Session 2014 - 15
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Finance Bill, continued

 
 

(b)    

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”),

 

(c)    

the earlier sum is paid before the member becomes entitled

 

to the expected pension,

 

(d)    

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,

 

(e)    

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”),

 

(f)    

the further sum is paid on or after 6 July 2014 but before 6

 

April 2015, and

 

(g)    

either—

 

(i)    

the payment of the further sum is a payment

 

described in regulation 11, 11A or 12, or

 

(ii)    

the further sum is a trivial commutation lump sum

 

within paragraph 7A of Schedule 29 and the earlier

 

sum is the pension commencement lump sum in

 

connection with which the further sum is paid.

 

      (2)  

If this regulation applies to the earlier sum, and the payment of the

 

further sum is a payment described in regulation 11, 11A or 12—

 

(a)    

the payment of the earlier sum is a payment of a prescribed

 

description for the purposes of section 164(1)(f), and

 

(b)    

section 636A of ITEPA 2003 (exemption from income tax

 

for certain lump sums) applies in relation to the earlier sum

 

as if the earlier sum were a pension commencement lump

 

sum.

 

      (3)  

When deciding for the purposes of this regulation whether the

 

further sum is a trivial commutation lump sum within paragraph 7A

 

of Schedule 29, sub-paragraph (2)(c) of that paragraph is to be

 

omitted.

 

      (4)  

If this regulation applies to the earlier sum, and only the sums and

 

assets mentioned in paragraph (1)(e) 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).

 

      (5)  

If this regulation applies to the earlier sum, and the sums and assets

 

mentioned in paragraph (1)(e) 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—


 
 

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(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 paragraph (1)(e),

 

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.

 

      (6)  

For the purposes of paragraph (1), if the circumstances are as

 

described in paragraph (1)(d)(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.”

 

      (2)  

The amendment made by sub-paragraph (1) is to be treated as having been

 

made by the Commissioners for Her Majesty’s Revenue and Customs under

 

the powers to make regulations conferred by section 164(1)(f) and (2) of FA

 

2004.

 

Preservation of protected pension age following certain transfers of pension rights

 

7    (1)  

In paragraph 22 of Schedule 36 to FA 2004 (protection of rights to take benefit

 

before normal minimum pension age) after sub-paragraph (6) insert—

 

  “(6A)  

A transfer is also a block transfer if—

 

(a)    

it involves the transfer in a single transaction of all the sums

 

and assets held for the purposes of, or representing accrued

 

rights under, the arrangements under the pension scheme

 

from which the transfer is made which relate to the

 

member,

 

(b)    

the transfer takes place—

 

(i)    

on or after 19 March 2014, and

 

(ii)    

before 6 April 2015, and

 

(c)    

the date mentioned in sub-paragraph (7)(a) is before 6

 

October 2015.”

 

      (2)  

In paragraph 23(6) of Schedule 36 to FA 2004 (meaning of “block transfer”)

 

after “22(6)” insert “and (6A), but for this purpose paragraph 22(6A)(c) is to

 

be read as if its reference to paragraph 22(7)(a) were a reference to sub-

 

paragraph (7) of this paragraph”.

 

Operation of enhanced protection of pre-6 April 2006 rights to take lump sums

 

8          

In paragraph 29 of Schedule 36 to FA 2004 (modifications of paragraph 3 of

 

Schedule 29 to FA 2004 for cases where there is enhanced protection) after

 

sub-paragraph (3) insert—


 
 

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    “(4)  

Paragraph 3 applies as if in sub-paragraph (8A)(a) for “is one third

 

of” there were substituted “is—equation: cross[over[times[char[V],char[U],char[L],char[S],char[R]],times[char[V],char[U],

char[R]]],id[plus[times[char[L],char[S]],times[char[C],char[A],char[P],char[P]]]]]

 

            

where VULSR, VUR and LS have the same meaning as in sub-

 

paragraph (1), and CAPP is”.

