Finance (No. 2) Bill (HC Bill 155)

(e) that paragraph 1 of Schedule 22 to FA 2013 (“fixed protection 2014”
relating to new standard lifetime allowance for the tax year 2014-15)
does not apply in the individual’s case on 6 April 2016.

Protection-cessation events

3 5There is a protection-cessation event if—

(a) there is benefit accrual in relation to the individual under an
arrangement under a registered pension scheme,

(b) there is an impermissible transfer into any arrangement under a
registered pension scheme relating to the individual,

(c) 10a transfer of sums or assets held for the purposes of, or representing
accrued rights under, any such arrangement is made that is not a
permitted transfer, or

(d) an arrangement relating to the individual is made under a registered
pension scheme otherwise than in permitted circumstances.

15Protection-cessation events: interpretation: “benefit accrual”

4 (1) For the purposes of paragraph 3(a) there is benefit accrual in relation to the
individual under an arrangement—

(a) in the case of a money purchase arrangement that is not a cash
balance arrangement, if a relevant contribution is paid under the
20arrangement on or after 6 April 2016,

(b) in the case of a cash balance arrangement or defined benefits
arrangement, if there is an increase in the value of the individual’s
rights under the arrangement at any time on or after that date (but
subject to sub-paragraph (5)), and

(c) 25in the case of a hybrid arrangement—

(i) where the benefits that may be provided to or in respect of
the individual under the arrangement include money
purchase benefits other than cash balance benefits, if a
relevant contribution is paid under the arrangement on or
30after 6 April 2016, and

(ii) in any case, if there is an increase in the value of the
individual’s rights under the arrangement at any time on or
after that date (but subject to sub-paragraph (5)).

(2) For the purposes of sub-paragraphs (1)(b) and (c)(ii) and (5) whether there is
35an increase in the value of the individual’s rights under an arrangement (and
its amount if there is) is to be determined—

(a) in the case of a cash balance arrangement (or a hybrid arrangement
under which cash balance benefits may be provided to or in respect
of the individual under the arrangement), by reference to whether
40there is an increase in the amount that would, on the valuation
assumptions, be available for the provision of benefits to or in respect
of the individual (and, if there is, the amount of the increase), and

(b) in the case of a defined benefits arrangement (or a hybrid
arrangement under which defined benefits may be provided to or in
45respect of the individual under the arrangement), by reference to
whether there is an increase in the benefits amount.

(3) For the purposes of sub-paragraph (2)(b) “the benefits amount” is—

(4) Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid
under an arrangement) applies for the purposes of sub-paragraph (1)(a) and
(c)(i).

(5) Increases in the value of the individual’s rights under an arrangement are to
5be ignored for the purposes of sub-paragraph (1)(b) or (c)(ii) if in no tax year
do they exceed the relevant percentage.

(6) The relevant percentage, in relation to a tax year, means—

(a) where the arrangement (or a predecessor arrangement) includes
provision for the value of the rights of the individual to increase
10during the tax year at an annual rate specified in the rules of the
pension scheme (or a predecessor registered pension scheme) on 9
December 2015—

(i) that percentage (or, where more than one arrangement
includes such provision, the higher or highest of the
15percentages specified), plus

(ii) the relevant statutory increase percentage;

(b) otherwise—

(i) the percentage by which the consumer prices index for the
month of September in the previous tax year is higher than it
20was for the September before that (or 0% if it is not higher), or

(ii) if higher, the relevant statutory increase percentage.

(7) In sub-paragraph (6)(a)—

• “predecessor arrangement”, in relation to an arrangement, means
  another arrangement (under the same or another registered pension
  25scheme) from which some or all of the sums or assets held for the
  purposes of the arrangement directly or indirectly derive;

• “predecessor registered pension scheme”, in relation to a registered
  pension scheme, means another registered pension scheme from
  which some or all of the sums or assets held for the purposes of the
  30arrangement under the pension scheme directly or indirectly derive.

(8) In sub-paragraph (6) “the relevant statutory increase percentage”, in relation
to a tax year, means the percentage increase in the value of the individual’s
rights under the arrangement during the tax year so far as it is attributable
solely to one or more of the following—

(a) 35an increase in accordance with section 15 of the Pension Schemes Act
1993 or section 11 of the Pension Schemes (Northern Ireland) Act
1993 (increase of guaranteed minimum where commencement of
guaranteed minimum pension postponed);

(b) a revaluation in accordance with section 16 of the Pension Schemes
40Act 1993 or section 12 of the Pension Schemes (Northern Ireland) Act
1993 (early leavers: revaluation of earnings factors);

(c) a revaluation in accordance with Chapter 2 of Part 4 of the Pension
Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act
1993 (early leavers: revaluation of accrued benefits);

(d) a revaluation in accordance with Chapter 3 of Part 4 of the Pension
5Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act
1993 (early leavers: protection of increases in guaranteed minimum
pensions);

(e) the application of section 67 of the Equality Act 2010 (sex equality
rule for occupational pension schemes).

