Taxation of Pensions Bill (HC Bill 97)

subsection (7) insert—

“(8) If, for a tax year preceding the current tax year, the chargeable
amount in the individual’s case was the alternative chargeable
amount—

(a) 5a reference in subsection (3)(a) or (b), (4)(b) or (6)(a) to the
annual allowance for that preceding tax year is a reference to
the alternative annual allowance for that preceding tax year
(see section 227B(2)), and

(b) a reference in subsection (3)(a) or (b), (4)(b) or (6)(a) to the
10total pension input amount in the case of the individual for
that preceding tax year is a reference to the defined-benefit
input sub-total in the case of the individual for that preceding
tax year (see section 227B(3) to (5)).

(9) Subsection (3) does not apply in relation to a tax year—

(a) 15preceding the current tax year, and

(b) ending not later than 5 April 2015,

if, at any time in that preceding tax year, section 165(3A) or 167(2A)
applied to an arrangement relating to the individual.”

(2) The amendment made by this paragraph has effect where the current tax
20year is the tax year 2015-16 or a subsequent tax year.

68 In section 237B of FA 2004 (scheme administrator’s co-liability for
individual’s annual allowance charge) after subsection (2) insert—

“(2A) If the chargeable amount for the tax year in the individual’s case is
the alternative chargeable amount, each of the following is treated as
25being a reference to the amount that the annual allowance charge for
the tax year would be in the individual’s case if the chargeable
amount were the default chargeable amount—

(a) the reference in subsection (1)(a) to the amount of the
individual’s liability to the annual allowance charge for the
30tax year, and

(b) the reference in subsection (3) to the annual allowance charge
arising in the case of the individual.”

69 (1) In article 25C of the Taxation of Pension Schemes (Transitional Provisions)
Order 2006 (S.I. 2006/572S.I. 2006/572) after paragraph (3) insert—

“(4) 35If—

(a) a stand-alone lump sum is paid—

(i) on or after 6 April 2015,

(ii) to a member of a pension scheme,

(iii) under a money purchase arrangement, and

(iv) 40in circumstances where article 25B(2) (circumstance
A) applies, and

(b) no previous stand-alone lump sum has been paid—

(i) on or after that day,

(ii) to the member,

(iii) 45under a money purchase arrangement, and

(iv) in circumstances where article 25B(2) applies,

subsection (1) of section 227G of the 2004 Act (individual first flexibly
accesses pension rights at earliest time given by the following
subsections of that section) has effect as if there were a subsequent
subsection of that section stating that the member first flexibly
5accesses pension rights immediately before the stand-alone lump
sum is paid.”

(2) The amendment made by sub-paragraph (1) is to be treated as having been
made by the Treasury under the powers to make orders conferred by section
283(2) of FA 2004.

10Part 5 Miscellaneous amendments

Pension commencement lump sums

70 (1) In paragraph 3A(3) of Schedule 29 to FA 2004 (pension commencement
lump sum: when pension scheme is to be treated as making an unauthorised
15payment) for the words “1% of the standard lifetime allowance on that day”
substitute “£7,500”.

(2) The amendment made by sub-paragraph (1) has effect in relation to pension
commencement lump sums paid on or after 6 April 2015.

Trivial commutation lump sums and small pot lump sums

71 (1) 20In paragraph 7(1) of Schedule 29 to FA 2004 (meaning of “trivial
commutation lump sum”)—

(a) after paragraph (a) insert—

“(aa) it is paid in respect of a defined benefits
arrangement,”,

(b) 25in paragraph (d) (entitlement to benefits must be extinguished) for
“the member’s entitlement to benefits” substitute “any entitlement to
defined benefits that the member has”, and

(c) in paragraph (e) (member must have reached 60) for “the age of 60”
substitute “normal minimum pension age (or the ill-health condition
30is met)”.

(2) The amendments made by sub-paragraph (1) have effect for commutation
periods beginning on or after 6 April 2015 and do so irrespective of whether
the nominated date is before, on or after 6 April 2015.