 

      (5)  

Paragraph 3 applies as if in sub-paragraph (8A)(b) for “is one third

 

of the sums, plus one third of” there were substituted “is—equation: cross[over[times[char[V],char[U],char[L],char[S],char[R]],times[char[V],char[U],

char[R]]],id[plus[times[char[L],char[S]],times[char[E],char[P]]]]]

 

            

where VULSR, VUR and LS have the same meaning as in sub-

 

paragraph (1), and EP is the total of the sums, and”.”

 

Protected lump sum entitlement following certain transfers of pension rights

 

9          

In paragraph 31(8) of Schedule 36 to FA 2004 (“block transfer” has meaning

 

given by paragraph 22(6) of Schedule 36 to FA 2004)—

 

(a)    

after “22(6)” insert “and (6A)”, and

 

(b)    

at the end insert “, and reading paragraph 22(6A)(c) as if its reference

 

to paragraph 22(7)(a) were a reference to sub-paragraph (3) of this

 

paragraph.”

 

10  (1)  

In paragraph 34(2) of Schedule 36 to FA 2004 (modifications required by

 

paragraph 31 in cases involving protected entitlements to lump sums) the sub-

 

paragraphs treated as substituted in paragraph 2 of Schedule 29 to FA 2004 are

 

amended as follows.

 

      (2)  

In the substituted sub-paragraph (7A), in the definition of AC, for “(7AA) and

 

(7B))” substitute “(7AA) to (7B))”.

 

      (3)  

After the substituted sub-paragraph (7AA) insert—

 

“(7AB)  

Where paragraph 1A applies to the lump sum, AC is the total of—

 

(a)    

the sums 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,

 

and

 

(b)    

the market value at that time of the assets held at that time

 

for that purpose.

 

  (7AC)  

Where paragraph 1B applies to the lump sum, AC is the total of—

 

(a)    

the sums held, at the time the lump sum is paid, for the

 

purpose of providing the expected pension (see paragraph

 

1B(2)(b)), and

 

(b)    

the market value at that time of the assets held at that time

 

for that purpose.”

 

Reporting obligations

 

11  (1)  

In the Registered Pension Schemes (Provision of Information) Regulations

 

2006 (S.I. 2006/567) after regulation 18 insert—


 
 

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“Modified operation of these Regulations in the case of certain pre-6 April 2015 lump

 

sums

 

19      

Lump sums to which paragraph 1B of Schedule 29 applies

 

(1)    

Regulations 3 to 18 have effect subject to the following provisions of

 

this regulation.

 

(2)    

Paragraphs (3) to (8) apply if—

 

(a)    

a lump sum is paid by a registered pension scheme (“the

 

paying scheme”) to a member of the scheme,

 

(b)    

paragraph 1B of Schedule 29 applies to the lump sum, and

 

(c)    

the member’s becoming entitled to the actual pension

 

mentioned in paragraph 1B(2)(h) of Schedule 29 has the effect

 

that—

 

(i)    

the member also becomes entitled to the lump sum,

 

and

 

(ii)    

the member’s becoming entitled to the lump sum is a

 

benefit crystallisation event.

 

(3)    

For the purposes of—

 

(a)    

reportable event 6,

 

(b)    

regulation 3 so far as applying by virtue of that event, and

 

(c)    

obligations under regulation 14(1),

 

    

the benefit crystallisation event mentioned in paragraph (2)(c)(ii) is

 

treated as occurring—

 

(i)    

in respect of the scheme to which the transfer mentioned in

 

paragraph 1B(2)(g) of Schedule 29 was made (“the receiving

 

scheme”) and not in respect of the paying scheme, and

 

(ii)    

when the member becomes entitled to the actual pension or, if

 

later, on 5 August 2014.

 

(4)    

For the purposes of regulations 15(2)(a) and 17(5)(a)(i) and (7)(a)(i),

 

that benefit crystallisation event is treated as occurring in respect of

 

the receiving scheme and not in respect of the paying scheme.