(9) 10Sub-paragraph (10) applies in relation to a tax year if—

(a) the arrangement is a defined benefits arrangement which is under an
annuity contract treated as a registered pension scheme under
section 153(8) of FA 2004,

(b) the contract provides for the value of the rights of the individual to
15be increased during the tax year at an annual rate specified in the
contract, and

(c) the contract limits the annual rate to the percentage increase in the
retail prices index over a 12 month period specified in the contract.

(10) Sub-paragraph (6)(b)(i) applies as if it referred instead to the annual rate of
20the increase in the value of the rights during the tax year.

(11) For the purposes of sub-paragraph (9)(c) the 12 month period must end
during the 12 month period preceding the month in which the increase in the
value of the rights occurs.

Protection-cessation events: interpretation: “impermissible transfer”

5 25Paragraph 17A of Schedule 36 to FA 2004 (impermissible transfers) applies
for the purposes of paragraph 3(b) but as if—

(a) the references to a relevant existing arrangement were to the
arrangement, and

(b) the reference in sub-paragraph (2) to 5 April 2006 were to 5 April
302016.

Protection-cessation events: interpretation: “permitted transfer”

6 Sub-paragraphs (7) to (8B) of paragraph 12 of Schedule 36 to FA 2004 (when
there is a permitted transfer) apply for the purposes of paragraph 3(c).

Protection-cessation events: interpretation: “permitted circumstances”

7 35Sub-paragraphs (2A) to (2C) of paragraph 12 of Schedule 36 to FA 2004
(“permitted circumstances”) apply for the purposes of paragraph 3(d).

Protection-cessation events: interpretation: relieved non-UK pension schemes

8 (1) Subject to sub-paragraphs (2) to (4), paragraph 3 applies in relation to an
individual who is a relieved member of a relieved non-UK pension scheme
40as if the relieved non-UK pension scheme were a registered pension scheme;
and the other paragraphs of this Part of this Schedule apply accordingly.

(2) Sub-paragraphs (3) and (4) apply for the purposes of paragraph 3(a) (instead
of paragraph 4(1)) in determining if there is benefit accrual in relation to an

individual under an arrangement under a relieved non-UK pension scheme
of which the individual is a relieved member.

(3) There is benefit accrual in relation to the individual under the arrangement
if there is a pension input amount under sections 230 to 237 of FA 2004 (as
5applied by Schedule 34 to that Act) greater than nil in respect of the
arrangement for a tax year; and, in such a case, the benefit accrual is treated
as occurring at the end of the tax year.

(4) There is also benefit accrual in relation to the individual under the
arrangement if—

(a) 10in a tax year there occurs a benefit crystallisation event in relation to
the individual (whether in relation to the arrangement or to any
other arrangement under any pension scheme or otherwise), and

(b) had the tax year ended immediately before the benefit crystallisation
event, there would have been a pension input amount under sections
15230 to 237 of FA 2004 greater than nil in respect of the arrangement
for the tax year,

and, in such a case, the benefit accrual is treated as occurring immediately
before the benefit crystallisation event.

Part 2 20“Individual protection 2016”

The protection

9 (1) Sub-paragraph (2) applies at any particular time on or after 6 April 2016 in
the case of an individual if—

(a) the individual has one or more relevant arrangements (see sub-
25paragraph (3)) on 5 April 2016,

(b) the individual’s relevant amount at the particular time is greater
than £1,000,000 (see sub-paragraphs (4) and (7)),

(c) paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not
make provision for a lifetime enhancement factor in relation to the
30individual,

(d) none of the provisions listed in sub-paragraph (5) applies in the
individual’s case at the particular time, and

(e) at the particular time or any later time, the individual has a reference
number (see Part 3 of this Schedule) for the purposes of sub-
35paragraph (2).

(2) Part 4 of FA 2004 has effect in relation to the individual as if the standard
lifetime allowance were—

(a) if the individual’s relevant amount at the particular time is greater
than £1,250,000, the greater of the standard lifetime allowance and
40£1,250,000, or

(b) otherwise, the greater of the individual’s relevant amount at the
particular time and the standard lifetime allowance.