72 (1) In article 23C(4) of the Taxation of Pension Schemes (Transitional
35Provisions) Order 2006 (S.I. 2006/572S.I. 2006/572) (modifications of Schedule 29 to FA
2004) in the inserted paragraph 7A(1)(b) (member must have reached age 60
for certain sums to be trivial commutation lump sums) for “the age of 60”
substitute “normal minimum pension age (or the ill-health condition is
met)”.

(2) 40The amendment made by sub-paragraph (1)—

(a) has effect for determining whether a lump sum paid on or after 6
April 2015 is within the inserted paragraph 7A, and

(b) is to be treated as having been made by the Treasury under the
powers to make orders conferred by section 283(2) of FA 2004.

73 (1) The Registered Pension Schemes (Authorised Payments) Regulations 2009
(S.I. 2009/1171S.I. 2009/1171) are amended as follows.

(2) For regulation 10 substitute—

“10 Payments to members receiving annuities

5A payment by a registered pension scheme to a member which
would be a payment that is described in regulation 11, 11A(1)(a) to
(c) or 12 but for the continuance after the payment of an annuity if the
member has not previously received a payment, by that scheme,
under this regulation.”

(3) 10In each of regulations 11(1)(a), 11A(1)(a) and 12(1)(c) (member must have
reached 60 for certain payments by registered pension scheme to be
authorised payments) for “the age of 60” substitute “normal minimum
pension age or the ill-health condition is met (see paragraph 1 of Schedule
28)”.

(4) 15The amendments made by sub-paragraphs (2) and (3)—

(a) have effect for payments made on or after 6 April 2015, and

(b) are 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.

20Trivial commutation lump sum death benefits

74 (1) Paragraph 20 of Schedule 29 to FA 2004 (trivial commutation lump sum
death benefit) is amended as follows.

(2) In sub-paragraph (1) (definition) for the words from “if” to the end substitute
“if condition A or B is met.”

(3) 25After sub-paragraph (1) insert—

“(1A) Condition A is that the lump sum—

(a) is paid to a dependant entitled under the pension scheme
to pension death benefit in respect of the member, and

(b) extinguishes the dependant’s entitlement under the
30pension scheme to pension death benefit and lump sum
death benefit in respect of the member.

(1B) Condition B is that—

(a) the lump sum is paid after the member’s death to an
individual entitled to be paid a pension under the
35scheme—

(i) which the member was entitled to be paid
immediately before the member’s death, and

(ii) which is payable to the individual under pension
rule 2 (see section 165),

(b) 40if the pension is an annuity or scheme pension payable by
an insurance company, the lump sum extinguishes all
entitlements in respect of the member under the contract
concerned, and

(c) if the pension is a scheme pension payable by the scheme
45administrator, the lump sum extinguishes all entitlements

to receive a scheme pension in respect of the member from
the scheme administrator under pension rule 2.”

(4) In sub-paragraph (2) (excess over £18,000 not a trivial commutation lump
sum death benefit) for “£18,000” substitute “£30,000”.

(5) 5In consequence of sub-paragraph (4), in Schedule 18 to FA 2011 omit
paragraph 6(2).

(6) The amendments made by this paragraph have effect in relation to lump
sum death benefits paid on or after 6 April 2015.

Winding-up lump sum death benefit

75 (1) 10In Schedule 29 to FA 2004 (authorised lump sums) omit paragraph 21 (which
has come to have the effect that every winding-up lump sum death benefit
is also a trivial commutation lump sum death benefit).

(2) In consequence of sub-paragraph (1), in Schedule 18 to FA 2011 omit
paragraph 7.

15Early lifetime annuities

76 (1) In paragraph 7 of Schedule 32 to FA 2004 (benefit crystallisation events 2 and
4: early lifetime annuities) after sub-paragraph (3) insert—

“(4) Sub-paragraph (5) has effect for the purposes of benefit
crystallisation event 2 as it applies in relation to the individual’s
20becoming entitled to the lifetime annuity.

