £1,500,000 if that is greater than CSLA.

(11)The member is a “protected individual” if—

(a)paragraph 7 of Schedule 36 (primary protection) makes provision for a lifetime allowance enhancement factor in relation to the member, or

(b)at the time the member becomes entitled to the lump sum, paragraph 12 of that Schedule (enhanced protection) applies in relation to the member.]

Textual Amendments

F14Sch. 29 para. 2(5A) inserted (retrospectively) by Finance Act 2007 (c. 11), Sch. 20 paras. 11(4), 24(3)

F15Words in Sch. 29 para. 2(6) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 23(2)

F16Sch. 29 para. 2(6A)(6B) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 23(3)

F17Words in Sch. 29 para. 2(7) substituted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 23(4)

F18Sch. 29 para. 2(7A) inserted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 25

F19Sch. 29 para. 2(9)-(11) inserted (with effect in accordance with Sch. 22 para. 8(3) of the amending Act) by Finance Act 2013 (c. 29), Sch. 22 para. 8(2)

F20Words in Sch. 29 para. 2(10) inserted (with effect in accordance with Sch. 4 para. 28(3) of the amending Act) by Finance Act 2016 (c. 24), Sch. 4 para. 28(1)

Modifications etc. (not altering text)

3(1)Where the member becomes entitled to income withdrawal, the applicable amount is one third of the aggregate of—U.K.

(a)the amount of the sums designated as available for the payment of [F21drawdown pension] on that occasion, and

(b)the market value of the assets so designated,

but subject to sub-paragraph (2).

(2)Any of the sums and assets so designated which represent rights attributable to a disqualifying pension credit are to be disregarded.

(3)Where the member becomes entitled to a lifetime annuity, the applicable amount is one third of the annuity purchase price.

(4)“The annuity purchase price” is the aggregate of—

(a)the amount of such of the sums held for the purposes of the pension scheme, and

(b)the market value of such of the assets held for the purposes of the pension scheme,

as are applied in (or in connection with) the purchase [F22of the lifetime annuity and any related dependants' annuity] [F23and any related nominees' annuity] but subject to sub-paragraph (5).

[F24(4A)For the purposes of this Part a dependants' annuity is related to a lifetime annuity payable to a member of a registered pension scheme—

(a)if they are purchased either in the form of a joint life annuity or separately in circumstances in which the day on which the one is purchased is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased, and

(b)the dependant's annuity will be payable to a dependant of the member.]

[F25(4B)For the purposes of this Part a nominees' annuity is related to a lifetime annuity payable to a member of a registered pension scheme—

(a)if they are purchased either in the form of a joint life annuity or separately in circumstances in which the day on which the one is purchased is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased, and

(b)the nominees' annuity will be payable to a nominee of the member.]

[F26(5)There is to be deducted from that aggregate—

(a)if the sums or assets applied in (or in connection with) the purchase of the annuity or any related dependants' annuity [F27or any related nominees' annuity] consist of or include sums or assets representing the whole or part of the [F28member's drawdown pension fund] [F29or of the member's flexi-access drawdown fund], the aggregate of the amount of those sums and the market value of those assets, and

(b)in any case, so much (if any) of the sums or assets applied in (or in connection with) the purchase of the annuity or any related dependants' annuity [F27or any related nominees' annuity] as represents rights which are attributable to a disqualifying pension credit.]

(6)Where the member becomes entitled to a scheme pension [F30under a defined benefits arrangement], the applicable amount is—

but subject to sub-paragraph (8).

(7)In sub-paragraph (6)—

  • LS is the amount of the lump sum, and

  • [F31AC is—

(a)in a case where the member becomes entitled to the pension before reaching the age of 75, the amount crystallised by reason of the member becoming entitled to the pension, disregarding paragraph 3 of Schedule 32, and

(b)in a case where the member becomes entitled to the pension after reaching that age, the amount that would have been so crystallised (disregarding that paragraph) but for paragraph 2 of that Schedule.]

[F32(7A)Where the member becomes entitled to a scheme pension under a money purchase arrangement, the applicable amount is one third of the scheme pension purchase price.

