|
| |
|
assumptions, be available for the provision of benefits to or in respect |
| |
of 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 |
| 5 |
whether there is an increase in the benefits amount. |
| |
(6) | For the purposes of sub-paragraph (5)(b) “the benefits amount” is—![equation: plus[id[cross[char[P],times[char[R],char[V],char[F]]]],times[char[L],char[S]]]](missing.gif) |
| |
| |
LS is the lump sum to which the individual would, on the valuation |
| |
assumptions, be entitled under the arrangement (otherwise than by |
| 10 |
| |
P is the annual rate of the pension which would, on the valuation |
| |
assumptions, be payable to the individual under the arrangement; |
| |
RVF is the relevant valuation factor. |
| |
(7) | Paragraph 17A of Schedule 36 to FA 2004 (impermissible transfers) applies |
| 15 |
for the purposes of sub-paragraph (3)(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 2014. |
| |
(8) | 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 (3)(c); |
| 20 |
and 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 |
| 25 |
paragraph, this paragraph applies in relation to the arrangement to |
| |
which the transfer is made as if it were the same as that from which |
| |
| |
(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 |
| 30 |
which 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 |
| |
| |
(9) | Sub-paragraphs (2A) to (2C) of paragraph 12 of Schedule 36 to FA 2004 |
| 35 |
(“permitted circumstances”) apply for the purposes of sub-paragraph (3)(d). |
| |
(10) | Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid |
| |
under an arrangement) applies for the purposes of sub-paragraph (4)(a) and |
| |
| |
(11) | Increases in the value of the individual’s rights under an arrangement are to |
| 40 |
be ignored for the purposes of sub-paragraph (4)(b) or (c)(ii) if in no tax year |
| |
do they exceed the relevant percentage. |
| |
(12) | 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 |
| 45 |
during the tax year at an annual rate specified in the rules of the |
| |
pension scheme (or a predecessor registered pension scheme) on 11 |
| |
| |
|
| |
|
| |
|
(i) | that percentage (or, where more than one arrangement |
| |
includes such provision, the higher or highest of the |
| |
percentages specified), plus |
| |
(ii) | the relevant statutory increase percentage; |
| |
| 5 |
(i) | the percentage by which the consumer prices index for the |
| |
month of September in the previous tax year is higher than it |
| |
was for the September before that (or nil per cent if it is not |
| |
| |
(ii) | if higher, the relevant statutory increase percentage. |
| 10 |
(13) | In sub-paragraph (12)(a)— |
| |
“predecessor arrangement”, in relation to an arrangement, means |
| |
another arrangement (under the same or another registered pension |
| |
scheme) from which some or all of the sums or assets held for the |
| |
purposes of the arrangement directly or indirectly derive; |
| 15 |
“predecessor registered pension scheme”, in relation to a pension |
| |
scheme, means another registered pension scheme from which some |
| |
or all of the sums or assets held for the purposes of the arrangement |
| |
under the pension scheme directly or indirectly derive. |
| |
(14) | In sub-paragraph (12) “the relevant statutory increase percentage”, in |
| 20 |
relation to a tax year, means the percentage increase in the value of the |
| |
individual’s rights under the arrangement during the tax year so far as it is |
| |
attributable solely to one or more of the following— |
| |
(a) | an increase in accordance with section 15 of the Pension Schemes Act |
| |
1993 or section 11 of the Pension Schemes (Northern Ireland) Act |
| 25 |
1993 (increase of guaranteed minimum where commencement of |
| |
guaranteed minimum pension postponed); |
| |
(b) | a revaluation in accordance with section 16 of the Pension Schemes |
| |
Act 1993 or section 12 of the Pension Schemes (Northern Ireland) Act |
| |
1993 (early leavers: revaluation of earnings factors); |
| 30 |
(c) | a revaluation in accordance with Chapter 2 of Part 4 of the Pension |
| |
Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act |
| |
1993 (early leavers: revaluation of accrued benefits); |
| |
(d) | a revaluation in accordance with Chapter 3 of Part 4 of the Pension |
| |
Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act |
| 35 |
1993 (early leavers: protection of increases in guaranteed minimum |
| |
| |
(e) | the application of section 67 of the Equality Act 2010 (sex equality |
