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Finance (No. 3) BillPage 300

multiplied by LAEF were £1,800,000 (the standard lifetime allowance
for the tax year 2011-12) if that is greater than SLA.

(5B) Where the operation of a lifetime allowance enhancement factor is
provided for by paragraph 7 of Schedule 36, subsection (4) has effect
5as if SLA were £1,800,000 (the standard lifetime allowance for the tax
year 2011-12) if that is greater than SLA.

(5C) Where benefit crystallisation event 7 occurs on or after 6 April 2012
by reason of the payment of a relevant lump sum death benefit in
respect of the death of the individual before that date, the standard
10lifetime allowance at the time of the benefit crystallisation event is
£1,800,000 (the standard lifetime allowance for the tax year 2011-12).

3 Schedule 29 (authorised lump sums) is amended as follows.

4 (1) Paragraph 7 (trivial commutation lump sum) is amended as follows.

(2) In sub-paragraph (4), for “1% of the standard lifetime allowance on the
15nominated date.” substitute “£18,000.”

(3) After that sub-paragraph insert—

(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 (1) 20Paragraph 10 (winding-up lump sum) is amended as follows.

(2) In sub-paragraph (2), for “1% of the standard lifetime allowance when the
lump sum is paid,” substitute “£18,000,”.

(3) After that sub-paragraph insert—

(2A) The Treasury may by order substitute for the amount for the time
25being specified in sub-paragraph (2) such larger amount as is
specified in the order.

6 (1) Paragraph 20 (trivial commutation lump sum death benefit) is amended as
follows.

(2) In sub-paragraph (2), for “1% of the standard lifetime allowance on the date
30the lump sum is paid,” substitute “£18,000,”.

(3) After that sub-paragraph insert—

(3) 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.

7 (1) 35Paragraph 21 (winding-up lump sum death benefit) is amended as follows.

(2) In sub-paragraph (2), for “1% of the standard lifetime allowance on the date
the lump sum is paid,” substitute “£18,000,”.

(3) After that sub-paragraph insert—

(3) The Treasury may by order substitute for the amount for the time
40being specified in sub-paragraph (2) such larger amount as is
specified in the order.

8 Schedule 36 (transitional provision) is amended as follows.

Finance (No. 3) BillPage 301

9 In paragraph 16(3), for “standard lifetime allowance when the first relevant
event occurs.” substitute “underpinned lifetime allowance when the first
relevant event occurs; and “the underpinned lifetime allowance” is the
greater of the current standard lifetime allowance and £1,800,000 (the
5standard lifetime allowance for the tax year 2011-12).”

10 (1) Paragraph 28(3) is amended as follows.

(2) In the sub-paragraphs (6A) and (7) treated as substituted—

(a) in the formula, for “CSLA” substitute “ULA”, and

(b) for the definition of CSLA substitute—

(3) After the sub-paragraph (7) treated as substituted insert—

(7A) The underpinned lifetime allowance” is the greater of the current
standard lifetime allowance and £1,800,000 (the standard lifetime
allowance for the tax year 2011-12).

11 (1) 15Paragraph 34(2) is amended as follows.

(2) In the sub-paragraph (5) treated as substituted, for “CSLA” substitute
“ULA”.

(3) In the sub-paragraph (7) treated as substituted, for the definition of CSLA
substitute—

(4) After the sub-paragraph (7A) treated as substituted insert—

(7AZA) The underpinned lifetime allowance” is the greater of the
current standard lifetime allowance and £1,800,000 (the standard
lifetime allowance for the tax year 2011-12).

12 25In the Registered Pension Schemes (Standard Lifetime and Annual
Allowances) Order 2010 (S.I. 2010/922S.I. 2010/922), omit article 2.

Part 2 Commencement and transitional provision

13 The amendments made by Part 1 have effect for the tax year 2012-13 and
30subsequent tax years.

14 (1) This paragraph applies on and after 6 April 2012 in the case of an
individual—

(a) who has one or more arrangements under a registered pension
scheme on that date,

(b) 35in relation to whom paragraph 7 of Schedule 36 to FA 2004 (primary
protection) does not make provision for a lifetime allowance
enhancement factor, and

(c) in relation to whom paragraph 12 of that Schedule (enhanced
protection) does not apply on that date,

40if notice of intention to rely on it is given to an officer of Revenue and
Customs.

(2) The Commissioners for Her Majesty’s Revenue and Customs may make
regulations specifying how notice is to be given.

Finance (No. 3) BillPage 302

(3) Part 4 of FA 2004 has effect in relation to the individual as if the standard
lifetime allowance were the greater of the standard lifetime allowance and
£1,800,000 (the standard lifetime allowance for the tax year 2011-12).