(5) If the total of—

(a) the sums applied to purchase the lifetime annuity and any
related dependants’ annuity, and

(b) the market value, at the time they are applied, of the assets
25applied to make the purchase,

is greater than the amount that would apart from this sub-
paragraph be the amount crystallised by the event, that total is the
amount crystallised by the event.”

(2) The amendment made by sub-paragraph (1) has effect in relation to a
30lifetime annuity if, applying the rule in section 165(3)(b) of FA 2004, the
annuity is one to which an individual becomes entitled on or after 6 April
2015.

Individuals who on 5 April 2006 had actual right to payment of pensions

77 (1) In paragraph 20(4)(a) and (b) of Schedule 36 to FA 2004 (lifetime allowance:
35deemed crystallisation: value of rights to pre-5 April 2006 drawdown
pensions) before “the maximum” insert “80% of”.

(2) The amendment made by sub-paragraph (1) in relation to paragraph 20(4)(a)
of that Schedule has effect where the benefit crystallisation event mentioned
in the opening words of paragraph 20(2) of that Schedule occurs on or after
406 April 2015.

(3) The amendment made by sub-paragraph (1) in relation to paragraph
20(4)(b) of that Schedule has effect where—

(a) the benefit crystallisation event mentioned in the opening words of
paragraph 20(2) of that Schedule occurs on or after 6 April 2015, and

(b) section 165(3A) of FA 2004 first applied to the arrangement
concerned in a drawdown pension year that began on or after 27
5March 2014.

Transfers between schemes of funds held in respect of individual who has a protected pension
age

78 (1) In Schedule 36 to FA 2004 after paragraph 23 insert—

“23ZA (1) Sub-paragraph (2) applies if—

(a) 10there is a recognised transfer from one registered pension
scheme (“the old scheme”) to another registered pension
scheme (“the new scheme”), and

(b) as a result of paragraph 21 or the previous operation of
sub-paragraph (2), immediately before the transfer this
15Part (except for section 218(6) and paragraph 19) applied in
relation to all of the transferred sums or assets as if
references to normal minimum pension age were to the
member’s protected pension age as defined by paragraph
22(8) or, as the case may be, paragraph 23(8).

(2) 20This Part (except for section 218(6) and paragraph 19) applies in
relation to—

(a) the transferred sums or assets while held for the purposes
of an arrangement under the new scheme, and

(b) any sums or assets held for the purposes of such an
25arrangement that arise, or (directly or indirectly) derive,
from—

(i) any of the transferred sums or assets, or

(ii) sums or assets which so arise or derive,

as if references to normal minimum pension age were to the
30member’s protected pension age as defined by paragraph 22(8) or,
as the case may be, paragraph 23(8).

(3) Paragraphs 22(7)(a) and 23(7) have effect as if the benefits or
pensions to which they refer do not include any that are in respect
of sums or assets within sub-paragraph (2)(a) or (b) of this
35paragraph.”

(2) The amendment made by sub-paragraph (1) has effect in relation to
recognised transfers made on or after 6 April 2015.

Power to make certain payments

79 In FA 2004 after section 273A insert—

“273B 40 Power of trustees or managers to make certain payments

(1) Subsection (2) applies to a payment by a registered pension scheme
to or in respect of a person who is or has been a member of the
scheme if it is paid in respect of a money purchase arrangement and
is—

(a) 45a payment of drawdown pension,

(b) paid to purchase a short-term annuity,

(c) a payment of dependants’ drawdown pension,

(d) paid to purchase a dependants’ short-term annuity,

(e) an uncrystallised funds pension lump sum,

(f) 5a flexi-access drawdown fund lump sum death benefit,

(g) a pension commencement lump sum where the person
becomes entitled to it in connection with becoming entitled to
income withdrawal (or where the person dies after becoming
entitled to it but before becoming entitled to the income
10withdrawal in connection with which it was expected that the
person would become entitled to the lump sum), or

(h) a trivial commutation lump sum death benefit where
condition B in paragraph 20(1B) of Schedule 29 is met.

