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Finance (No. 2) BillPage 150

(b) any other economic benefits derived by—

(i) the relevant company, or

(ii) if there are any companies connected with that
company, the relevant company and those connected
5companies (taken together),

as a result of securing the relevant corporation tax advantage.

(8) The “non-tax value” of the tax arrangements is the total value of any
economic benefits, other than those falling within subsection (7)(a) or
(b), derived by—

(a) 10the relevant company, or

(b) if there are any companies connected with that company, the
relevant company and those connected companies (taken
together),

as a result of the tax arrangements.

(9) 15Condition E is that the tax arrangements are not arrangements in
relation to which section 269CK (banking companies: profits arising
from tax arrangements to be disregarded) applies.

(10) If this section applies, the relevant company is not entitled to deduct
from the relevant profits any amount in respect of the relevant
20carried-forward losses.

730H Interpretation of section 730G

(1) In section 730G—

(2) 10References in section 730G to bringing an amount into account “as a
deduction” in any period are to bringing it into account as a
deduction in that period—

(a) in calculating profits, losses or other amounts for corporation
tax purposes, or

(b) 15from profits or other amounts chargeable to corporation tax.

2 In section 1 of CTA 2010 (overview of Act), in subsection (4), after paragraph
(aa) insert—

(ab) carried-forward losses (see Part 14B),.

3 In Schedule 4 to CTA 2010 (index of defined expressions), at the appropriate
20place insert—

relevant carried-
forward loss (in Part 14B)
section 730F.

Part 2 Commencement

4 (1) 25The amendments made by this Schedule have effect for the purposes of
calculating the taxable total profits of companies for accounting periods
beginning on or after 18 March 2015.

(2) Sub-paragraph (3) applies where a company has an accounting period
beginning before 18 March 2015 and ending on or after that date (“the
30straddling period”).

(3) For the purposes of Part 14B of CTA 2010—

(a) so much of the straddling period as falls before 18 March 2015, and
so much of that period as falls on or after that date, are treated as
separate accounting periods, and

(b) 35any amounts brought into account for the purposes of calculating the
taxable total profits of the company for the straddling period are
apportioned to the two separate accounting periods—

(i) in accordance with section 1172 of CTA 2010 (time basis), or

(ii) if that method would produce a result that is unjust or
40unreasonable, on a just and reasonable basis.

Finance (No. 2) BillPage 152

Section 34

SCHEDULE 4 Pension flexibility: annuities etc

Part 1 Death benefits for nominees, successors and dependants

5Introductory

1 Part 4 of FA 2004 is amended as follows.

Nominees’ annuities and successors’ annuities to be authorised payments

2 (1) Section 167(1) (the pension death benefit rules) is amended as follows.

(2) In pension death benefit rule 3A (payments that may, by way of exception,
10be made to a nominee) after “other than” insert “a nominees’ annuity in
respect of a money purchase arrangement or”.

(3) In pension death benefit rule 3B (payments that may, by way of exception,
be made to a successor) after “other than” insert “a successors’ annuity in
respect of a money purchase arrangement or”.

15Nominees’ annuities and successors’ annuities: definitions

3 (1) Part 2 of Schedule 28 (interpretation of the pension death benefit rules) is
amended as follows.

(2) After paragraph 27A insert—

Nominees’ annuity

27AA (1) 20For the purposes of this Part an annuity payable to a nominee is a
nominees’ annuity if—

(a) either—

(i) it is purchased together with a lifetime annuity
payable to the member and the member becomes
25entitled to that lifetime annuity on or after 6 April
2015, or

(ii) it is purchased after the member’s death, the
member dies on or after 3 December 2014 and the
nominee becomes entitled to the annuity on or after
306 April 2015,

(b) it is payable by an insurance company, and

(c) it is payable until the nominee’s death or until the earliest
of the nominee’s marrying, entering into a civil
partnership or dying.

(2) 35For the purposes of sub-paragraph (1)(a) a nominees’ annuity is
purchased together with a lifetime annuity if the nominees’
annuity is related to the lifetime annuity.

