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| | Nominees and successors: further drawdown amendments |
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| | 4 | In section 169(1D) (regulations about transfers of drawdown funds) after |
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| | paragraph (aa) (which is inserted by this Act) insert “or |
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| | (ab) | a nominee’s flexi-access drawdown fund, or |
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| | (ac) | a successor’s flexi-access drawdown fund,”. |
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| | 5 | In section 172(1)(a) (assignment of rights or benefits) after “dependant” insert |
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| | “, nominee or successor”. |
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| | 6 | In section 172A(1)(a) (surrender of rights or benefits) after “dependant” insert |
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| | “, nominee or successor”. |
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| | 7 | In section 172A(5) (exceptions to provisions on surrender: entitlement to |
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| | |
| | (a) | in paragraph (b) after “dependant” insert “, or nominee,”, |
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| | (b) | after paragraph (b) insert— |
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| | “(ba) | a surrender (or agreement to surrender) by a |
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| | dependant, nominee or successor of the member (“the |
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| | beneficiary”) in return for the conferring, on a |
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| | successor of the member, of an entitlement to benefits |
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| | after the beneficiary’s death,”, and |
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| | (c) | in paragraph (c) for “or dependant” substitute “, dependant, nominee |
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| | |
| | 8 | In section 172A(5A) (further provision on surrender exceptions)— |
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| | (a) | after “dependant”, in the first place it occurs, insert “, or nominee,”, |
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| | |
| | (b) | after “dependant”, in the second place it occurs, insert “or nominee”. |
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| | 9 | In section 172A after subsection (5A) insert— |
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| | “(5B) | Subsection (5)(ba) applies only if the entitlement is held (or is to be |
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| | held) by the successor under an arrangement under the pension |
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| | scheme relating to the beneficiary or successor.” |
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| | 10 | In section 172A(7) (exceptions to provisions on surrender: prospective |
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| | |
| | (a) | in the opening words after “dependant” insert “or nominee or |
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| | |
| | (b) | in paragraph (a) after “dependant” insert “, or nominee or successor,”. |
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| | 11 | In section 172B(2) (rights of a “relevant member”)— |
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| | (a) | in paragraph (a) after “dependant” insert “or nominee or successor”, |
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| | |
| | (b) | after paragraph (aa) insert— |
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| | “(ab) | rights representing the nominee’s flexi-access |
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| | drawdown fund or successor’s flexi-access |
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| | drawdown fund in respect of an arrangement under |
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| | |
| | 12 | In section 172B(7A) (section does not apply to certain increases in rights) |
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| | before “dependant’s drawdown pension fund” (in both places) insert |
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| | “nominee’s flexi-access drawdown fund, successor’s flexi-access drawdown |
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| | |
| | 13 | In section 182(3) (value of arrangement for purposes of borrowing limits) after |
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| | |
| | “(ba) | the amount of such of the sums and the market value of such |
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| | of the assets as represent nominees’ flexi-access drawdown |
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| | funds in respect of the arrangement (if any), |
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| |
| |
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| | (bb) | the amount of such of the sums and the market value of such |
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| | of the assets as represent successors’ flexi-access drawdown |
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| | funds in respect of the arrangement (if any),”. |
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| | 14 | In section 280(2) (index of defined expressions) at the appropriate places |
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| | |
| “dependant (of a member of a |
| paragraph 15 of Schedule 28” |
| | | | registered pension scheme) |
| | | | | “nominee (of a member of a |
| paragraph 27A of Schedule 28” |
| | | | registered pension scheme) |
| | | | | “nominees’ drawdown pension |
| paragraph 27B of Schedule 28” |
| | | | “nominee’s flexi-access drawdown |
| paragraph 27E of Schedule 28” |
| | | | | | | | | “nominees’ income withdrawal |
| paragraph 27D of Schedule 28” |
| | | | “nominees’ short-term annuity |
| paragraph 27C of Schedule 28” |
| | | | “successor (of a member of a |
| paragraph 27F of Schedule 28” |
| | | | registered pension scheme) |
| | | | | “successors’ drawdown pension |
| paragraph 27G of Schedule 28” |
| | | | “successor’s flexi-access |
| paragraph 27K of Schedule 28” |
| | | | | | | | | “successors’ income withdrawal |
| paragraph 27J of Schedule 28” |
| | | | “successors’ short-term annuity |
| paragraph 27H of Schedule 28” |
| | |
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| | Nomination of charities by nominees and successors of deceased scheme members |
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| | 15 (1) | Paragraph 18 of Schedule 29 (charity lump sum death benefit) is amended as |
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| | |
| | (2) | After sub-paragraph (2) insert— |
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| | “(2A) | A lump sum death benefit is also a charity lump sum death benefit |
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| | |
| | (a) | it is paid on the death of an individual who is— |
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| | (i) | a nominee of the member, or |
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| | (ii) | a successor of the member, |