(2) The trustees or managers of the scheme may make the payment
15despite any provision of the rules of the scheme (however framed)
prohibiting the making of the payment.”

Temporary non-residence

80 ITEPA 2003 is amended as follows.

81 (1) Section 579CA as substituted by paragraph 117 of Schedule 45 to FA 2013
20(pensions under registered pension schemes: temporary non-residents) is
amended as follows.

(2) In subsection (2) (relevant withdrawals treated as accruing in the year of
return from temporary non-residence) at the end insert “, but only if the total
amount of—

“(1)25the relevant withdrawals within subsection (3), and

(b) the relevant withdrawals (as defined by section 576A(4))
within section 576A(3) for the same temporary period of non-
residence,

exceeds £100,000”.

(3) 30For subsection (4) (meaning of “relevant withdrawal”) substitute—

“(4) A “relevant withdrawal” is—

(a) any income withdrawal paid to the person from a member’s
flexi-access drawdown fund in respect of an arrangement
relating to the person under a registered pension scheme,

(b) 35any dependants’ income withdrawal paid to the person from
a dependant’s flexi-access drawdown fund in respect of an
arrangement relating to the person under a registered
pension scheme,

(c) any payment to the person of a short-term annuity purchased
40using sums or assets out of a member’s flexi-access
drawdown fund in respect of an arrangement relating to the
person under a registered pension scheme,

(d) any payment to the person of a dependants’ short-term
annuity purchased using sums or assets out of a dependant’s
45flexi-access drawdown fund in respect of an arrangement
relating to the person under a registered pension scheme,

(e) any uncrystallised funds pension lump sum paid to the
person in respect of an arrangement relating to the person
under a registered pension scheme, but only so far as section
579A applies in relation to the sum (see section 636A),

(f) 5any income withdrawal, or dependants’ income withdrawal,
paid before 6 April 2015 to the person under a registered
pension scheme in respect of an arrangement relating to the
person under the scheme which at the time of the payment
was an arrangement to which section 165(3A) or 167(2A) of
10FA 2004 applied (flexible drawdown arrangements),

(g) any payment to the person of a lifetime annuity or
dependants’ annuity where—

(i) the annuity is within paragraph 3(1A) or 17(1ZA), as
the case may be, of Schedule 28 to FA 2004,

(ii) 15the terms of the contract under which the annuity is
paid are such that there will or could be decreases in
the amount of the annuity other than decreases from
time to time allowed by regulations under paragraph
3(1)(d) or 17(1)(c), as the case may be, of Schedule 28
20to FA 2004 (and any such regulations are to be treated
as having effect for this purpose), and

(iii) the annuity is purchased using sums or assets held for
the purposes of a registered pension scheme, or

(h) any payment to the person of a scheme pension, or
25dependants’ scheme pension, under a money purchase
arrangement under a registered pension scheme where—

(i) the person first acquired an actual (rather than a
prospective) right to receive the scheme pension on or
after 6 April 2015,

(ii) 30when the person first acquired that actual right, fewer
than 11 other individuals were entitled to the present
payment of a scheme pension, or dependants’ scheme
pension, under the registered pension scheme, and

(iii) the scheme pension is not payable under an annuity
35contract treated under section 153(8) or (8A) of FA
2004 as having become a registered pension scheme.

(4A) For the purpose of determining whether the figure specified in
subsection (2) is exceeded, any relevant withdrawal paid in a
currency other than sterling is to be translated into sterling using the
40average exchange rate for the year ending with 31 March in the tax
year in which the relevant withdrawal is paid.”