(3) The Commissioners for Her Majesty’s Revenue and Customs may
by regulations make provision in relation to cases in which a

Finance (No. 2) BillPage 153

nominees’ annuity payable to a person (“the original nominees’
annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance
company to another insurance company and are applied—

(i) 5towards the provision of another nominees’
annuity (a “new nominees’ annuity”) by the other
insurance company, or

(ii) otherwise, or

(b) sums or assets are transferred to the relevant registered
10pension scheme.

(4) The regulations may provide that—

(a) in a case where a new nominees’ annuity becomes payable,
the new nominees’ annuity is to be treated, to such extent
as is prescribed by the regulations and for such of the
15purposes of this Part as are so prescribed, as if it were the
original nominees’ annuity, and

(b) in any other case, the relevant registered pension scheme is
to be treated as making an unauthorised payment in
respect of the member of an amount equal to the aggregate
20of the sums, and the market value of the assets, transferred.

(5) For the purposes of sub-paragraphs (3) and (4) a registered
pension scheme is the relevant registered pension scheme if the
original nominees’ annuity was acquired using sums or assets
held for the purposes of the pension scheme.

(3) 25After paragraph 27F insert—

Successors’ annuity

27FA (1) For the purposes of this Part an annuity payable to a successor is a
successors’ annuity if—

(a) the successor becomes entitled to it on or after 6 April 2015,

(b) 30it is payable by an insurance company,

(c) it is payable until the successor’s death or until the earliest
of the successor’s marrying, entering into a civil
partnership or dying,

(d) it is purchased after the death of a dependant, nominee or
35successor of the member (“the beneficiary”),

(e) it is purchased using undrawn funds, and

(f) the beneficiary dies on or after 3 December 2014.

(2) For the purposes of sub-paragraph (1)(e), sums or assets held for
the purposes of an arrangement after the beneficiary’s death are
40undrawn funds if—

(a) immediately before the beneficiary’s death, they were held
for the purposes of the arrangement and, as the case may
be, represented (alone or with other sums or assets) the
beneficiary’s—

(i) 45dependant’s flexi-access drawdown fund,

(ii) dependant’s drawdown pension fund,

(iii) nominee’s flexi-access drawdown fund, or

(iv) successor’s flexi-access drawdown fund,

Finance (No. 2) BillPage 154

in respect of the arrangement, or

(b) they arise, or (directly or indirectly) derive, from undrawn
funds under paragraph (a) or from sums or assets which so
arise or derive.

(3) 5The Commissioners for Her Majesty’s Revenue and Customs may
by regulations make provision in relation to cases in which a
successors’ annuity payable to a person (“the original successors’
annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance
10company to another insurance company and are applied—

(i) towards the provision of another successors’
annuity (a “new successors’ annuity”) by the other
insurance company, or

(ii) otherwise, or

(b) 15sums or assets are transferred to the relevant registered
pension scheme.

(4) The regulations may provide that—

(a) in a case where a new successors’ annuity becomes
payable, the new successors’ annuity is to be treated, to
20such extent as is prescribed by the regulations and for such
of the purposes of this Part as are so prescribed, as if it were
the original successors’ annuity, and

(b) in any other case, the relevant registered pension scheme is
to be treated as making an unauthorised payment in
25respect of the member of an amount equal to the aggregate
of the sums, and the market value of the assets, transferred.

(5) For the purposes of sub-paragraphs (3) and (4) a registered
pension scheme is the relevant registered pension scheme if the
original successors’ annuity was acquired using sums or assets
30held for the purposes of the pension scheme.

(4) Regulations made before 25 December 2015 under the paragraph 27AA or
27FA inserted by this paragraph may, for cases where the transfer concerned
takes place on or after 6 April 2015, include provision having effect in
relation to times before the regulations are made.