(3) “Relevant arrangement”, in relation to an individual, means an arrangement
relating to the individual under—

(a) 45a registered pension scheme of which the individual is a member, or

(b) a relieved non-UK pension scheme of which the individual is a
relieved member.

(4) An individual’s “relevant amount” is the sum of amounts A, B, C and D (see
paragraphs 10 to 13, but see also sub-paragraph (7)).

(5) 5The provisions mentioned in sub-paragraph (1)(d) are—

(a) paragraph 12 of Schedule 36 to FA 2004 (enhanced protection);

(b) paragraph 14 of Schedule 18 to FA 2011 (fixed protection 2012);

(c) paragraph 1 of Schedule 22 to FA 2013 (fixed protection 2014);

(d) paragraph 1(2) of Schedule 6 to FA 2014 (individual protection 2014);

(e) 10paragraph 1(2) of this Schedule (fixed protection 2016).

(6) Sub-paragraph (7) applies if rights of an individual under a relevant
arrangement become subject to a pension debit where the transfer day falls
on or after 6 April 2016.

(7) For the purpose of applying sub-paragraph (2) in the case of the individual
15on and after the transfer day, the individual’s relevant amount is reduced (or
further reduced) by the following amount—

(If the formula gives a negative amount, it is to be taken to be nil.)

(8) In sub-paragraphs (6) and (7) “appropriate amount” and “transfer day”, in
25relation to a pension debit, have the same meaning as in section 29 of WRPA
1999 or Article 26 of WRP(NI)O 1999 (as the case may be).

Amount A (pre-6 April 2006 pensions in payment)

10 (1) To determine amount A—

(a) apply sub-paragraph (2) if a benefit crystallisation event has
30occurred in relation to the individual during the period beginning
with 6 April 2006 and ending with 5 April 2016;

(b) otherwise, apply sub-paragraph (6).

(2) If this sub-paragraph is to be applied, amount A is—

(3) Paragraph 20(4) of Schedule 36 to FA 2004 applies for the purposes of the
definition of “ARP” in sub-paragraph (2) (and, for this purpose, in
paragraph 20(4) any reference to “the time” is to be read as a reference to the
time immediately before the benefit crystallisation event occurred).

(4) 5If the time immediately before the benefit crystallisation event occurred falls
before 6 April 2015, in sub-paragraph (3) references to paragraph 20(4) are
to be read as references to that provision as it had effect in relation to benefit
crystallisation events occurring at the time immediately before the benefit
crystallisation event occurred.

(5) 10If more than one benefit crystallisation event has occurred, in sub-
paragraphs (2) to (4) references to the benefit crystallisation event are to be
read as references to the first benefit crystallisation event.

(6) If this sub-paragraph is to be applied, amount A is—

“(a) the annual rate at which any relevant existing pension is payable to
the individual at the end of 5 April 2016, or

(b) if more than one relevant existing pension is payable to the
individual at the end of 5 April 2016, the sum of the annual rates at
20which each of the relevant existing pensions is so payable.”

(7) Paragraph 20(4) of Schedule 36 to FA 2004 applies for the purposes of the
definition of “ARP” in sub-paragraph (6) (and, for this purpose, in
paragraph 20(4) any reference to “the time” is to be read as a reference to 5
April 2016).

(8) 25In this paragraph “relevant existing pension” means (subject to sub-
paragraph (9)) a pension, annuity or right—

(a) which was, at the end of 5 April 2006, a “relevant existing pension”
as defined by paragraph 10(2) and (3) of Schedule 36 to FA 2004, and

(b) to the payment of which the individual had, at the end of 5 April
302006, an actual (rather than a prospective) right.

(9) If—

(a) before 6 April 2016, there was a recognised transfer of sums or assets
representing a relevant existing pension, and

(b) those sums or assets were, after the transfer, applied towards the
35provision of a scheme pension (“the new scheme pension”),

the new scheme pension is also to be a “relevant existing pension” (including
for the purposes of this sub-paragraph).

Amount B (pre-6 April 2016 benefit crystallisation events)

11 (1) To determine amount B—

(a) 40identify each benefit crystallisation event that has occurred in
relation to the individual during the period beginning with 6 April
2006 and ending with 5 April 2016,

(b) determine the amount that was crystallised by each of those benefit
crystallisation events (applying paragraph 14 of Schedule 34 to FA
452004 if relevant), and

(c) multiply each crystallised amount by the following fraction—

(2) Amount B is the sum of the crystallised amounts determined under sub-
paragraph (1)(b) as adjusted under sub-paragraph (1)(c).