(7B)“The scheme pension purchase price” is the aggregate of—

(a)the amount of such of the sums held for the purposes of the pension scheme, and

(b)the market value of such of the assets held for the purposes of the pension scheme,

as are applied in (or in connection with) the purchase or provision of the scheme pension and any related dependants' scheme pension, but subject to sub-paragraph (8).

(7C)For the purposes of this Part a dependants' scheme pension is related to a scheme pension payable to a member of a registered pension scheme if—

(a)the day on which one is purchased or sums or assets are applied for its provision is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased or sums or assets are applied for its provision, and

(b)the dependants' scheme pension will be payable to a dependant of the member.]

(8)There is to be deducted from the aggregate of the amount of the lump sum and the amount crystallised [F33or from the scheme pension purchase price]

(a)if the scheme pension is funded (in whole or in part) by the [F34application] of sums or assets representing the whole or part of the [F35member's drawdown pension fund] [F36or of the member's flexi-access drawdown fund], the aggregate of the amount of those sums and the market value of those assets, and

(b)in any case, so much (if any) of the aggregate of the lump sum and the amount crystallised [F37or of the scheme pension purchase price] as represents rights which are attributable to a disqualifying pension credit.

[F38(8A)Sub-paragraphs (1) to (8) have effect subject to the following—

(a)if—

(i)paragraph 1A or 1B applies to the lump sum,

(ii)the lump sum is paid more than 6 months before the day on which the member becomes entitled to it,

(iii)a contract for a lifetime annuity is entered into to provide the pension in connection with which the lump sum is paid, and

(iv)on or after 19 March 2014 the contract is cancelled,

the applicable amount is one third of the annuity purchase price that would have been given by sub-paragraphs (4) to (5) in the case of that annuity had the contract not been cancelled, and

(b)if—

(i)paragraph 1A or 1B applies to the lump sum,

(ii)the lump sum is paid more than 6 months before the day on which the member becomes entitled to it, and

(iii)paragraph (a) does not apply,

the applicable amount is one third of the sums, plus one third of the then market value of the assets, held at the time the lump sum is paid for the purpose of providing the pension at that time expected to be the pension in connection with which the lump sum is paid.

(8B)For the purposes of sub-paragraph (8A)(a)(ii), the member is treated as not having become entitled to a pension as a result of the cancelled contract having been entered into.]

[F39(9)Sub-paragraph (10) applies if—

(a)sums or assets held for the purposes of, or representing accrued rights under, a money purchase arrangement relating to the member under a registered pension scheme (“member money purchase funds”) are subject to a relevant surrender or a relevant transfer,

(b)the sole or main purpose of the relevant surrender or relevant transfer is to increase the applicable amount on the member becoming entitled to a scheme pension, and

(c)the member becomes entitled to a scheme pension under a relevant defined benefits arrangement.

(10)The pension scheme under which the relevant defined benefits arrangement is an arrangement is to be treated as making an unauthorised payment to the member of any amount by which—

(a)the applicable amount in relation to the scheme pension under sub-paragraph (6), exceeds

(b)the amount which would be that applicable amount under sub-paragraph (7A) if the arrangement were a money purchase arrangement.

(11)For the purposes of sub-paragraph (9)—

(a)member money purchase funds are subject to a relevant surrender if they are surrendered and, in consequence of the surrender, there is a corresponding increase in the sums or assets held for the purposes of, or representing rights under, a defined benefits arrangement relating to the member under the pension scheme (or such an arrangement is established), and

(b)member money purchase funds are subject to a relevant transfer if they are transferred so as to become held for the purposes of, or to represent rights under, a defined benefits arrangement relating to the member under any other registered pension scheme.

(12)In sub-paragraphs (9) and (10) “relevant defined benefits arrangement” means—

(a)the defined benefits arrangement mentioned in paragraph (a) or (b) of sub-paragraph (11), or

(b)any other defined benefits arrangement relating to the member (under the pension scheme or any other registered pension scheme) in the case of which any of the sums or assets held for the purposes of, or representing accrued rights under, the arrangement directly or indirectly represent sums or assets previously held for the purposes of, or representing accrued rights under, the defined benefits arrangement so mentioned.]