(4) But this paragraph ceases to apply if on or after 6 April 2012—

(a) 5there is benefit accrual in relation to the individual under an
arrangement under a registered pension scheme,

(b) there is an impermissible transfer into any arrangement under a
registered pension scheme relating to the individual,

(c) a transfer of sums or assets held for the purposes of, or representing
10accrued rights under, any such arrangement is made that is not a
permitted transfer, or

(d) an arrangement relating to the individual is made under a registered
pension scheme otherwise than in permitted circumstances.

(5)
For the purposes of sub-paragraph (4)(a) there is benefit accrual in relation
15to the individual under an arrangement—

(a) in the case of a money purchase arrangement that is not a cash
balance arrangement, if a relevant contribution is paid under the
arrangement on or after 6 April 2012,

(b) in the case of a cash balance arrangement or a defined benefits
20arrangement, if there is an increase in the value of the individual’s
rights under the arrangement at any time on or after that date (but
subject to sub-paragraph (12)), and

(c) in the case of a hybrid arrangement—

(i) where the benefits that may be provided to or in respect of
25the individual under the arrangement include money
purchase benefits other than cash balance benefits, if a
relevant contribution is paid under the arrangement on or
after 6 April 2012, and

(ii) in any case, if there is an increase in the value of the
30individual’s rights under the arrangement at any time on or
after that date (but subject to sub-paragraph (12)).

(6) For the purposes of sub-paragraphs (5)(b) and (c)(ii) and (12) whether there
is an increase in the value of the individual’s rights under the arrangement
(and its amount if there is) is to be determined—

(a) 35in the case of a cash balance arrangement (or a hybrid arrangement
under which cash balance benefits may be provided to or in respect
of the individual under the arrangement), by reference to whether
there is an increase in the amount that would, on the valuation
assumptions, be available for the provision of benefits to or in respect
40of the member (and, if there is, the amount of the increase), and

(b) in the case of a defined benefits arrangement (or a hybrid
arrangement under which defined benefits may be provided to or in
respect of the individual under the arrangement), by reference to
whether there is an increase in the benefits amount.

(7) 45For the purposes of sub-paragraph (6)(b) “the benefits amount” is—


where—

(8) Paragraph 17A of Schedule 36 to FA 2004 (impermissible transfers) applies
5for the purposes of sub-paragraph (4)(b) but as if the references to a relevant
existing arrangement were to the arrangement and the reference in sub-
paragraph (2) to 5 April 2006 were to 5 April 2012.

(9) Sub-paragraphs (7) to (8B) of paragraph 12 of Schedule 36 to FA 2004 (when
there is a permitted transfer) apply for the purposes of sub-paragraph (4)(c);
10and where there is a permitted transfer—

(a) if it is a permitted transfer by virtue of sub-paragraph (8)(a) of
paragraph 12, this paragraph applies in relation to the arrangement
to which the transfer is made,

(b) if it is a permitted transfer by virtue of sub-paragraph (8)(b) of that
15paragraph, this paragraph applies in relation to the arrangement to
which the transfer is made as if it were the same as that from which
it is made, and

(c) if it is a permitted transfer by virtue of sub-paragraph (8)(c) of that
paragraph, this paragraph applies in relation to the arrangement to
20which the transfer is made as if it were the same as that from which
it is made and (if the employment is transferred) as if the
employment with the transferee were the employment with the
transferor.

(10) Sub-paragraphs (2A) to (2C) of paragraph 12 of Schedule 36 to FA 2004
25(“permitted circumstances”) apply for the purposes of sub-paragraph (4)(d).

(11) Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid
under an arrangement) applies for the purposes of sub-paragraph (5)(a).

(12) Increases in the value of the individual’s rights under an arrangement are to
be ignored for the purposes of sub-paragraph (5)(b) or (c)(ii) if in no tax year
30do they exceed the relevant percentage.

(13) The relevant percentage, in relation to a tax year, means—

(a) where the arrangement (or a predecessor arrangement) includes
provision for the value of the rights of the individual to increase
during the tax year at an annual rate specified in the rules of the
35pension scheme (or a predecessor registered pension scheme) on 9
December 2010, that percentage (or, where more than one
arrangement does so the higher or highest of the percentages so
specified), and

(b) otherwise, the percentage by which the consumer prices index for
40the month of September in the previous tax year is higher than it was
for the same month in the period of 12 months (or nil per cent if it is
not higher).

(14) In sub-paragraph (13)(a)—

(15) Regulations under sub-paragraph (2) may include supplementary or
incidental provision.

(16) 5The power to make regulations under sub-paragraph (2) is exercisable by
statutory instrument.

(17) A statutory instrument containing regulations under sub-paragraph (2) is
subject to annulment in pursuance of a resolution of the House of Commons.

(18) Expressions used in this paragraph and Part 4 of FA 2004 have the same
10meaning in this paragraph as in that Part.

Section 73

SCHEDULE 19 The bank levy

Part 1 Introduction

1 15There is to be a tax called “the bank levy”.

2 The bank levy is charged on certain types of equity and liabilities of certain
groups of entities and individual entities as set out in Part 2 of this Schedule.

3 In this Schedule—

Part 2 30Charging of bank levy

Bank levy to be charged in relation to certain groups of entities

4 (1) The bank levy is charged if, as at the end of a period of account (“the
chargeable period”) of an entity (“the parent entity”)—

(a) the parent entity is a parent and is not a subsidiary of any other
35entity, and

(b) the group (“the relevant group”) for which the parent entity is the
parent is a group within sub-paragraph (2).

(2) The groups within this sub-paragraph are—

Finance (No. 3) BillPage 305

(a) a UK banking group,

(b) a building society group,

(c) a foreign banking group, or

(d) a relevant non-banking group.

5See Part 3 of this Schedule for the definitions of these groups.

(3) “Group”, “parent” and “subsidiary” have the meanings given by those
provisions of international accounting standards relating to the preparation
of consolidated financial statements (whether or not the parent entity
prepares financial statements under those standards).

(4) 10Accordingly, for the purposes of this Schedule the members of the relevant
group are—

(a) the parent entity, and

(b) any other entity which, as at the end of the chargeable period, is a
member of the group for the purposes of the provisions mentioned
15in sub-paragraph (3).

(5) Sub-paragraphs (3) and (4) are subject to what follows.

(6) Sub-paragraph (7) applies if—

(a) as at the end of the chargeable period—

(i) the parent entity is resident in a territory outside the United
20Kingdom,

(ii) generally accepted accounting practice for entities resident in
that territory is or includes US GAAP, and

(iii) the parent entity is a parent for the purposes of those
provisions of US GAAP which relate to the preparation of
25consolidated financial statements (as well as being a parent
for the purposes of the provisions mentioned in sub-
paragraph (3)), and

(b) the parent entity prepares consolidated financial statements for the
chargeable period under US GAAP.

(7) 30The relevant group is the group for which the parent entity is the parent for
the purposes of the provisions of US GAAP mentioned in sub-paragraph
(6)(a)(iii) (instead of the provisions mentioned in sub-paragraph (3)) and,
accordingly, for the purposes of this Schedule the members of the relevant
group are—

(a) 35the parent entity, and

(b) any other entity which, as at the end of the chargeable period, is a
member of the group for the purposes of the provisions of US GAAP
mentioned in sub-paragraph (6)(a)(iii).

(8) This paragraph applies in relation to periods of account ending on or after 1
40January 2011.

Bank levy to be charged in relation to certain entities which are not members of groups

5 (1) The bank levy is charged if, as at the end of a period of account (“the
chargeable period”) of an entity (“the relevant entity”), the relevant entity—

(a) is a UK resident bank, a building society or a relevant foreign bank,
45and

(b) does not fall within sub-paragraph (2) or (3).

Finance (No. 3) BillPage 306

(2) An entity falls within this sub-paragraph if it is an entity in relation to which
paragraph 4(1) applies as at the end of the chargeable period.

(3) An entity (“A”) falls within this sub-paragraph if—

(a) there is another entity (“B”) in relation to which paragraph 4(1)
5applies as at the end of the chargeable period (or in relation to which
paragraph 4(1) would apply if B had a period of account ending at
the same time as the chargeable period), and

(b) A is (or would be) a member of the relevant group.

(4) This paragraph applies in relation to periods of account ending on or after 1
10January 2011.

Steps for determining the amount of the bank levy

6 (1) This paragraph applies where the bank levy is charged as provided for by
paragraph 4 or 5.

(2) Here are the steps to be taken to determine the amount of the bank levy.

15Step 1

In accordance with Part 4 of this Schedule, determine the amount of the
chargeable equity and liabilities of the relevant group or the relevant entity
(as the case may be).

Step 2

20If the amount of the chargeable equity and liabilities is not more than
£20,000,000,000, the amount of the bank levy is nil and no further steps are
taken.

If the amount of the chargeable equity and liabilities is more than
£20,000,000,000, go to Step 3.

25Step 3

Determine how much of the chargeable equity and liabilities are long term
equity and liabilities and how much are short term liabilities.

Step 4

Determine the proportion (“A%”) of the chargeable equity and liabilities
30which is long term equity and liabilities and the proportion (“B%”) of the
chargeable equity and liabilities which is short term liabilities.

Step 5

Reduce the amount of the long term chargeable equity and liabilities by an
amount equal to A% of £20,000,000,000 and the amount of the short term
35chargeable liabilities by an amount equal to B% of £20,000,000,000.

Step 6

If the chargeable period is 12 months, go straight to Step 7.

If not, adjust the amount of the long term chargeable equity and liabilities
and the amount of the short term chargeable liabilities as follows.

40Divide the amount by 365 and then multiply the result by the number of
days in the chargeable period.

Finance (No. 3) BillPage 307

Step 7

Charge the amount of the long term chargeable equity and liabilities at the
rate of 0.039%.

Charge the amount of the short term chargeable liabilities at the rate of
50.078%.

(3) The bank levy is to be paid as provided for by Part 6 of this Schedule.

Special provision for chargeable periods falling wholly or partly before 1 January 2012

7 (1) Paragraph 6(2) applies subject to this paragraph if some or all of the
chargeable period falls before 1 January 2012.

(2) 10For Step 7 there is substituted—

Step 7

Determine the proportion (“X%”) of the chargeable period (if any) falling in
the period from 1 January 2011 to 28 February 2011.

Determine the proportion (“Y%”) of the chargeable period (if any) falling in
15the period from 1 March 2011 to 30 April 2011.

Determine the proportion (“Z%”) of the chargeable period (if any) falling in
the period from 1 May 2011 to 31 December 2011.

Charge X% of the amount of the long term chargeable equity and liabilities
at the rate of 0.025%, Y% of that amount at the rate of 0.05%, Z% of that
20amount at the rate of 0.0375% and the balance (if any) at the rate of 0.039%.

Charge X% of the amount of the short term chargeable liabilities at the rate
of 0.05%, Y% of that amount at the rate of 0.1%, Z% of that amount at the rate
of 0.075% and the balance (if any) at the rate of 0.078%.

(3) If the chargeable period starts before 1 January 2011, for the purposes of Step
256 and Step 7 (as substituted by sub-paragraph (2)) the part of the period
falling before 1 January 2011 is ignored and, accordingly, the period is
treated as having started on 1 January 2011.

Part 3 Groups covered by the bank levy

30Definitions of “UK banking group”, “building society group”, “foreign banking group” and
“relevant non-banking group”

8 The relevant group is a “UK banking group” if—

(a) the group is a banking group (see paragraph 12), and

(b) the parent entity is a UK resident entity.

9 35The relevant group is a “building society group” if the parent entity is a
building society.

10 The relevant group is a “foreign banking group” if—

(a) the group is a banking group (see paragraph 12), and

(b) the parent entity is a non-UK resident entity.

11 40The relevant group is a “relevant non-banking group” if—

Finance (No. 3) BillPage 308

(a) the members of the group include at least one UK resident bank or
relevant foreign bank, and

(b) the group is neither a banking group nor a building society group.

Definition of “banking group”

12 (1) 5The relevant group is a “banking group” if—

(a) condition A, B, C or D is met, and

(b) the exempt activities condition is not met (see paragraph 13).

(2) Condition A is that the parent entity is a UK resident bank (see paragraph
79) or a relevant foreign bank (see paragraph 77).

(3) 10Condition B is that—

(a) the parent entity is an investment entity, and

(b) the members of the relevant group include at least one UK resident
bank to which sub-paragraph (6) applies or relevant foreign bank to
which that sub-paragraph applies.

(4) 15Condition C is that—

(a) the parent entity is a non-UK resident entity to which sub-paragraph
(8) applies, and

(b) the members of the relevant group include at least one UK resident
bank or relevant foreign bank.

(5) 20Condition D is that—

(a) the parent entity is an investment entity,

(b) the members of the relevant group include at least one non-UK
resident entity to which both sub-paragraphs (6) and (8) apply, and

(c) those members also include at least one UK resident bank or relevant
25foreign bank.

(6) This sub-paragraph applies to an entity (“E”) if, for the purposes of the
applicable accounting provisions, E is not a subsidiary of any other entity
apart from investment entities.

(7) “The applicable accounting provisions” means—

(a) 30the provisions mentioned in paragraph 4(3), or

(b) if the members of the relevant group are determined under
paragraph 4(7), the provisions of US GAAP mentioned in paragraph
4(6)(a)(iii).

(8) This sub-paragraph applies to an entity (“F”) if—

(a) 35F would be a UK resident bank if—

(i) F were a UK resident entity,

(ii) it carried on its activities in the United Kingdom,

(iii) where it would be required to be an authorised person for the
purposes of FISMA 2000 in order to carry on those activities
40in the United Kingdom, it were an authorised person with
permission to carry on those activities, and

(iv) where those activities consist wholly or mainly of any of the
relevant activities described in the provisions mentioned in
paragraph 78(b) to (f), as a result of carrying on those
45activities and having such permission it would be a BIPRU
730k firm and a full scope BIPRU investment firm, or

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