Amount C (uncrystallised rights at end of 5 April 2016 under registered pension schemes)

12 Amount C is the total value of the individual’s uncrystallised rights at the
10end of 5 April 2016 under arrangements relating to the individual under
registered pension schemes of which the individual is a member as
determined in accordance with section 212 of FA 2004.

Amount D (uncrystallised rights at end of 5 April 2016 under relieved non-UK schemes)

13 (1) To determine amount D—

(a) 15identify each relieved non-UK pension scheme of which the
individual is a relieved member at the end of 5 April 2016, and

(b) in relation to each such scheme—

(i) assume that a benefit crystallisation event occurs in relation
to the individual at the end of 5 April 2016, and

(ii) 20in accordance with paragraph 14 of Schedule 34 to FA 2004,
determine what the untested portion of the relevant relieved
amount would be immediately before the assumed benefit
crystallisation event.

(2) Amount D is the sum of the untested portions determined under sub-
25paragraph (1)(b)(ii).

Part 3 Reference numbers etc

Issuing of reference numbers for fixed or individual protection 2016

14 (1) An individual has a reference number for the purposes of paragraph 1(2), or
30for the purposes of paragraph 9(2), if a reference number—

(a) has been issued by or on behalf of the Commissioners in respect of
the individual for the purposes concerned, and

(b) has not been withdrawn.

(2) Such a reference number—

(a) 35may include, or consist of, characters other than figures, and

(b) may be issued only if a valid application for its issue is received by
or on behalf of the Commissioners.

(3) A valid application is an application—

(a) made by or on behalf of the individual concerned,

(b) 40made on or after 6 April 2016,

(c) made by means of a digital service provided for the purpose by or on
behalf of the Commissioners, or by other means authorised in a
particular case by an officer of Revenue and Customs,

(d) containing—

(i) 5the following details for the individual and, where the
individual is not the applicant, also for the applicant: title, full
name, full postal address and e-mail address,

(ii) the individual’s date of birth,

(iii) the individual’s national insurance number, or the reason
10why the individual does not qualify for a national insurance
number, and

(iv) a declaration that everything stated in the application is true
and complete to the best of the applicant’s knowledge and
belief,

(e) 15containing also in the case of an application for a reference number
for the purposes of paragraph 1(2)—

(i) a declaration that the conditions specified in paragraph 2 are
met in the individual’s case, and

(ii) a declaration that there has been no protection-cessation
20event (see paragraph 3) in the individual’s case in the period
beginning with 6 April 2016 and ending with the making of
the application, and

(f) containing also in the case of an application for a reference number
for the purposes of paragraph 9(2)—

(i) 25the individual’s relevant amount (see paragraph 9(4) and
(7)),

(ii) amounts A, B, C and D for the individual (see paragraphs 10
to 13),

(iii) if rights of the individual under a relevant arrangement have
30become subject to a relevant pension debit, the appropriate
amount and transfer day for each such pension debit,

(iv) a declaration that the condition in paragraph 9(1)(c) is met in
the individual’s case, and

(v) a declaration that paragraph 1(2) of Schedule 6 to FA 2014
35(“individual protection 2014”) does not apply in the
individual’s case.

(4) Where an application for a reference number for the purposes of paragraph
1(2) or 9(2) is unsuccessful, or is successful on a dormant basis, that must be
notified to the applicant by or on behalf of the Commissioners.

(5) 40In sub-paragraph (3)(f)(iii) and this sub-paragraph—

• “relevant arrangement” has the meaning given by paragraph 9(3);

• “relevant pension debit”, in relation to an application for a reference
  number, means a pension debit where—

  (a)

  the transfer day falls on or after 6 April 2016 and before the
  45day on which the application is made, and

  (b)

  the individual has, before the day on which the application is
  made, received notice under regulation 8(2) or (3) of the
  Pensions on Divorce etc. (Provision of Information)
  Regulations 2000 (S.I. 2000/1048S.I. 2000/1048) relating to discharge of
  50liability in respect of the pension credit corresponding to the
  pension debit;

Finance (No. 2) BillPage 288

• “appropriate amount” and “transfer day”, in relation to a pension debit,
  have the same meaning as in paragraph 9(6) and (7) (see paragraph
  9(8)).

(6) Sub-paragraph (3)(c) is not to be read as requiring a digital service to be
5provided and available for the purpose referred to.

(7) For the purposes of this Part of this Schedule, an application for a reference
number for the purposes of paragraph 1(2) is successful on a dormant basis
if the decision on the application is that—

(a) the application would have been unconditionally successful but for
10the fact that paragraph 1(2) of Schedule 6 to FA 2014 (“individual
protection 2014”) applies in the case of the individual concerned, and

(b) a reference number for the purposes of paragraph 1(2) will be issued
in response to the application but only when paragraph 1(2) of
Schedule 6 to FA 2014 does not apply in the individual’s case.

(8) 15For the purposes of this Part of this Schedule, an application for a reference
number for the purposes of paragraph 9(2) is successful on a dormant basis
if the decision on the application is that—

(a) the application would have been unconditionally successful but for
the fact that a prior provision applies in the case of the individual
20concerned, and

(b) a reference number for the purposes of paragraph 9(2) will be issued
in response to the application but only when no prior provision
applies in the individual’s case.

(9) For the purposes of sub-paragraph (8), the prior provisions are—

(a) 25paragraph 12 of Schedule 36 to FA 2004 (enhanced protection),

(b) paragraph 14 of Schedule 18 to FA 2011 (fixed protection 2012),

(c) paragraph 1 of Schedule 22 to FA 2013 (fixed protection 2014), and

(d) paragraph 1(2) of this Schedule (fixed protection 2016).

Withdrawal of reference numbers

15 (1) 30This paragraph applies where a reference number for the purposes of
paragraph 1(2) or 9(2) has been issued by or on behalf of the Commissioners
in respect of an individual.

(2) The number may be withdrawn by an officer of Revenue and Customs.

(3) The number may be withdrawn only if—

(a) 35something contained in the application for the number was incorrect,
or

(b) where the number was for the purposes of paragraph 1(2)—

(i) there has been a protection-cessation event (see paragraph 3)
in the individual’s case since the making of the application,
40or

(ii) paragraph 1(2) of Schedule 6 to FA 2014 has come to apply in
the individual’s case, or

(c) where the number was for the purposes of paragraph 9(2)—

(i) a provision listed in paragraph 9(5) has come to apply in the
45individual’s case, or

(ii) paragraph 9(2) has ceased to apply in the individual’s case as
a result of the operation of paragraph 9(7), or

(d) the individual—

(i) has been given a notice under paragraph 1 of Schedule 36 to
FA 2008 (information and inspection powers: taxpayer
notice) in connection with (as the case may be) Part 1 or 2 of
5this Schedule, and

(ii) fails to comply with the notice within the period specified in
the notice.

(4) Where the number is withdrawn—

(a) notice of the withdrawal, and

(b) 10reasons for the withdrawal,

are to be given by an officer of Revenue and Customs to the individual.

(5) Where the number is withdrawn, the effect of the withdrawal is as follows—

(a) in the case of withdrawal in reliance on sub-paragraph (3)(a), the
number is treated as never having been issued,

(b) 15in the case of withdrawal in reliance on paragraph (b) or (c) of sub-
paragraph (3), the number is treated as having been withdrawn at
the time of the event mentioned in sub-paragraph (i) or (ii) of that
paragraph, and

(c) in the case of withdrawal in reliance on sub-paragraph (3)(d), the
20number is treated as having been withdrawn at the time specified in
the notice of the withdrawal as the effective time of the withdrawal,
which may be any time not earlier than the time of issue of the
number.

Appeals against non-issue or withdrawal of reference numbers

16 (1) 25Where—

(a) an application is made for a reference number for the purposes of
paragraph 1(2) or 9(2) in respect of an individual, and

(b) the application is unsuccessful (see sub-paragraph (7)),

the individual may appeal against the decision on the application.

(2) 30Where a reference number issued in respect of an individual for the
purposes of paragraph 1(2) or 9(2) is withdrawn, the individual may appeal
against the withdrawal.

(3) Where a reference number issued in respect of an individual for the
purposes of paragraph 1(2) or 9(2) is withdrawn in reliance on paragraph
3515(3)(d), the individual may appeal against the time specified (in the notice
of the withdrawal) as the effective time of the withdrawal.

(4) Where an appeal under sub-paragraph (1) is notified to the tribunal, the
tribunal—

(a) must allow the appeal if satisfied—

(i) 40that the application was a valid application,

(ii) that everything in the application was correct, and

(iii) that, at the time of deciding the appeal, paragraph 15(3)(b),
(c) or (d) does not authorise withdrawal of the requested
number (assuming it had been issued), and

(b) 45must otherwise dismiss the appeal.