Textual Amendments

F21Words in Sch. 29 para. 3(1)(a) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 79(3)(a)

F22Words in Sch. 29 para. 3(4) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 30(2), 64(1)

F24Sch. 29 para. 3(4A) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 30(3), 64(1)

F26Sch. 29 para. 3(5) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 35(2), 64(1)

F28Words in Sch. 29 para. 3(5)(a) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 79(3)(b)

F29Words in Sch. 29 para. 3(5)(a) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 22

F30Words in Sch. 29 para. 3(6) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(2)

F31Words in Sch. 29 para. 3(7) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 26

F32Sch. 29 para. 3(7A)-(7C) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(3)

F33Words in Sch. 29 para. 3(8) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(4)(a)

F34Word in Sch. 29 para. 3(8) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 24, 64(1)

F35Words in Sch. 29 para. 3(8)(a) substituted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 79(3)(c)

F36Words in Sch. 29 para. 3(8)(a) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 22

F37Words in Sch. 29 para. 3(8) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(4)(b)

F38Sch. 29 para. 3(8A)(8B) inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 4, 15

F39Sch. 29 para. 3(9)-(12) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 22(5)

Modifications etc. (not altering text)

C10Sch. 29 para. 3(4A)(4B) applied by 2003 c. 1, s. 646B(7) (as inserted (with effect in accordance with Sch. 4 para. 17(2) of the amending Act) by Finance Act 2015 (c. 11), Sch. 4 para. 17(1))

[F403A(1)Where this paragraph applies in relation to a pension commencement lump sum paid to the member, the pension scheme is to be treated as making to the member an unauthorised payment of the appropriate amount.U.K.

(2)Subject to [F41sub-paragraphs (3) to (4A)], this paragraph applies in relation to a pension commencement lump sum if—

(a)because of the lump sum, the amount of the contributions paid by or on behalf of, or in respect of, the member to the pension scheme, or to any other registered pension scheme, is significantly greater than it otherwise would be, and

(b)the member envisaged at the relevant time that that would be so.

(3)This paragraph does not apply in relation to any lump sum paid to the member on any day if the amount of the lump sum, when added to any other pension commencement lump sum paid to the member within the period of 12 months ending with that day, does not exceed [F42£7,500].

(4)This paragraph does not apply if the amount by which the contributions paid as mentioned in sub-paragraph (2)(a) is greater than it otherwise would be because of the lump sum does not exceed 30% of the amount of the lump sum.

[F43(4A)This paragraph does not apply if—

(a)the member has reached the age of 75 when the contributions are paid as mentioned in sub-paragraph (2)(a), and

(b)the contributions are not paid by an employer of the member.]

[F44(5)The appropriate amount” is—

(a)where the member becomes entitled to the lump sum before reaching the age of 75, so much of the amount crystallised by the benefit crystallisation event constituted by its payment (or the amount that would have been so crystallised but for paragraph 15A of Schedule 32) as does not exceed the amount of the member's lifetime allowance which is available on it;

(b)where the member becomes entitled to the lump sum after reaching that age, the amount of the lump sum.]

(6)“The relevant time” is—

(a)if paragraph (a) of sub-paragraph (2) is satisfied before the lump sum is paid, the time when that paragraph is first satisfied, and

(b)otherwise, the time when the lump sum is paid.]

Textual Amendments

F40Sch. 29 para. 3A inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 159(1)(2)

F41Words in Sch. 29 para. 3A(2) substituted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 27(2)

F42Sum in Sch. 29 para. 3A(3) substituted (17.12.2014) (with effect in accordance with Sch. 1 para. 70(2) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 70(1)

F43Sch. 29 para. 3A(4A) inserted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 27(3)

F44Sch. 29 para. 3A(5) substituted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 27(4)

Modifications etc. (not altering text)

C12Sch. 29 para. 3A excluded (E.W.) (1.4.2015) by The Teachers' Pension Scheme Regulations 2014 (S.I. 2014/512), reg. 167(1) (with reg. 183)

Serious ill-health lump sumU.K.

4(1)For the purposes of this Part a lump sum is a serious ill-health lump sum if—U.K.

(a)before it is paid the scheme administrator has received evidence from a registered medical practitioner that the member is expected to live for less than one year,

(b)it is paid when all or part of the member’s lifetime allowance is available, [F45and]

[F46(ca)either—

(i)it is paid in respect of an uncrystallised arrangement, and it extinguishes the member's entitlement to benefits under the arrangement, or

(ii)it is paid in respect of uncrystallised rights of the member under an arrangement other than an uncrystallised arrangement, and it extinguishes the member's uncrystallised rights under the arrangement.]