35Dependants’ and nominees’ annuities: testing against deceased member’s lifetime allowance

4 (1) In section 216(1) (benefit crystallisation events and amounts crystallised) the
table is amended as follows.

(2) In the second column of the entry relating to benefit crystallisation event 4,
after “any related dependants’ annuity” insert “and any related nominees’
40annuity”.

(3) After the entry relating to benefit crystallisation event 5C insert—

Finance (No. 2) BillPage 155

5D. A person becoming entitled,
on or after 6 April 2015 but
before the end of the relevant
two-year period, to a
dependants’ annuity or
nominees’ annuity in respect of
the individual if— the annuity is purchased
using (whether or not
exclusively) relevant
unused uncrystallised
funds, and the individual died on or
after 3 December 2014

The aggregate of—

(a)

the amount of such
of the sums, and

(b)

5the market value of
such of the assets,

5 (1) Section 217 (persons liable to lifetime allowance charge) is amended as
follows.

(2) In subsection (2A) (cases where dependant or nominee liable) after “event
105C,” insert “or by reason of a person becoming entitled to an annuity as
mentioned in the description of benefit crystallisation event 5D,”.

(3) In subsection (4A) (events 5C and 7 are “relevant post-death” events) after
“benefit crystallisation event 5C” insert “, 5D”.

6 In section 219(7A) (events 5C and 7 are “relevant post-death” events) after
15“benefit crystallisation event 5C” insert “, 5D”.

7 In Schedule 32 (supplementary provisions about benefit crystallisation
events)—

(a) in paragraph 1 (meaning of “the relevant pension schemes”: in
certain cases means schemes of which the individual was a member
20immediately before death) after “5C” insert “or 5D”,

(b) in paragraph 4(1) (further provision about benefit crystallisation
event 4) for the words from “if” to “purchased” substitute if—

(a)(a)the lifetime annuity or a related dependants’
annuity or a related nominees’ annuity is, or

(b) 25the lifetime annuity and a related dependants’
annuity are, or

(c) the lifetime annuity and a related nominees’
annuity are, or

(d) a related dependants’ annuity and a related
30nominees’ annuity are, or

(e) the lifetime annuity and a related dependants’
annuity and a related nominees’ annuity are,

purchased,

(c) in paragraph 14B (event 5C: meaning of “relevant two-year period”),
35and in the italic heading before that paragraph, for “event 5C”
substitute “events 5C and 5D”, and

(d) in paragraph 14C(1) (event 5C: meaning of “relevant unused
uncrystallised funds”), and in the italic heading before paragraph
14C, for “event 5C” substitute “events 5C and 5D”.

Finance (No. 2) BillPage 156

Minor and consequential amendments

8 In section 172(6A)(b) (“benefit” in section 172 includes rights to payments
under certain annuities) after “lifetime annuity or dependants’ annuity”
insert “, or nominees’ annuity or successors’ annuity,”.

9 (1) 5Section 172A (surrenders of benefits and rights) is amended as follows.

(2) In subsection (1)(aa) (surrender of rights to payments under certain
annuities triggers operation of subsection (2)) after “lifetime annuity or
dependants’ annuity” insert “, or nominees’ annuity or successors’
annuity,”.

(3) 10In subsection (9A)(b) (references to benefits include references to rights to
payments under certain annuities) after “lifetime annuity or dependants’
annuity” insert “, or nominees’ annuity or successors’ annuity,”.

10 (1) Section 172B (increase of rights of connected person on death) is amended as
follows.

(2) 15In subsection (2)(aa) (relevant member includes person who has rights to
payments under certain annuities) after “lifetime annuity or dependants’
annuity” insert “, or nominees’ annuity or successors’ annuity,”.

(3) In subsection (7A) (section does not apply to certain increases in rights) after
“dependants’ annuity”, in both places, insert “, nominees’ annuity,
20successors’ annuity”.

(4) In subsection (7B)(b) (“benefit” in section 172B includes rights to payments
under certain annuities) after “lifetime annuity or dependants’ annuity”
insert “, or nominees’ annuity or successors’ annuity,”.