| |
rule for occupational pension schemes). |
| |
(15) | Sub-paragraph (16) applies in relation to a tax year if— |
| 40 |
(a) | the arrangement is a defined benefits arrangement which is under an |
| |
annuity contract treated as a registered pension scheme under |
| |
section 153(8) of FA 2004, |
| |
(b) | the contract provides for the value of the rights of the individual to |
| |
be increased during the tax year at an annual rate specified in the |
| 45 |
| |
(c) | the contract limits the annual rate to the percentage increase in the |
| |
retail prices index over a 12 month period specified in the contract. |
| |
(16) | Sub-paragraph (12)(b)(i) applies as if it referred instead to the annual rate of |
| |
the increase in the value of the rights during the tax year. |
| 50 |
|
| |
|
| |
|
(17) | For the purposes of sub-paragraph (15)(c) the 12 month period must end |
| |
during the 12 month period preceding the month in which the increase in the |
| |
value of the rights occurs. |
| |
(18) | Subject to sub-paragraphs (19) to (21), sub-paragraph (3) applies in relation |
| |
to an individual who is a relieved member of a relieved non-UK pension |
| 5 |
scheme as if the relieved non-UK pension scheme were a registered pension |
| |
scheme; and the other sub-paragraphs of this paragraph apply accordingly. |
| |
(19) | Sub-paragraphs (20) and (21) apply for the purposes of sub-paragraph (3)(a) |
| |
(instead of sub-paragraph (4)) in determining if there is benefit accrual in |
| |
relation to an individual under an arrangement under a relieved non-UK |
| 10 |
pension scheme of which the individual is a relieved member. |
| |
(20) | There is benefit accrual in relation to the individual under the arrangement |
| |
if there is a pension input amount under sections 230 to 237 of FA 2004 (as |
| |
applied by Schedule 34 to that Act) greater than nil in respect of the |
| |
arrangement for a tax year; and, in such a case, the benefit accrual is treated |
| 15 |
as occurring at the end of the tax year. |
| |
(21) | There is also benefit accrual in relation to the individual under the |
| |
| |
(a) | in a tax year there occurs a benefit crystallisation event in relation to |
| |
the individual (whether in relation to the arrangement or to any |
| 20 |
other arrangement under any pension scheme or otherwise), and |
| |
(b) | had the tax year ended immediately before the benefit crystallisation |
| |
event, there would have been a pension input amount under sections |
| |
230 to 237 of FA 2004 greater than nil in respect of the arrangement |
| |
| 25 |
| and, in such a case, the benefit accrual is treated as occurring immediately |
| |
before the benefit crystallisation event. |
| |
(22) | Expressions used in this paragraph and Part 4 of FA 2004 (pension schemes) |
| |
have the same meaning in this paragraph as in that Part. |
| |
(23) | In particular, references to a relieved non-UK pension scheme or a relieved |
| 30 |
member of such a scheme are to be read in accordance with paragraphs 13(3) |
| |
and (4) and 18 of Schedule 34 to FA 2004 (application of lifetime allowance |
| |
charge provisions to members of overseas pension schemes). |
| |
2 (1) | The Commissioners for Her Majesty’s Revenue and Customs may by |
| |
regulations amend paragraph 1. |
| 35 |
(2) | Regulations under this paragraph may (for example) add to the cases in |
| |
which paragraph 1 is to apply or is to cease to apply. |
| |
(3) | Regulations under this paragraph may include provision having effect in |
| |
relation to a time before the regulations are made; but— |
| |
(a) | the time must be no earlier than 6 April 2014, and |
| 40 |
(b) | the provision must not increase any person’s liability to tax. |
| |
3 (1) | The Commissioners for Her Majesty’s Revenue and Customs may by |
| |
regulations make provision specifying how any notice required to be given |
| |
to an officer of Revenue and Customs under paragraph 1 is to be given. |
| |
(2) | In sub-paragraph (1) the reference to paragraph 1 is to that paragraph as |
| 45 |
amended from time to time by regulations under paragraph 2. |
| |
|
| |
|
| |
|
4 (1) | Regulations under paragraph 2 or 3 may include supplementary or |
| |
| |
(2) | The powers to make regulations under paragraphs 2 and 3 are exercisable by |
| |
| |
(3) | A statutory instrument containing regulations under paragraph 2 or 3 is |
| 5 |
subject to annulment in pursuance of a resolution of the House of Commons. |
| |
| |