F47(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)An uncrystallised arrangement is an arrangement in respect of which there has been no previous benefit crystallisation event.

[F48(2A)In subsection (1)(ca)(ii) “uncrystallised rights”, in relation to the member, means rights of the member that are uncrystallised rights as defined by section 212(1) and (2).]

[F49(3)For the purposes of sub-paragraph (2)—

(a)the fact that benefit crystallisation event 5 or benefit crystallisation event 5B has occurred in relation to the member is to be disregarded, and

(b)anything which, but for paragraph 2 of Schedule 32, would have been a benefit crystallisation event is to be treated as if it were such an event.]

Textual Amendments

F45Word in Sch. 29 para. 4(1)(b) inserted (with effect in accordance with Sch. 5 para. 4 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 1(4)(a)

F46Sch. 29 para. 4(1)(ca) substituted for Sch. 29 para. 4(1)(c)(d) (with effect in accordance with Sch. 5 para. 4 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 1(4)(b)

F47Sch. 29 para. 4(1)(e) and word omitted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 28(2)(b)

F48Sch. 29 para. 4(2A) inserted (with effect in accordance with Sch. 5 para. 4 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 1(5)

F49Sch. 29 para. 4(3) inserted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 28(3)

Modifications etc. (not altering text)

[F50Uncrystallised funds pension lump sumU.K.

Textual Amendments

F50Sch. 29 para. 4A and cross-heading inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 57

4A(1)For the purposes of this Part a lump sum is an uncrystallised funds pension lump sum if—U.K.

(a)it is paid on or after 6 April 2015 in respect of a money purchase arrangement,

(b)it is paid when all or part of the member's lifetime allowance is available,

(c)it is paid when the member has reached normal minimum pension age (or the ill-health condition is met),

(d)it is not a pension commencement lump sum,

(e)it is not a lump sum that, for the purposes of Part 9 of ITEPA 2003 (pension income), is treated by regulations under section 164(1)(f) and (2) as a trivial commutation lump sum paid to the member,

(f)immediately before the member becomes entitled to it, the sums or assets that are to be used to provide it—

(i)represent rights of the member under the scheme that are uncrystallised rights as defined by section 212(1) and (2), but

(ii)do not to any extent represent rights attributable to a disqualifying pension credit, and

(g)none of sub-paragraphs (3) to (5) applies to the member.

(2)But if a lump sum falling within sub-paragraph (1)—

(a)is paid when the member has not reached the age of 75, and

(b)exceeds the member's available lifetime allowance,

the excess is not an uncrystallised funds pension lump sum.

(3)This sub-paragraph applies to the member if—

(a)paragraph 12 of Schedule 36 applies to the member (enhanced protection from 6 April 2006) immediately before the sum is paid, and

(b)the lump sum condition (see paragraphs 24(2) and (3), 25 and 26 of Schedule 36) is met in relation to the member.

(4)This sub-paragraph applies to the member if—

(a)paragraph 7 of Schedule 36 makes provision for the operation of a lifetime allowance enhancement factor in relation to the member immediately before the sum is paid, and

(b)the lump sum condition (see paragraphs 24(2) and (3), 25 and 26 of Schedule 36) is met in relation to the member.

(5)This sub-paragraph applies to the member if—

(a)any of the provisions listed in sub-paragraph (6) makes provision for the operation of a lifetime allowance enhancement factor in relation to the member immediately before the sum is paid, and

(b)immediately before the sum is paid, the available portion of the member's lump sum allowance for the purposes of paragraph 2 of Schedule 29 is nil or less than 25% of the sum.

(6)The listed provisions are—

(a)paragraph 7 of Schedule 36 (primary protection);

(b)section 220 (pension credits from previously crystallised rights);

(c)section 221 (non-residence arrangements);

(d)section 224 (transfers from recognised overseas pensions schemes);

(e)paragraph 18 of Schedule 36 (pre-commencement pension credits).

(7)In sub-paragraph (1)(f) “disqualifying pension credit” is to be read in accordance with paragraph 2(3) and (4).]

Short service refund lump sumU.K.