11 In section 273B(1) (power of trustees or managers to make certain payments)
25after paragraph (f) insert—

(fa) paid to purchase a nominees’ annuity,

(fb) paid to purchase a successors’ annuity,.

12 In section 280(2) (index of defined expressions) at the appropriate places
insert—

nominees’ annuity 30paragraph 27AA of Schedule 28”
“related nominees’ annuity paragraph 3(4B) of Schedule 29”
“successors’ annuity paragraph 27FA of Schedule 28

13 (1) Schedule 28 (interpretation of the pension rules and the pension death
benefit rules) is amended as follows.

(2) 35In paragraph 3(2B)(a) (power to make regulations about cases where lifetime
annuity ceases to be payable by insurance company) after “dependants’
annuity” insert “, nominees’ annuity”.

(3) In paragraph 6(1B)(a) (power to make regulations about cases where short-
term annuity ceases to be payable by insurance company) after
40“dependants’ annuity” insert “, nominees’ annuity”.

(4) In paragraph 27E(3) (meaning of “unused drawdown funds”)—

Finance (No. 2) BillPage 157

(a) in paragraph (b), for “derive.” substitute “derive,”, and

(b) after paragraph (b) (but not as part of it) insert—

and since the member’s death they have not been
designated as available for the payment of dependants’
5drawdown pension, not been designated as available for
the payment of nominees’ drawdown pension, not been
applied towards the provision of a dependants’ annuity,
not been applied towards the provision of a nominees’
annuity and not been applied towards the provision of a
10dependants’ scheme pension.

(5) In paragraph 27E(4)(b) and (5) (meaning of “unused uncrystallised funds”)
after “not been applied towards the provision of a dependants’ annuity”
insert “, not been applied towards the provision of a nominees’ annuity”.

(6) In paragraph 27K(3) (meaning of “unused drawdown funds of the
15beneficiary’s”)—

(a) in paragraph (b) for “derive.” substitute “derive,”, and

(b) after paragraph (b) (but not as part of it) insert—

and since the beneficiary’s death they have not been
designated as available for the payment of successors’
20drawdown pension and not been applied towards the
provision of a successors’ annuity.

14 (1) Paragraph 3 of Schedule 29 (interpretation of the lump sum rule: meaning of
“the applicable amount”) is amended as follows.

(2) In sub-paragraph (4) (amount applied to purchase certain annuities) after
25“any related dependants’ annuity” insert “and any related nominees’
annuity”.

(3) After sub-paragraph (4A) (when a dependants’ annuity is related to a
lifetime annuity) insert—

(4B) For the purposes of this Part a nominees’ annuity is related to a
30lifetime annuity payable to a member of a registered pension
scheme—

(a) if they are purchased either in the form of a joint life
annuity or separately in circumstances in which the day on
which the one is purchased is no earlier than seven days
35before, and no later than seven days after, the day on
which the other is purchased, and

(b) the nominees’ annuity will be payable to a nominee of the
member.

(4) In sub-paragraph (5) (deductions in calculating applicable amount) after
40“any related dependants’ annuity”, in both places, insert “or any related
nominees’ annuity”.

15 In paragraph 15(2)(a) of Schedule 29 (uncrystallised funds lump sum death
benefit is sum paid in respect of funds not spent on certain annuities and
other pensions) after “lifetime annuity,” insert “a nominees’ annuity,”.