 

(5)    

For the purposes of—

 

(a)    

reportable event 7 (but not its definition of “the entitlement

 

amount”),

 

(b)    

reportable event 8, and

 

(c)    

regulation 3 so far as applying by virtue of either of those

 

events,

 

    

the lump sum is treated as having been paid—

 

(i)    

by the receiving scheme and not by the paying scheme, and

 

(ii)    

when the member becomes entitled to the actual pension or, if

 

later, on 5 August 2014.

 

(6)    

For the purposes of reportable event 7 “the entitlement amount” is the

 

total of—

 

(a)    

the sums held, at the time the lump sum is actually paid, for

 

the purpose of providing the expected pension mentioned in

 

paragraph 1B(2)(b) of Schedule 29, and

 

(b)    

the market value at that time of the assets held at that time for

 

that purpose.


 
 

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(7)    

The scheme administrator of the paying scheme is to provide the

 

scheme administrator of the receiving scheme with the following

 

information—

 

(a)    

the date the lump sum was paid,

 

(b)    

the amount of the lump sum,

 

(c)    

the total of—

 

(i)    

the sums held, at the time lump sum is paid, for the

 

purpose of providing the expected pension mentioned

 

in paragraph 1B(2)(b) of Schedule 29, and

 

(ii)    

the market value at that time of the assets held at that

 

time for that purpose, and

 

(d)    

a statement that no further pension commencement lump sum

 

may be paid in connection with that expected pension.

 

(8)    

The scheme administrator of the paying scheme is to comply with its

 

obligations under paragraph (7) before—

 

(a)    

the end of 30 days beginning with the date of the transfer

 

mentioned in paragraph 1B(2)(g) of Schedule 29, or

 

(b)    

if later, the end of 3 September 2014.

 

20      

Lump sums to which paragraph 1B of Schedule 29 fails to apply

 

(1)    

Regulations 3 to 18 have effect subject to the following provisions of

 

this regulation.

 

(2)    

Paragraph (3) applies if—

 

(a)    

a lump sum is paid by a registered pension scheme (“the

 

paying scheme”) to a member of the scheme,

 

(b)    

paragraph 1B of Schedule 29 does not apply to the lump sum,

 

but the conditions in paragraph 1B(2)(a) to (g) are met in the

 

case of the lump sum, and

 

(c)    

as at the end of 5 October 2015 it is the case that the lump sum

 

is to be taken as having been an unauthorised member

 

payment.

 

(3)    

For the purposes of reportable event 1, and regulation 3 so far as

 

applying by virtue of that event, the lump sum is treated as having been

 

paid—

 

(a)    

by the receiving scheme and not by the paying scheme, and

 

(b)    

on 6 October 2015.”

 

      (2)  

The amendment made by sub-paragraph (1) is to be treated as having been

 

made by the Commissioners for Her Majesty’s Revenue and Customs under

 

such of the powers cited in the instrument containing the Regulations as are

 

applicable.

 

Scheme sanction charges

 

12  (1)  

In section 239(3) of FA 2004 (cases where person other than scheme

 

administrator is liable for a scheme sanction charge)—

 

(a)    

after “But” insert “—

 

(a)    

”, and

 

(b)    

at the end insert “, and

 

(b)    

in the case of a payment of a lump sum to a member

 

where the conditions in paragraphs 1(1)(b) and (d)

 

and 1B(2)(a) to (g) of Schedule 29 are met, the person


 
 

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Finance Bill, continued

 
 

liable to the scheme sanction charge so far as relating

 

to any part of the lump sum within the permitted

 

maximum is the scheme administrator of the

 

registered pension scheme to which the transfer

 

mentioned in paragraph 1B(2)(g) of Schedule 29 is

 

made.”

 

      (2)  

In section 239 of FA 2004 (scheme sanction charges) after subsection (3)

 

insert—

 

“(3A)    

For the purposes of subsection (3)(b) “the permitted maximum”, in the

 

case of a lump sum paid to an individual, is the amount that in

 

accordance with paragraph 2 of Schedule 29 would be the permitted

 

maximum for that lump sum if the individual became entitled at the

 

time the lump sum is paid to the pension at that time expected to be the

 

pension in connection with which the lump sum is paid.”