5(1)For the purposes of this Part a lump sum is a short service refund lump sum if—U.K.

(a)the pension scheme is an occupational pension scheme,

(b)the member’s pensionable service was terminated before normal pension age but the member is not entitled to short service benefit by virtue of section 71 of the Pension Schemes Act 1993 (c. 48) (basic principle as to short service benefit),

(c)there has been no previous benefit crystallisation event in relation to the member and the pension scheme,

(d)it extinguishes the member’s entitlement to benefits under the pension scheme [F51(except to the extent that it is prohibited from being extinguished by the payment of a lump sum by reason of the operation of provision made by or under any enactment)], and

(e)it is paid when the member has not reached the age of 75.

(2)But if a lump sum falling within sub-paragraph (1) exceeds an amount equal to the aggregate of the member’s contributions under the pension scheme, the excess is not a short service refund lump sum.

[F52(2A)In sub-paragraph (2) the reference to the member's contributions includes—

(a)any amount paid under section 7 of the Social Security Act 1986 (incentive payments to schemes becoming contracted-out between 1986 and 1993),

(b)any amount paid by the Commissioners for Her Majesty's Revenue and Customs under section 42A(3) of the Pension Schemes Act 1993 or section 38A(3) of the Pension Schemes (Northern Ireland) Act 1993 (rebates), and

(c)any amount recovered by the member's employer under regulations falling within sub-paragraph (2B) in respect of minimum payments made to the scheme in relation to any period before 6 April 2012.

(2B)Those regulations are regulations which were 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).]

(3)Pensionable service”, “normal pension age” and “short service benefit” have the same meaning as in the Pension Schemes Act 1993 (see section 181 (1) of that Act).

Textual Amendments

F51Words in Sch. 29 para. 5(1)(d) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 27

F52Sch. 29 para. 5(2A)(2B) inserted (retrospective to 6.4.2013) by Finance Act 2013 (c. 29), s. 52(8)(10)

Refund of excess contributions lump sumU.K.

6(1)A lump sum is a refund of excess contributions lump sum if—U.K.

(a)it is paid in respect of a tax year in which the excess contributions condition is met in respect of the member, and

(b)it is paid before the end of the period of six years beginning with the last day of the tax year in respect of which it is paid.

(2)But if a lump sum falling within sub-paragraph (1) exceeds the member’s available excess contributions allowance for the tax year in respect of which it is paid, the excess is not a refund of excess contributions lump sum.

(3)The excess contributions condition is met in respect of a member and a tax year if the amount of relievable pension contributions (see section 188(2) and (3)) paid in respect of the member in the tax year exceeds the maximum amount of relief to which the member is entitled for the tax year under section 190 (annual limit for relief).

(4)If no refund of excess contributions lump sum has been paid to the member in respect of a tax year (by any registered pension scheme), the available excess contributions allowance for that tax year is [F53(subject to sub-paragraph (7))]

(5)If one or more refund of excess contributions lump sums have been paid to the member in respect of a tax year, the available excess contributions allowance for that tax year is [F54(subject to sub-paragraph (7))]

or, if the amount resulting from that calculation is negative, is nil.

(6)In this paragraph—

  • RPC is the amount of the relievable pension contributions paid in respect of the member in the tax year,

  • MAR is the maximum amount of relief to which the member is entitled for the tax year under section 190, and

  • ALS is the aggregate of the refund of excess contributions lump sums previously paid to the member in respect of the tax year.

[F55(7)If any relief given in accordance with section 192(1) in relation to any contribution included in RPC is in excess of the maximum amount of relief to which the member is entitled under section 190, RPC is to be taken to be reduced by the amount of that excess.]

Textual Amendments

F53Words in Sch. 29 para. 6(4) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 28(2)

F54Words in Sch. 29 para. 6(5) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 28(2)

F55Sch. 29 para. 6(7) inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 161(2), Sch. 23 para. 28(3)

Trivial commutation lump sumU.K.

7(1)For the purposes of this Part a lump sum is a trivial commutation lump sum if—U.K.