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| | (b) | there are no dependants of the member, |
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| | (c) | it is paid in respect of the individual’s nominee’s flexi- |
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| | access drawdown fund or successor’s flexi-access |
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| | drawdown fund at the date of the individual’s death in |
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| | respect of an arrangement relating to the individual in the |
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| | capacity of a nominee or successor of the member, and |
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| | (d) | it is paid to a charity nominated by the member or, if the |
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| | member made no nomination, by the individual.” |
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| | (3) | In sub-paragraph (3) (cases where lump sum exceeds the permitted maximum) |
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| | for “or (2)” substitute “, (2) or (2A)”. |
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| |
| |
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| | (4) | In sub-paragraph (4) (meaning of “permitted maximum”) after “arrangement” |
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| | insert “, or the nominee’s or successor’s flexi-access drawdown fund in respect |
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| | |
| | Related amendments in regulations |
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| | 16 (1) | Regulation 12 of the Registered Pension Schemes (Transfer of Sums and |
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| | Assets) Regulations 2006 (S.I. 2006/499) (drawdown funds—recognised |
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| | transfers) is amended as follows. |
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| | (2) | In the heading before “—recognised” insert “and nominee’s flexi-access |
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| | drawdown fund and successor’s flexi-access drawdown fund”. |
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| | (3) | In paragraph (1) (transfer recognised only if transferred items are only items |
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| | held under arrangement to which transfer made) before “member’s drawdown |
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| | pension fund” insert “nominee’s flexi-access drawdown fund, successor’s |
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| | flexi-access drawdown fund,”. |
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| | (4) | The amendments made by this paragraph— |
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| | (a) | come into force on 6 April 2015, and |
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| | (b) | are to be treated as having been made by the Commissioners for Her |
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| | Majesty’s Revenue and Customs under the powers to make |
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| | regulations conferred by section 169(1D) and (1E) of FA 2004 (as |
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| | amended by this Schedule). |
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| | |
| | Special lump sum death benefits charge |
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| | 17 (1) | Section 206 of FA 2004 (special lump sum death benefits charge) is amended |
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| | |
| | (2) | After subsection (1) insert— |
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| | “(1ZA) | In subsection (1) the reference to a member (and to the member’s |
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| | |
| | |
| | (i) | a drawdown pension fund lump sum death benefit |
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| | under paragraph 17(2) of Schedule 29, or |
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| | (ii) | a flexi-access drawdown fund lump sum death benefit |
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| | under paragraph 17A(2) of Schedule 29, |
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| | | as a reference to a dependant (and to the dependant’s death), |
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| | (b) | in relation to a flexi-access drawdown fund lump sum death |
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| | benefit under paragraph 17A(2A) of Schedule 29, as a |
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| | reference to a nominee (and to the nominee’s death), and |
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| | (c) | in relation to a flexi-access drawdown fund lump sum death |
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| | benefit under paragraph 17A(2B) of Schedule 29, as a |
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| | reference to a successor (and to the successor’s death).” |
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| | (3) | After subsection (1A) insert— |
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| | “(1B) | The special lump sum death benefits charge also arises where— |
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| | (a) | a lump sum death benefit is paid by a registered pension |
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| | scheme in respect of a member of the scheme who had not |
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| | reached the age of 75 at the date of the member’s death, |
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| | (b) | the lump sum death benefit is— |
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| | (i) | a drawdown pension fund lump sum death benefit |
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| | under paragraph 17(1) of Schedule 29, |
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| |
| |
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| | (ii) | a flexi-access drawdown fund lump sum death benefit |
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| | under paragraph 17A(1) of Schedule 29, or |
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| | (iii) | an uncrystallised funds lump sum death benefit, and |
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| | (c) | the lump sum death benefit is not paid before the end of the |
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| | period of two years beginning with the earlier of the day on |
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| | which the scheme administrator of the scheme first knew of |
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| | the member’s death and the day on which the scheme |
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| | administrator could first reasonably have been expected to |
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| | |
| | (1C) | The special lump sum death benefits charge also arises where— |
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| | (a) | a lump sum death benefit is paid by a registered pension |
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| | scheme on the death of a dependant, nominee or successor of |
