Session 2014 - 15
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303

 

House of Commons

 
 

Notices of Amendments

 

given on

 

Thursday 26 June 2014

 

For other Amendment(s) see the following page(s) of Supplement to Votes:

 

247-68 and 269-302

 

Consideration of Bill


 

Finance Bill, As Amended


 

Mr Chancellor of the Exchequer

 

NC13

 

To move the following Clause—

 

“Pension flexibility: further amendments

 

Schedule (Pension flexibility: further amendments) makes further provision in

 

connection with pension flexibility.”

 

Mr Chancellor of the Exchequer

 

NS5

 

To move the following Schedule—

 

“Pension flexibility: further amendments

 

Temporary extension of period by which commencement lump sum may precede pension

 

1          

In Schedule 29 to FA 2004 (authorised lump sums under registered pension

 

schemes) after paragraph 1 (conditions for a lump sum to be a pension

 

commencement lump sum) insert—

 

“1A(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.

 

      (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


 
 

Notices of Amendments: 26 June 2014                     

304

 

Finance Bill, continued

 
 

(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.”

 

Temporary relaxation to allow transfer of pension rights after lump sum paid

 

2    (1)  

In Schedule 29 to FA 2004 after paragraph 1A insert—

 

“1B(1)  

When deciding whether a lump sum to which this paragraph applies

 

is a pension commencement lump sum—

 

(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,


 
 

Notices of Amendments: 26 June 2014                     

305

 

Finance Bill, continued

 
 

(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.”

 

      (2)  

In section 166(2) of FA 2004 (time at which a person becomes entitled to a

 

lump sum)—

 

(a)    

before paragraph (a) insert—

 

“(za)    

in the case of a pension commencement lump sum to

 

which paragraph 1B of Schedule 29 applies (certain

 

sums paid before 6 April 2015), immediately before

 

the person becomes entitled to the actual pension (see

 

paragraph 1B(2)(h) of that Schedule),”, and

 

(b)    

in paragraph (a) for “of a” substitute “of any other”.

 

Temporary relaxation to allow lump sum to be repaid to pension scheme that paid it

 

3          

In Chapter 3 of Part 4 of FA 2004 (payments by registered pension schemes)

 

after section 185I insert—


 
 

Notices of Amendments: 26 June 2014                     

306

 

Finance Bill, continued

 
 

“Repayments of lump sums

 

185J  

Effect of repayment of certain pre-6 April 2015 lump sums

 

(1)    

For the purposes of this Part—

 

(a)    

a lump sum to which this section applies is treated as never

 

having been paid, and

 

(b)    

the payment by which it is repaid is treated as not being a

 

payment.

 

(2)    

This section applies to a lump sum if—

 

(a)    

the sum is paid by a registered pension scheme to a member

 

of the scheme in respect of a money purchase arrangement,

 

(b)    

the 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”),

 

(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)    

before the member becomes entitled to the expected pension,

 

the member repays the sum to the pension scheme that paid it,

 

and

 

(g)    

the repayment is made before 6 October 2015.

 

(3)    

For the purposes of subsection (2), if the circumstances are as

 

described in subsection (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.”

 

Calculation of “applicable amount” in certain cases

 

4          

In paragraph 3 of Schedule 29 to FA 2004 (pension commencement lump

 

sums: applicable amount) after sub-paragraph (8) insert—

 

  “(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


 
 

Notices of Amendments: 26 June 2014                     

307

 

Finance Bill, continued

 
 

(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.”

 

Expected pension commencement lump sums treated as trivial commutation lump sums

 

5    (1)  

In section 166(1) of FA 2004, in the lump sum rule, omit the “or” after

 

paragraph (f), and after paragraph (g) insert “, or

 

(h)    

a transitional 2013/14 lump sum.”

 

      (2)  

In Schedule 29 to FA 2004, after paragraph 11 insert—

 

“Transitional 2013/14 lump sum, and its related trivial commutation lump sum

 

11A(1)  

A lump sum is a transitional 2013/14 lump sum for the purposes of

 

this Part if—

 

(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)).


 
 

Notices of Amendments: 26 June 2014                     

308

 

Finance Bill, continued

 
 

      (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.”

 

      (3)  

In section 636A of ITEPA 2003 (income tax exemption for certain lump

 

sums)—

 

(a)    

in subsection (1) after paragraph (c) insert—


 
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