(4) In subsection (7) for the definition of “flexible drawdown arrangement”
substitute—

• ““dependants’ annuity”, “dependant’s flexi-access drawdown
  45fund”, “dependants’ scheme pension”, “dependants’ short-
  term annuity”, “lifetime annuity”, “member’s flexi-access
  drawdown fund”, “money purchase arrangement”, “scheme
  pension”, “short-term annuity” and “uncrystallised funds
  pension lump sum” have the same meaning as in Part 4 of FA
  502004 (see section 152 of FA 2004 and paragraphs 2, 3, 6, 8A, 16
  to 16C, 17, 20 and 22A of Schedule 28, and paragraph 4A of
  Schedule 29, to FA 2004).”

(5) The amendments made by this paragraph come into force on 6 April 2015.

82 (1) The version of section 579CA which has effect if the year of departure is the
tax year 2012-13 or an earlier tax year (pensions under registered pension
schemes: temporary non-residents) is amended as follows.

(2) 5In subsection (1)—

(a) for “income withdrawal or dependants’ income withdrawal under
the registered pension scheme” substitute “relevant withdrawal paid
to a person”,

(b) omit paragraph (a), and

(c) 10at the end insert “, but only if the total amount of the relevant
withdrawals meeting those conditions, and the relevant withdrawals
(as defined by section 576A(4A)) meeting the conditions in section
576A(1) for the same set of years of non-residence, exceeds £100,000”.

(3) After subsection (3) insert—

“(3A) 15A “relevant withdrawal”, in relation to a person, is—

(a) any income withdrawal paid to the person from a member’s
flexi-access drawdown fund in respect of an arrangement
relating to the person under a registered pension scheme,

(b) any dependants’ income withdrawal paid to the person from
20a dependant’s flexi-access drawdown fund in respect of an
arrangement relating to the person under a registered
pension scheme,

(c) any payment to the person of a short-term annuity purchased
using sums or assets out of a member’s flexi-access
25drawdown fund in respect of an arrangement relating to the
person under a registered pension scheme,

(d) any payment to the person of a dependants’ short-term
annuity purchased using sums or assets out of a dependant’s
flexi-access drawdown fund in respect of an arrangement
30relating to the person under a registered pension scheme,

(e) any uncrystallised funds pension lump sum paid to the
person in respect of an arrangement relating to the person
under a registered pension scheme, but only so far as section
579A applies in relation to the sum (see section 636A),

(f) 35any income withdrawal, or dependants’ income withdrawal,
paid before 6 April 2015 to the person under a registered
pension scheme in respect of an arrangement relating to the
person under the scheme which at the time of the payment
was an arrangement to which section 165(3A) or 167(2A) of
40FA 2004 applied (flexible drawdown arrangements),

(g) any payment to the person of a lifetime annuity or
dependants’ annuity where—

(i) the annuity is within paragraph 3(1A) or 17(1ZA), as
the case may be, of Schedule 28 to FA 2004,

(ii) 45the terms of the contract under which the annuity is
paid are such that there will or could be decreases in
the amount of the annuity other than decreases from
time to time allowed by regulations under paragraph
3(1)(d) or 17(1)(c), as the case may be, of Schedule 28

to FA 2004 (and any such regulations are to be treated
as having effect for this purpose), and

(iii) the annuity is purchased using sums or assets held for
the purposes of a registered pension scheme, or

(h) 5any payment to the person of a scheme pension, or
dependants’ scheme pension, under a money purchase
arrangement under a registered pension scheme where—

(i) the person first acquired an actual (rather than a
prospective) right to receive the scheme pension on or
10after 6 April 2015,

(ii) when the person first acquired that actual right, fewer
than 11 other individuals were entitled to the present
payment of a scheme pension, or dependants’ scheme
pension, under the registered pension scheme, and

(iii) 15the scheme pension is not payable under an annuity
contract treated under section 153(8) or (8A) of FA
2004 as having become a registered pension scheme.

(3B) For the purpose of determining whether the figure specified at the
end of subsection (1) is exceeded, any relevant withdrawal paid in a
20currency other than sterling is to be translated into sterling using the
average exchange rate for the year ending with 31 March in the tax
year in which the relevant withdrawal is paid.”

(4) In subsection (4) for “income withdrawal or dependants’ income” substitute
“relevant”.