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| | a deceased member of the scheme, |
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| | (b) | the dependant, nominee or successor (“the beneficiary”) had |
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| | not reached the age of 75 at the date of the beneficiary’s death, |
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| | (c) | the lump sum death benefit is— |
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| | (i) | a drawdown pension fund lump sum death benefit |
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| | under paragraph 17(2) of Schedule 29, or |
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| | (ii) | a flexi-access drawdown fund lump sum death benefit |
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| | under paragraph 17A(2), (2A) or (2B) of Schedule 29, |
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| | |
| | (d) | the lump sum death benefit is not paid before the end of the |
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| | period of two years beginning with the earlier of the day on |
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| | which the scheme administrator of the scheme first knew of |
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| | the beneficiary’s death and the day on which the scheme |
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| | administrator could first reasonably have been expected to |
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| | |
| | (4) | For subsection (7) (lump sum death benefits which are not to be treated as |
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| | income for tax purposes) substitute— |
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| | “(7) | A lump sum death benefit in respect of which income tax is charged |
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| | under this section is not to be treated as income for any purpose of the |
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| | |
| | (5) | In consequence of sub-paragraph (4) omit paragraph 41(5) of Schedule 16 to |
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| | |
| | 18 | In section 280(2) of FA 2004 (index of defined expressions) in the entry for |
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| | “special lump sum death benefits charge” for “206(1)” substitute “206”. |
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| | Uncrystallised funds lump sum death benefit |
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| | 19 (1) | In paragraph 15 of Schedule 29 to FA 2004 (uncrystallised funds lump sum |
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| | |
| | (a) | in sub-paragraph (1) omit the second sentence (lump sum is |
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| | uncrystallised funds lump sum death benefit only if paid before end of |
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| | relevant two-year period), and |
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| | (b) | omit sub-paragraph (1A) (meaning of “relevant two-year period” in |
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| | the second sentence of sub-paragraph (1)). |
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| | (2) | In paragraph 16 of Schedule 32 to FA 2004 (benefit crystallisation event 7: |
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| | uncrystallised funds lump sum death benefit is a “relevant lump sum death |
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| | |
| | (a) | in sub-paragraph (b) after “benefit” insert “, other than one— |
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| |
| |
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| | (i) | paid by a registered pension scheme in respect of a |
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| | member of the scheme who had not reached the |
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| | age of 75 at the date of the member’s death, but |
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| | (ii) | not paid before the end of the relevant two-year |
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| | |
| | (b) | after sub-paragraph (b) insert— |
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| | | “In sub-paragraph (b)(ii) “the relevant two-year period”, in |
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| | relation to a member of a registered pension scheme, means |
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| | the period of two years beginning with the earlier of the day |
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| | on which the scheme administrator of the scheme first |
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| | knew of the member’s death and the day on which the |
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| | scheme administrator could first reasonably have been |
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| | expected to have known of it.” |
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| | (3) | In section 636A of ITEPA 2003 (exemption for certain lump sums under |
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| | registered pension schemes)— |
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| | (a) | in subsection (1) (lump sums on which there is no liability to income |
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| | |
| | (i) | after paragraph (ca) insert “or”, and |
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| | (ii) | omit paragraph (e) and the “or” preceding it (uncrystallised |
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| | funds lump sum death benefit paid in respect of member who |
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| | |
| | (b) | in subsection (4)(aa) (on uncrystallised funds lump sum death benefit |
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| | paid in respect of member who dies having reached 75 there is no |
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| | liability to income tax other than liability under section 206 of FA |
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| | 2004) omit “paid in respect of a member who had reached the age of |
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| | 75 at the date of the member’s death”. |
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| | (4) | In consequence of sub-paragraphs (1) and (3) omit— |
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| | (a) | paragraphs 35(2)(c) and (3) and 42(2)(c) of Schedule 16 to FA 2011, |
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| | |
| | (b) | paragraph 28(2)(a) of Schedule 19 to FA 2007. |
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| | |
| | 20 | The amendments made by paragraphs 17 and 19 apply to lump sums paid on |
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| | or after 6 April 2015, and the amendment made by paragraph 18 comes into |
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| | |
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| |
| |
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| | Uncrystallised rights at member’s death |
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| | 21 | In section 216(1) of FA 2004 (benefit crystallisation events and amounts |