45Consequential repeal

16 In consequence of paragraph 7(b) of this Schedule, omit paragraph 32 of
Schedule 10 to FA 2005.

Finance (No. 2) BillPage 158

Part 2 Income tax on beneficiaries’ annuities etc

Exemption in certain cases for annuities for dependants, nominees and successors

17 (1) In Chapter 17 of Part 9 of ITEPA 2003 (tax on pension income: exemptions)
5after section 646A insert—

646B Registered schemes: beneficiaries’ annuities from unused funds

(1) The charge to tax under this Part does not apply to a dependants’
annuity, or nominees’ annuity, payable to a person if—

(a) it is paid in respect of a deceased member of a registered
10pension scheme who had not reached the age of 75 at the date
of the member’s death,

(b) the member died on or after 3 December 2014,

(c) either—

(i) the annuity was purchased using unused drawdown
15funds or unused uncrystallised funds, or

(ii) the annuity was purchased using sums or assets
transferred to an insurance company by another
insurance company in consequence of an annuity that
was payable to the person by that other company, and
20was a dependants’ annuity or nominees’ annuity (as
the case may be) purchased as mentioned in sub-
paragraph (i) or this sub-paragraph, ceasing to be
payable,

(d) in a case where the annuity is purchased as mentioned in
25paragraph (c)(i) and using (whether or not exclusively)
unused uncrystallised funds, the person became entitled to it
before the end of the period of two years beginning with the
earlier of—

(i) the day on which the scheme administrator first knew
30of the member’s death, and

(ii) the day on which the scheme administrator could first
reasonably have been expected to know of the death,

(e) in a case where the annuity is purchased as mentioned in
paragraph (c)(ii) and the prior annuity purchased as
35mentioned in paragraph (c)(i) was purchased using (whether
or not exclusively) unused uncrystallised funds, the person
became entitled to that prior annuity before the end of the
period of two years specified in paragraph (d),

(f) no payment of the annuity is made before 6 April 2015, and

(g) 40in a case where the annuity is purchased as mentioned in
paragraph (c)(ii), no payment is made before 6 April 2015
of—

(i) the prior annuity purchased as mentioned in
paragraph (c)(i), and

(ii) 45any other annuity purchased as mentioned in
paragraph (c)(ii) that is in the chain of annuities
beginning with that prior annuity and ending with
the annuity.

Finance (No. 2) BillPage 159

(2) The charge to tax under this Part does not apply to a successor’s
annuity payable to a person if—

(a) it is paid in respect of a deceased member of a registered
pension scheme,

(b) 5it is paid on the subsequent death of a dependant, nominee or
successor of the member (“the beneficiary”),

(c) the beneficiary had not reached the age of 75 at the date of the
beneficiary’s death,

(d) the beneficiary died on or after 3 December 2014,

(e) 10either—

(i) the annuity was purchased using undrawn funds, or

(ii) the annuity was purchased using sums or assets
transferred to an insurance company by another
insurance company in consequence of an annuity that
15was payable to the person by that other company, and
was a successors’ annuity purchased as mentioned in
sub-paragraph (i) or this sub-paragraph, ceasing to be
payable,

(f) no payment of the annuity is made before 6 April 2015, and

(g) 20in a case where the annuity is purchased as mentioned in
paragraph (e)(ii), no payment is made before 6 April 2015
of—

(i) the prior annuity purchased as mentioned in
paragraph (e)(i), and

(ii) 25any other annuity purchased as mentioned in
paragraph (e)(ii) that is in the chain of annuities
beginning with that prior annuity and ending with
the annuity.

(3) The charge to tax under this Part does not apply to a dependants’
30annuity or nominees’ annuity payable to a person if—

(a) it is paid in respect of a deceased member of a registered
pension scheme who had not reached the age of 75 at the date
of the member’s death,

(b) the member died on or after 3 December 2014,

(c) 35the annuity—

(i) was purchased together with a lifetime annuity
payable to the member, or

(ii) was purchased using sums or assets transferred to an
insurance company by another insurance company in
40consequence of an annuity that was payable to the
person by that other company, and was a
dependants’ annuity or nominees’ annuity (as the
case may be) purchased as mentioned in sub-
paragraph (i) or this sub-paragraph, ceasing to be
45payable,

(d) no payment of the annuity is made before 6 April 2015, and

(e) in a case where the annuity is purchased as mentioned in
paragraph (c)(ii), no payment is made before 6 April 2015
of—

(i) 50the prior annuity purchased as mentioned in
paragraph (c)(i), and

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