(5) 25In subsection (5) for the definition of “flexible drawdown arrangement”
substitute—

• ““dependants’ annuity”, “dependant’s flexi-access drawdown
  fund”, “dependants’ scheme pension”, “dependants’ short-
  term annuity”, “lifetime annuity”, “member’s flexi-access
  30drawdown fund”, “money purchase arrangement”, “scheme
  pension”, “short-term annuity” and “uncrystallised funds
  pension lump sum” have the same meaning as in Part 4 of FA
  2004 (see section 152 of FA 2004 and paragraphs 2, 3, 6, 8A, 16
  to 16C, 17, 20 and 22A of Schedule 28, and paragraph 4A of
  35Schedule 29, to FA 2004).”

(6) The amendments made by this paragraph come into force on 6 April 2015.

83 (1) Section 576A as substituted by paragraph 116 of Schedule 45 to FA 2013
(pensions under relevant non-UK schemes: temporary non-residents) is
amended as follows.

(2) 40In subsection (2) (relevant withdrawals treated as accruing in the year of
return from temporary non-residence) at the end insert “, but only if the total
amount of—

“(1)(a)the relevant withdrawals within subsection (3), and

(a) the relevant withdrawals (as defined by section 579CA(4))
45within section 579CA(3) for the same temporary period of
non-residence,

exceeds £100,000”.

(3) For subsection (4) (meaning of “relevant withdrawal”) substitute—

“(4) A “relevant withdrawal” is an amount paid under a relevant non-UK
scheme that—

(a) is paid to the person in respect of an arrangement relating to
5the person under the scheme and would, if the scheme were
a registered pension scheme, be income withdrawal (within
the meaning of paragraph 7 of Schedule 28 to FA 2004) paid
to the person from the person’s member’s flexi-access
drawdown fund in respect of the arrangement,

(b) 10is paid to the person in respect of an arrangement relating to
the person under the scheme and would, if the scheme were
a registered pension scheme, be dependants’ income
withdrawal (within the meaning of paragraph 21 of Schedule
28 to FA 2004) paid to the person from the person’s
15dependant’s flexi-access drawdown fund in respect of the
arrangement,

(c) is a payment to the person of an annuity purchased using
sums or assets held for the purposes of an arrangement
relating to the person under the scheme and would, if the
20scheme were a registered pension scheme, be a payment of a
short-term annuity (within the meaning of paragraph 6 of
Schedule 28 to FA 2004) purchased using sums or assets out
of the person’s member’s flexi-access drawdown fund in
respect of the arrangement,

(d) 25is a payment to the person of an annuity purchased using
sums or assets held for the purposes of an arrangement
relating to the person under the scheme and would, if the
scheme were a registered pension scheme, be a payment of a
dependants’ short-term annuity (within the meaning of
30paragraph 20 of Schedule 28 to FA 2004) purchased using
sums or assets out of the person’s dependant’s flexi-access
drawdown fund in respect of the arrangement,

(e) is paid before 6 April 2015 to the person in respect of an
arrangement relating to the person under the scheme which
35at the time of the payment was an arrangement to which
section 165(3A) or 167(2A) of FA 2004 (flexible drawdown
arrangements) applied and would, if the scheme had been a
registered pension scheme, have been income withdrawal or
dependants’ income withdrawal (within the meaning of
40paragraphs 7 and 21 of Schedule 28 to FA 2004),

(f) is a payment to the person of an annuity purchased using
sums or assets held for the purposes of an arrangement
relating to the person under the scheme where—

(i) the payment would, if the scheme were a registered
45pension scheme, be of a lifetime annuity or
dependants’ annuity within paragraph 3(1A) or
17(1ZA), as the case may be, of Schedule 28 to FA
2004, and

(ii) the terms of the contract under which it is paid are
50such that there will or could be decreases in the
amount of the annuity other than decreases which, if
the scheme were a registered pension scheme, would
be decreases from time to time allowed by regulations