(a)it is paid when no trivial commutation lump sum has previously been paid to the member (by any registered pension scheme) or, if such a lump sum has previously been paid, before the end of the commutation period,

[F56(aa)it is paid in respect of a defined benefits arrangement, [F57or in respect of a scheme pension payable by the scheme administrator to which the member has become entitled under a money purchase arrangement (an “in-payment money-purchase in-house scheme pension”), or partly in respect of the former and partly in respect of the latter,]]

(b)on the nominated date, the value of the member’s pension rights does not exceed the commutation limit,

(c)it is paid when all or part of the member’s lifetime allowance is available,

(d)it extinguishes [F58any entitlement to defined benefits [F59, and any entitlement to payments of in-payment money-purchase in-house scheme pensions,] that the member has] under the pension scheme, and

(e)it is paid when the member has reached [F60normal minimum pension age (or the ill-health condition is met)] F61....

(2)The commutation period is the period beginning with the day on which a trivial commutation lump sum is first paid to the member and ending 12 months after that day.

(3)The nominated date is the day within the period of three months ending with the first day of the commutation period nominated by the member (or, if no date is nominated, is the first day of the commutation period).

(4)The commutation limit is [F62£30,000].

[F63(4A)The Treasury may by order substitute for the amount for the time being specified in sub-paragraph (4) such larger amount as is specified in the order.]

(5)The value of the member’s pension rights on the nominated date is the aggregate of—

(a)the value of the member’s relevant crystallised pension rights on that date (calculated in accordance with paragraph 8), and

(b)the value of the member’s uncrystallised rights on that date (calculated in accordance with paragraph 9).

Textual Amendments

F56Sch. 29 para. 7(1)(aa) inserted (17.12.2014) (with effect in accordance with Sch. 1 para. 71(2) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 71(1)(a)

F57Words in Sch. 29 para. 7(1)(aa) inserted (with effect in accordance with Sch. 5 para. 9 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 7(2)

F58Words in Sch. 29 para. 7(1)(d) substituted (17.12.2014) (with effect in accordance with Sch. 1 para. 71(2) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 71(1)(b)

F59Words in Sch. 29 para. 7(1)(d) inserted (with effect in accordance with Sch. 5 para. 9 of the amending Act) by Finance Act 2016 (c. 24), Sch. 5 para. 7(3)

F60Words in Sch. 29 para. 7(1)(e) substituted (17.12.2014) (with effect in accordance with Sch. 1 para. 71(2) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 71(1)(c)

F61Words in Sch. 29 para. 7(1)(e) omitted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 29

F62Sum in Sch. 29 para. 7(4) substituted (with effect in accordance with s. 42(8) of the amending Act) by Finance Act 2014 (c. 26), s. 42(1)

F63Sch. 29 para. 7(4A) inserted (with effect in accordance with Sch. 18 Pt. 2 of the amending Act) by Finance Act 2011 (c. 11), Sch. 18 para. 4(3)

8(1)The value of the member’s relevant crystallised pension rights on the nominated date is the aggregate of—U.K.

(a)the value of the member’s relevant crystallised pension rights on 5th April 2006, calculated in accordance with paragraph 10 of Schedule 36 (as if the member were the individual mentioned there)F64..., and

(b)the aggregate of the amounts crystallised on benefit crystallisation events in the period beginning with 6th April 2006 and ending with the nominated dateF65....

F66(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F66(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F64Words in Sch. 29 para. 8(1)(a) omitted (with effect in accordance with s. 42(8) of the amending Act) by virtue of Finance Act 2014 (c. 26), s. 42(2)(a)

F65Words in Sch. 29 para. 8(1)(b) omitted (with effect in accordance with s. 42(8) of the amending Act) by virtue of Finance Act 2014 (c. 26), s. 42(2)(b)

F66Sch. 29 para. 8(2)(3) omitted (with effect in accordance with s. 42(8) of the amending Act) by virtue of Finance Act 2014 (c. 26), s. 42(2)(c)

9(1)The value of the member’s uncrystallised rights on the nominated date is the aggregate value of the member’s uncrystallised rights on that date under each arrangement relating to the member under a registered pension scheme.U.K.

(2)The value on the nominated date of the member’s uncrystallised rights under such an arrangement is to be calculated in accordance with section 212 (valuation of uncrystallised rights for purposes of section 210).

Winding-up lump sumU.K.

10(1)For the purposes of this Part a lump sum is a winding-up lump sum if—U.K.