 

      (3)  

In section 268 of FA 2004 (discharge of liability to scheme sanction charges

 

etc) after subsection (7) insert—

 

“(7A)    

Subsection (7) applies with the omission of its paragraph (a) if the

 

scheme chargeable payment is a payment of a lump sum where the

 

conditions in paragraph 1B(2)(a) to (g) of Schedule 29 are met.”

 

      (4)  

In the Taxation of Pension Schemes (Transitional Provisions) Order 2006

 

(S.I. 2006/572) in article 18 (which provides for paragraph 1(1)(b) of Schedule

 

29 to FA 2004 to be omitted in certain cases) at the end insert “, and section

 

239 has effect in the case of a lump sum paid to that individual as if its

 

subsection (3)(b) did not include a reference to paragraph 1(1)(b) of Schedule

 

29”.

 

      (5)  

The amendment made by sub-paragraph (4) is to be treated as made by the

 

Treasury under the powers to make orders conferred by section 283(2) of FA

 

2004.

 

Power to make further adjustments

 

13         

In section 166 of FA 2004 (payments by registered pension schemes: the lump

 

sum rule) after subsection (4) insert—

 

“(5)    

The Commissioners for Her Majesty’s Revenue and Customs may by

 

regulations           amend Part 1 of Schedule 29, or Part 3 of Schedule 36, in

 

connection with cases involving a lump sum within subsection (6).

 

(6)    

A lump sum is within this subsection if—

 

(a)    

the sum is paid on or after 19 September 2013 and before 6

 

April 2015, or

 

(b)    

the sum is paid before 19 September 2013, a contract for a

 

lifetime annuity is entered into to provide the pension in

 

connection with which the sum is paid, and on or after 19

 

March 2014 the contract is cancelled.

 

(7)    

The provision that may be made under subsection (5) includes

 

provision altering the effect of amendments made by the Finance Act

 

2014.”

 

14         

In section 282(1) and (2) of FA 2004 (making of regulations and orders) for

 

“Board of Inland Revenue” substitute “Commissioners for Her Majesty’s

 

Revenue and Customs”.


 
 

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Finance Bill, continued

 
 

Commencement

 

15         

The amendments made by paragraphs 1 to 5, 6(1), 7 to 10, 11(1) and 12(1) to

 

(4) of this Schedule are to be treated as having come into force on 19 March

 

2014.”

 


 

NEW CLAUSES AND NEW SCHEDULES RELATING TO THE ANNUAL INVESTMENT

 

ALLOWANCE; AMENDMENTS TO CLAUSE 10 AND SCHEDULE 2

 

Ed Balls

 

Chris Leslie

 

Cathy Jamieson

 

Catherine McKinnell

 

Shabana Mahmood

 

NC10

 

To move the following Clause—

 

“Review of reform to the annual investment allowance

 

(1)    

The Chancellor of the Exchequer shall, within three months of the passing of this

 

Act, undertake a review of the impact on business investment of changes to

 

section 51A of the Capital Allowances Act 2001 made by Finance Act 2011.

 

(2)    

The Chancellor of the Exchequer must publish the report of the review and lay

 

the report before the House.”

 


 

REMAINING NEW CLAUSES AND NEW SCHEDULES STANDING IN THE NAME OF A

 

MINISTER OF THE CROWN; AMENDMENTS STANDING IN THE NAME OF A MINISTER OF

 

THE CROWN; REMAINING PROCEEDINGS ON CONSIDERATION

 

Mr Chancellor of the Exchequer

 

NC1

 

To move the following Clause—

 

“Oil contractor activities: ring-fence trade etc

 

Schedule (oil contractors: ring-fence trade etc) contains provision about the

 

corporation tax treatment of oil contractor activities.”

 



 
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