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| | crystallised), in the table, after the entry relating to benefit crystallisation event |
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| | |
| “5C. The designation, on or |
| The aggregate of the amount of |
| | | | after 6 April 2015 but before |
| the sums and the market value |
| | | | the end of the relevant two- |
| of the assets designated” |
| | | | year period, of relevant unused |
| | | | | | | | | | available for the payment, to a |
| | | | | dependant or nominee of the |
| | | | | individual, of (as the case may |
| | | | | be) dependants’ flexi-access |
| | | | | | | | | | | | | | | | | | |
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| | 22 (1) | Section 217 of FA 2004 (persons liable to lifetime allowance charge) is |
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| | |
| | (2) | After subsection (1) insert— |
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| | “(1A) | Subsection (1) is subject to subsections (2) and (2A).” |
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| | (3) | In subsection (2) for “But where” substitute “Where”. |
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| | (4) | After subsection (2) insert— |
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| | “(2A) | Where the liability arises by reason of a designation mentioned in the |
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| | description of benefit crystallisation event 5C, it is a liability of the |
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| | dependant or nominee (as the case may be).” |
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| | (5) | For subsections (3) and (4) (multiple relevant lump sum death benefits) |
|
| | |
| | “(3) | Subsection (4) applies if— |
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| | (a) | two or more relevant post-death benefit crystallisation events |
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| | occur in respect of an individual, and |
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| | (b) | tax is not chargeable on the whole of the total of the amounts |
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| | |
| | (4) | The person liable under subsection (2) or (2A) to the lifetime |
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| | allowance charge charged by reason of the occurrence of any one of |
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| | the relevant post-death benefit crystallisation events is liable to such |
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| | portion of the total amount of the tax payable by reason of the relevant |
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| | post-death benefit crystallisation events having occurred as appears to |
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| | an officer of Revenue and Customs to be just and reasonable. |
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| | (4A) | For the purposes of subsections (3) and (4), a benefit crystallisation |
|
| | event is a “relevant post-death benefit crystallisation event” if it is |
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| | benefit crystallisation event 5C or 7.” |
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| | (6) | The amendment made by sub-paragraph (5) comes into force on 6 April 2015. |
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| | 23 (1) | Section 219 of FA 2004 (availability of individual’s lifetime allowance) is |
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| | |
|
|
| |
| |
|
| | (2) | In subsection (7) (cases where there is more than one benefit crystallisation |
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| | |
| | (a) | after “more than one” insert “relevant post-death”, |
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| | (b) | omit “by reason of the payment of lump sum death benefits”, and |
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| | (c) | for “individual the” substitute “individual, the relevant post-death”. |
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| | (3) | After subsection (7) insert— |
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| | “(7A) | For the purposes of subsection (7), a benefit crystallisation event is a |
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| | “relevant post-death benefit crystallisation event” if it is benefit |
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| | crystallisation event 5C or 7.” |
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| | (4) | The amendments made by this paragraph come into force on 6 April 2015. |
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| | 24 (1) | Schedule 32 to FA 2004 (supplementary provisions about benefit |
|
| | crystallisation events) is amended as follows. |
|
| | (2) | In paragraph 1 (meaning of “the relevant pension schemes”: in certain cases |
|
| | means schemes of which the individual was a member immediately before |
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| | death) before “7” insert “5C or”. |
|
| | (3) | After paragraph 14A insert— |
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| | “Benefit crystallisation event 5C: meaning of “relevant two-year period” |
|
| | 14B | For the purposes of benefit crystallisation event 5C “the relevant |
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| | two-year period”, in relation to relevant unused uncrystallised |
|
| | funds held for the purposes of a money purchase arrangement |
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| | relating to the individual under any of the relevant pension |
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| | schemes, means the period of two years beginning with the earlier |
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| | of the day on which the scheme administrator of the scheme first |
|
| | knew of the individual’s death and the day on which the scheme |
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| | administrator could first reasonably have been expected to have |
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| | |
| | Benefit crystallisation event 5C: meaning of “relevant unused uncrystallised |
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| | |
| | 14C(1) | For the purposes of benefit crystallisation event 5C, sums or assets |
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| | held after the death of the individual for the purposes of a money |
|
| | purchase arrangement relating to the individual under any of the |
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| | relevant pension schemes are relevant unused uncrystallised funds |
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| | |
| | (a) | they are unused uncrystallised funds, and |
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| | (b) | the individual had not reached the age of 75 at the date of |
|
| | |
| | (2) | Paragraph 27E(4) and (5) of Schedule 28 (meaning of “unused |
|
| | uncrystallised funds”) apply for the purposes of sub-paragraph |
|
| | (1)(a), but as if references to the member were references to the |
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| | |
| | Income tax on beneficiaries’ income withdrawal |
|
| | 25 (1) | ITEPA 2003 is amended as follows. |
|
|