(a)the pension scheme is an occupational pension scheme,

(b)the pension scheme is being wound-up,

(c)[F67any person by whom the member is employed at the time when the lump sum is paid, and who has made contributions under the pension scheme in respect of the member within the period of five years ending with the day on which it is paid,] meets the conditions in sub-paragraph (3),

(d)it is paid when all or part of the member’s lifetime allowance is available, [F68and]

(e)it extinguishes the member’s entitlement to benefits under the pension scheme, F69...

F69(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)But if a lump sum falling within sub-paragraph (1) exceeds [F70£18,000,] the excess is not a winding-up lump sum.

[F71(2A)The Treasury may by order substitute for the amount for the time being specified in sub-paragraph (2) such larger amount as is specified in the order.]

(3)The conditions [F72referred to in paragraph (c) of sub-paragraph (1) are that the person mentioned in that paragraph]

F73(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)is not making contributions under any other registered pension scheme in respect of the member, and

(c)undertakes to the Inland Revenue not to make such contributions during the period of one year beginning with the day on which the lump sum is paid.

Textual Amendments

F67Words in Sch. 29 para. 10(1)(c) substituted (19.7.2007) (with effect in accordance with Sch. 20 para. 24(6) of the amending Act) by Finance Act 2007 (c. 11), Sch. 20 para. 12(2)

F68Word in Sch. 29 para. 10(1)(d) inserted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 30(a)

F69Sch. 29 para. 10(1)(f) and word omitted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 30(b)

F70Word in Sch. 29 para. 10(2) substituted (with effect in accordance with Sch. 18 Pt. 2 of the amending Act) by Finance Act 2011 (c. 11), Sch. 18 para. 5(2)

F71Sch. 29 para. 10(2A) inserted (with effect in accordance with Sch. 18 Pt. 2 of the amending Act) by Finance Act 2011 (c. 11), Sch. 18 para. 5(3)

F72Words in Sch. 29 para. 10(3) substituted (19.7.2007) (with effect in accordance with Sch. 20 para. 24(6) of the amending Act) by Finance Act 2007 (c. 11), Sch. 20 para. 12(3)(a)

F73Sch. 29 para. 10(3)(a) repealed (19.7.2007) (with effect in accordance with Sch. 20 para. 24(6) of the amending Act) by Finance Act 2007 (c. 11), Sch. 20 para. 12(3)(b), Sch. 27 Pt. 3(2)

Lifetime allowance excess lump sumU.K.

11U.K.For the purposes of this Part a lump sum is a lifetime allowance excess lump sum if—

(a)it is paid when none of the member’s lifetime allowance is available,

(b)it is not a short service refund lump sum or a refund of excess contributions lump sum,

(c)it does not reduce the rate of payment of any pension to which the member has become (actually) entitled, or extinguish the member’s entitlement to payment of any such pension,

(d)it is paid when the member has reached normal minimum pension age (or the ill-health condition is met), and

(e)it is paid when the member has not reached the age of 75.

[F74Transitional 2013/14 lump sum, and its related trivial commutation lump sumU.K.

Textual Amendments

F74Sch. 29 para. 11A and cross-heading inserted (19.3.2014) by Finance Act 2014 (c. 26), Sch. 5 paras. 5(2), 15

11A(1)A lump sum is a transitional 2013/14 lump sum for the purposes of this Part if—U.K.

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

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

(c)either—

(i)the earlier sum is paid on or after 19 September 2013 but before 27 March 2014, or

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

(d)all of the sums and assets for the time being representing the sums and assets that when the earlier sum was paid were held for the purpose of providing the expected pension are, before the member becomes entitled to the expected pension, used in paying a further lump sum to the member ( “ the further sum ”),

(e)the further sum is paid on or after 6 July 2014 but before 6 April 2015, and

(f)the further sum is a trivial commutation lump sum (see sub-paragraph (2)).

(2)Sub-paragraph (4) applies when deciding under paragraph 7 whether the further sum is a trivial commutation lump sum in a case where the earlier sum is paid before the nominated date (see paragraph 7(3) for the meaning of “the nominated date”).

(3)If the earlier sum is a transitional 2013/14 lump sum, and the earlier sum and the further sum are not the only lump sums paid under registered pension schemes to the member, sub-paragraph (4) applies when deciding under paragraph 7 whether any other lump sum paid under a registered pension scheme to the member is a trivial commutation lump sum.