| |
5 | Part 4 of FA 2004 (pension schemes) is amended as follows. |
| |
6 (1) | Section 218 (standard lifetime allowance etc) is amended as follows. |
| 10 |
(2) | After subsection (5B) insert— |
| |
“(5BA) | Where the operation of a lifetime allowance enhancement factor is |
| |
provided for by any of sections 220, 222, 223 and 224 and the time |
| |
mentioned in the definition of SLA in the section concerned fell |
| |
within the period consisting of the tax year 2012-13 and the tax year |
| 15 |
2013-14, subsection (4) has effect as if the amount to be multiplied by |
| |
LAEF were £1,500,000 if that is greater than SLA. |
| |
(5BB) | Where more than one lifetime allowance enhancement factor |
| |
operates, subsection (5BA) does not apply if subsection (5A) or (5B) |
| |
| 20 |
(3) | After subsection (5C) insert— |
| |
“(5D) | Where benefit crystallisation event 7 occurs on or after 6 April 2014 |
| |
by reason of the payment of a relevant lump sum death benefit in |
| |
respect of the death of the individual during the period consisting of |
| |
the tax year 2012-13 and the tax year 2013-14, the standard lifetime |
| 25 |
allowance at the time of the benefit crystallisation event is |
| |
| |
(4) | The amendments made by this paragraph have effect for the tax year 2014- |
| |
15 and subsequent tax years. |
| |
7 (1) | In section 219 (availability of individual’s lifetime allowance) after |
| 30 |
| |
“(5A) | If paragraph 7 of Schedule 36 (primary protection) makes provision |
| |
for a lifetime allowance enhancement factor in relation to the |
| |
individual, subsection (5) has effect as if CSLA were £1,500,000 if that |
| |
| 35 |
(2) | The amendment made by this paragraph has effect for cases in which the |
| |
time of the current benefit crystallisation event falls on or after 6 April 2014. |
| |
8 (1) | Part 1 of Schedule 29 (authorised lump sums: lump sum rule) is amended as |
| |
| |
(2) | In paragraph 2 (which applies for the purpose of determining pension |
| 40 |
|
| |
|
| |
|
commencement lump sums) after sub-paragraph (8) insert— |
| |
“(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 as if CSLA were £1,500,000 |
| 5 |
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 |
| 10 |
(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.” |
| |
(3) | The amendment made by sub-paragraph (2) has effect for cases in which the |
| |
member becomes entitled to the lump sum on or after 6 April 2014. |
| 15 |
(4) | In paragraph 8 (which applies for the purpose of determining trivial |
| |
commutation lump sums) for sub-paragraphs (2) and (3) substitute— |
| |
“(2) | The adjustment referred to in sub-paragraph (1)(a) is the |
| |
multiplication of the value of the member’s relevant crystallised |
| |
pension rights on 5 April 2006 by—![equation: over[times[char[C],char[L]],comma[num[15.0000000000000000,"15"],num[0.0000000000000000,
"000"]]]](missing.gif) |
| 20 |
| where CL is the commutation limit on the nominated date. |
| |
(3) | The adjustment referred to in sub-paragraph (1)(b) is the |
| |
multiplication of the amount crystallised by a previous benefit |
| |
crystallisation event by—![equation: over[times[char[C],char[L]],times[char[B],char[C],char[L]]]](missing.gif) |
| |
| 25 |
CL is the commutation limit on the nominated date, and |
| |
BCL is the commutation limit when the previous benefit |
| |
crystallisation event occurred.” |
| |
(5) | The amendment made by sub-paragraph (4) has effect for cases in which the |
| |
nominated date falls on or after 6 April 2014. |
| 30 |
| |
| |
Employee shareholder shares |
| |
| |
Income tax treatment of employee shareholder shares |
| |
1 | ITEPA 2003 is amended in accordance with paragraphs 2 to 15. |
| 35 |
2 | In section 19(2) (time of receipt of non-money earnings), at the appropriate |
| |
|
| |
|
| |
|
| |
| “section 226A (amount treated as earnings: employee |
| |
| |
3 | In Chapter 12 of Part 3, after section 226 insert— |
| |
“Shares of employee shareholders |
| 5 |
226A | Amount treated as earnings |
| |
(1) | This section applies if shares having a market value of no less than |
| |
£2000 are acquired by an employee in consideration of an employee |
| |
| |
(2) | An amount calculated in accordance with subsection (3) is to be |
| 10 |
treated as earnings from the employment, in respect of the |
| |
acquisition of the shares, for the tax year in which they are acquired. |
| |
| But this is subject to subsection (4). |
| |
(3) | The amount is—![equation: plus[times[char[M],char[V]],minus[char[P]]]](missing.gif) |
| |
| 15 |
(a) | MV is an amount equal to the market value of the shares; |
| |
(b) | P is any payment the employee is treated as making for the |
| |
shares under section 226B. |
| |
| But if P exceeds MV, the amount is nil. |
| |
(4) | If the shares are acquired pursuant to an employment-related |
| 20 |
securities option, subsection (2) does not apply. |
| |
(5) | If subsection (2) applies, nothing else constitutes earnings under this |
| |
Part from the employment in respect of the acquisition of the shares. |
| |
(6) | For the purposes of this section and sections 226B to 226D— |
| |
shares are “acquired” by an employee if the employee becomes |
| 25 |
beneficially entitled to them (and they are acquired at the |
| |
time when the employee becomes so entitled); |
| |
“employee shareholder agreement” means an agreement by |
| |
virtue of which an employee is an employee shareholder (see |
| |
section 205A(1)(a) to (c) of the Employment Rights Act 1996); |
| 30 |
“employee shareholder share” means a share acquired by an |
| |
employee in consideration of an employee shareholder |
| |
| |
“employee” and “employer company”, in relation to an |
| |
employee shareholder agreement, mean the individual and |
| 35 |
the company which enter into the agreement; |
| |
“employment-related securities option” has the same meaning |
| |
as in Chapter 5 of Part 7 (see section 471(5)); |
| |
“market value” has the same meaning as it has for the purposes |
| |
of TCGA 1992 by virtue of Part 8 of that Act; and the market |
| 40 |
value of shares is their market value on the day on which they |
| |
are acquired (but see also subsection (7)). |
| |
(7) | For the purposes of subsection (1), the market value of the shares is |
| |
to be determined ignoring— |
| |
|
| |
|
| |
|
(a) | any election under section 431 (election for market value of |
| |
restricted shares to be calculated as if not restricted), and |
| |
(b) | section 437 (market value of convertible securities to be |
| |
determined as if not convertible). |
| |
226B | Deemed payment for employee shareholder shares |
| 5 |
(1) | This section applies if shares having a market value of no less than |
| |
£2000 are acquired by an employee in consideration of an employee |
| |
| |
(2) | Where all the shares acquired in consideration of the agreement are |
| |
acquired on the same day, the employee is to be treated, for the |
| 10 |
purposes of this Act, as having made on that day a payment of £2000 |
| |
| |
| |
(a) | shares are acquired by the employee in consideration of the |
| |
agreement on more than one day, and |
| 15 |
(b) | of those shares, shares having a market value of not less than |
| |
£2000 are acquired on the first of those days, |
| |
| the employee is to be treated for the purposes of this Act as having |
| |
made, on the first of those days, a payment of £2000 for the shares |
| |
| 20 |
(4) | If the market value of the shares acquired by the employee on the day |
| |
mentioned in subsection (2) or (3)(b) exceeds £2000, the amount of |
| |
the payment under subsection (2) or (3) which the employee is to be |
| |
treated as having made for each of the shares is an amount equal to |
| |
the appropriate proportion of the market value of that share. |
| 25 |
(5) | The “appropriate proportion” is the following—![equation: over[num[2000.0000000000000000,"2000"],char[V]]](missing.gif) |
| |
| where V is the total market value of the shares acquired by the |
| |
| |
(6) | This section is subject to— |
| |
(a) | section 226C (only one payment deemed to be made under |
| 30 |
agreements with associated companies), and |
| |
(b) | section 226D (no deemed payment if shareholder or a |
| |
connected person has a material interest in the company). |
| |
(7) | Except as provided by this section, for the purposes of this Act the |
| |
employee is to be treated as having given no consideration for shares |
| 35 |
acquired in consideration of the agreement. |
| |
(8) | Section 226A(7) applies for the purposes of this section as it applies |
| |
for the purposes of section 226A(1). |
| |
226C | Only one payment deemed to be made under associated agreements |
| |
(1) | An employee who is treated as having made a payment under |
| 40 |
section 226B for shares acquired in consideration of an employee |
| |
shareholder agreement (“the relevant agreement”) is not to be |
| |
treated as having made a payment for any other qualifying shares. |
| |
|
| |
|