(4)If this sub-paragraph applies, the payment of the earlier sum is to be treated for the purposes of paragraph 8(1)(b) as a benefit crystallisation event—

(a)which occurs when the earlier sum is paid, and

(b)on which the amount crystallised is the amount of the earlier sum.

(5)If the earlier sum is a transitional 2013/14 lump sum, and only the sums and assets mentioned in sub-paragraph (1)(d) are used in paying the further sum, section 636B of ITEPA 2003 applies in relation to the further sum with the omission of its subsection (3).

(6)If the earlier sum is a transitional 2013/14 lump sum, and the sums and assets mentioned in sub-paragraph (1)(d) are used together with other sums and assets in paying the further sum—

(a)section 636B of ITEPA 2003 applies in relation to the further sum as if instead of the further sum there were two separate trivial commutation lump sums as follows—

(i)one (“the first part of the further sum”) consisting of so much of the further sum as is attributable to the sums and assets mentioned in sub-paragraph (1)(d), and

(ii)another consisting of the remainder of the further sum,

(b)the first part of the further sum is to be treated for the purposes of section 636B of ITEPA 2003 as having been paid immediately before the remainder of the further sum,

(c)section 636B of ITEPA 2003 applies in relation to the first part of the further sum with the omission of its subsection (3), and

(d)for the purposes of applying section 636B(3) of ITEPA 2003 in relation to the remainder of the further sum, the rights to which the first part of the further sum relates are to be treated as rights that are not uncrystallised rights immediately before the remainder of the further sum is paid.

(7)For the purposes of sub-paragraph (1), if the circumstances are as described in sub-paragraph (1)(c)(ii), the member is treated as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.]

Interpretation of Part 1U.K.

12(1)Expressions used in this Part of this Schedule and in Schedule 28 have the same meaning in this Part of this Schedule as in Schedule 28.U.K.

[F75(1A)For the purposes of determining whether all or part of the member's lifetime allowance is available—

(a)the fact that benefit crystallisation event 5 or benefit crystallisation event 5B has occurred in relation to the member is to be disregarded, and

(b)anything which, but for paragraph 2 or 15A of Schedule 32, would have been a benefit crystallisation event is to be treated as if it were such an event.]

(2)Where all or part of the member’s lifetime allowance is available immediately before a lump sum is paid, sub-paragraph (3) applies to the lump sum if—

(a)its amount exceeds the member’s available lifetime allowance, and

(b)but for that fact, it would satisfy all the requirements of paragraph 1(1), 4(1), [F764A(1),] 7(1) or 10(1).

(3)For the purposes of this Schedule, the whole of the lump sum (and not only so much of it as does not exceed the member’s available lifetime allowance) is to be treated as paid when all or part of the member’s lifetime allowance is available.

(4)But sub-paragraph (3) does not apply—

(a)in the case of a lump sum that would satisfy all the requirements of paragraph 1(1), to so much of it as would be prevented from being a pension commencement lump sum by paragraph 1(2),

[F77(aa)in the case of a lump sum that would satisfy all the requirements of paragraph 4A(1) and is paid when the member has not reached the age of 75, to so much of it as would be prevented from being an uncrystallised funds pension lump sum by paragraph 4A(2),] and

(b)in the case of a lump sum that would satisfy all the requirements of paragraph 10(1), to so much of it as would be prevented from being a winding-up lump sum by paragraph 10(2).

(5)Where by virtue of paragraph 1(2), [F784A(2),] 5(2), 6(2) or 10(2) an excess is not an authorised lump sum of one description, that does not prevent the excess being an authorised lump sum of another description.

(6)Authorised lump sum” means a lump sum authorised to be paid by the lump sum rule.

Textual Amendments

F75Sch. 29 para. 12(1A) inserted (with effect in accordance with Sch. 16 paras. 85, 101 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 31

F76Word in Sch. 29 para. 12(2)(b) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 58

F77Sch. 29 para. 12(4)(aa) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 59

F78Word in Sch. 29 para. 12(5) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 60

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open the Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Close

See additional information alongside the content

Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.

Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

Timeline of Changes

This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.

Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources