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

(5) Where an appeal under sub-paragraph (2) is notified to the tribunal, the
tribunal—

(a) must allow the appeal if satisfied that the withdrawal was not
authorised by paragraph 15(3), and

(b) 5must otherwise dismiss the appeal.

(6) Where an appeal under sub-paragraph (3) is notified to the tribunal, the
tribunal must decide whether it was just and reasonable to specify the
particular time specified and—

(a) if the tribunal decides that it was, the tribunal must dismiss the
10appeal, and

(b) otherwise—

(i) the tribunal must decide what time it would have been just
and reasonable to specify, and

(ii) the withdrawal has effect as if the notice of the withdrawal
15had specified the time decided by the tribunal.

(7) Notice of an appeal under this paragraph must be given to Her Majesty’s
Revenue and Customs before the end of 30 days beginning with the date on
which notice under paragraph 14(4) or 15(4) (as the case may be) is given.

(8) In this paragraph “the tribunal” means the First-tier Tribunal or, where
20determined by or under Tribunal Procedure Rules, the Upper Tribunal.

(9) The references in sub-paragraph (1) and paragraph 17(3)(b)(ii) to an
application being unsuccessful do not include a case where an application
for a reference number for the purposes of paragraph 1(2) or 9(2) is
successful on a dormant basis (see paragraph 14(7) and (8)).

25Notification of subsequent protection-cessation events

17 (1) Sub-paragraph (2) applies if, in the case of an individual, there is a
protection-cessation event (see paragraphs 3 to 8) at a time when—

(a) the individual has a reference number for the purposes of paragraph
1(2),

(b) 30there is a pending application for a reference number for those
purposes in respect of the individual, or

(c) an appeal under paragraph 16(2) or (3) is in progress in connection
with withdrawal of a reference number issued for those purposes in
respect of the individual.

(2) 35The individual—

(a) must notify the Commissioners of the event, and

(b) must do so—

(i) before the end of 90 days beginning with the day on which
the individual could first reasonably be expected to have
40known that the event had occurred, and

(ii) 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.

(3) 45For the purposes of this paragraph—

(a) an application is pending if—

(i) it has been made,

(ii) no reference number has been issued in response to the
application, and

(iii) the applicant has not been notified that the application has
been unsuccessful;

(b) 5an application is also pending if—

(i) it has been made,

(ii) it has been unsuccessful, and

(iii) an appeal under paragraph 16(1) is in progress against the
decision on the application;

(c) 10an appeal under paragraph 16(1), (2) or (3) is in progress until one of
the following happens—

(i) it, or any further appeal, is withdrawn, or

(ii) it and any further appeal brought have been determined, and
there is no prospect of further appeal.

15Notification of subsequent pension debits

18 (1) Sub-paragraph (2) applies if an individual receives a discharge notice related
to a pension debit at a time when—

(a) the individual has a reference number for the purposes of paragraph
9(2),

(b) 20there is a pending application for a reference number for those
purposes in respect of the individual, or

(c) an appeal under paragraph 16(2) or (3) is in progress in connection
with withdrawal of a reference number issued for those purposes in
respect of the individual.

(2) 25The individual—

(a) must notify the Commissioners of the appropriate amount and
transfer day for the pension debit, and

(b) must do so—

(i) before the end of 60 days beginning with the date of the
30discharge notice related to the pension debit, and

(ii) 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.

(3) 35For the purposes of this paragraph—

(a) a notice is a discharge notice related to a pension debit if it is 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 liability in respect of the pension credit corresponding
40to the pension debit;

(b) an application is pending if—

(i) it has been made,

(ii) no reference number has been issued in response to the
application,

(iii) 45the applicant has not been notified that the application has
been unsuccessful, and

(iv) the applicant has not been notified that the application has
been successful on a dormant basis (see paragraph 14(7));

(c) an application is also pending if—

(i) it has been made,

(ii) it has been unsuccessful, and

(iii) an appeal under paragraph 16(1) is in progress against the
5decision on the application;

(d) an appeal under paragraph 16(1), (2) or (3) is in progress until one of
the following happens—

(i) it, or any further appeal, is withdrawn, or

(ii) it and any further appeal brought have been determined, and
10there is no prospect of further appeal.

Personal representatives

19 If an individual dies—

(a) anything which could have been done under or by virtue of this Part
of this Schedule by the individual may be done by the individual’s
15personal representatives,

(b) paragraph 14(3)(d)(ii) has effect in relation to an application made in
respect of the individual after the individual’s death as if it also
required a valid application to contain the individual’s date of death,
and

(c) 20any notice or reasons given under paragraph 15(4) after the
individual’s death are to be given to the individual’s personal
representatives.

Penalties for non-supply, or fraudulent etc supply, of information under paragraph 17 or 18

20 In column 2 of the Table in section 98 of TMA 1970 (provisions about
25information where non-compliance etc attracts penalties), at the appropriate
place insert—

Part 4 30Information

Preservation of records in connection with individual protection 2016

21 If an individual is issued with a reference number for the purposes of
paragraph 9(2), the individual must preserve, for the period of 6 years
beginning with the date the application for the reference number was made,
35all such records as were required for the purpose of enabling the
individual’s relevant amount (see paragraph 9), and amounts A, B, C and D
for the individual (see paragraphs 10 to 13), to be correctly calculated.

Amendments of regulations

22 (1) The Registered Pension Schemes (Provision of Information) Regulations
402006 (S.I. 2006/567S.I. 2006/567) are amended in accordance with paragraphs 23 to 26.

(2) The amendments made by those paragraphs are to be treated as having been
made by the Commissioners under such of the powers cited in the
instrument containing the Regulations as are applicable.

23 In regulation 2(1) (interpretation)—

(a) 5after the entry for “fixed protection 2014” insert—

• “““fixed protection 2016” means protection under
  paragraph 1(2) of Schedule 4 to FA 2016;”, and”

(b) after the entry for “individual protection 2014” insert—

• “““individual protection 2016” means protection under
  10paragraph 9(2) of Schedule 4 to FA 2016;”.

24 (1) In the table in regulation 3(1) (provision of event reports by scheme
administrators to HM Revenue and Customs), the entry for reportable event
6 (report where benefit crystallisation event occurs in relation to member of
scheme) is amended as follows.

(2) 15In column 1 of the entry, in paragraph (b)—

(a) omit the “or” at the end of sub-paragraph (iv), and

(b) after sub-paragraph (v) insert “, or

(vi) fixed protection 2016 or individual
protection 2016.”

(3) 20In column 2 of the entry—

(a) in the words before paragraph (a), before “the Commissioners” insert
“or on behalf of”,

(b) omit the “or” at the end of paragraph (c), and

(c) after paragraph (d) insert “, or

(e) 25Schedule 4 to the Finance Act 2016 (where the
member relies on fixed protection 2016 or individual
protection 2016).”

(4) In the heading of the entry, for the words after “Benefit crystallisation events
and” substitute “non-standard lifetime allowances”.

25 (1) 30Regulation 11 (information provided to scheme administrator by member
intending to rely on transitional protection in connection with lifetime
allowance) is amended as follows.

(2) In paragraph (1)—

(a) omit the “or” at the end of sub-paragraph (b),

(b) 35after sub-paragraph (c) (but before the closing words of paragraph
(1)) insert “, or

(d) fixed protection 2016 by virtue of Part 1 of Schedule 4
to the Finance Act 2016,”, and”

(c) in those closing words—

(i) 40before “the Commissioners” insert “or on behalf of”, and

(ii) before “in respect of that entitlement” insert “or Schedule 4 to
the Finance Act 2016”.

(3) After paragraph (2) insert—

“(3) If the member of a registered pension scheme intends to rely on
45individual protection 2016 by virtue of Part 2 of Schedule 4 to the

Finance Act 2016, the member must notify the scheme administrator
of—

(a) the reference number in respect of the member issued by or
on behalf of the Commissioners for the purposes of
5paragraph 9(2) of that Schedule, and

(b) the member’s relevant amount calculated in accordance with
Part 2 of that Schedule.”

(4) In the heading—

(a) for the “or” substitute a comma, and

(b) 10at the end insert “, fixed protection 2016 or individual protection
2016”.

26 After regulation 14B insert—

“14C Individual protection 2016: provision of information by scheme
administrator to member on request

(1) 15Where—

(a) an individual is a member of a registered pension scheme on
5 April 2016,

(b) the individual makes a written request to the scheme
administrator for the information mentioned in paragraph
20(2), and

(c) the request is received by the scheme administrator before 6
April 2020,

the scheme administrator must provide the individual with the
information within 3 months following receipt of the request.

(2) 25The information is such information relating to the member’s rights
under the scheme as is necessary for calculating, in accordance with
Part 2 of Schedule 4 to the Finance Act 2016 (individual protection
2016), the member’s relevant amount for the purposes of paragraph
9(2) of that Schedule.”

27 30In consequence of paragraph 24(4), in each of—

(a) the Registered Pension Schemes (Provision of Information)
(Amendment) Regulations 2013 (S.I. 2013/1742S.I. 2013/1742), and

(b) the Registered Pension Schemes (Provision of Information)
(Amendment) Regulations 2014 (S.I. 2014/1843S.I. 2014/1843),

35omit regulation 4(2)(a).

Part 5 Amendments in connection with protection of pre-6 April 2006 rights

28 (1) In Part 1 of Schedule 29 to FA 2004 (pension schemes: interpretation of the
lump sum rule), in paragraph 2 (permitted maximum amount of pension
40commencement lump sums, calculated in certain cases by deducting
adjusted value of previously crystallised amounts from current standard
lifetime allowance), in sub-paragraph (10) (modified adjustments where
member has protection under paragraph 7 or 12 of Schedule 36 by reference
to pre-6 April 2006 rights), after “have effect” insert “—

(a) 45where the member becomes entitled to the lump sum on or
after 6 April 2014, as if PSLA in the case of any previous

benefit crystallisation event which occurs on or after 6
April 2014 were £1,500,000 if that is greater than PSLA in
that case, and

(b) ”.

(2) 5In paragraph 28(3) of Schedule 36 to FA 2004 (transitional provision for pre-
6 April 2006 rights: modified version of paragraph 2 of Schedule 29 that
applies in certain cases), in the sub-paragraph (7) treated as substituted in
paragraph 2 of Schedule 29 to FA 2004, in the definition of “PSLA”, after
“became entitled to the lump sum” insert “if that occurred before 6 April
102012 but, if that occurred on or after 6 April 2012, PSLA is the greater of
£1,800,000 and the standard lifetime allowance at the time the individual
became entitled to the lump sum”.

(3) The amendment made by sub-paragraph (1) is treated as having come into
force on 6 April 2014.

(4) 15The amendment made by sub-paragraph (2) is treated as having come into
force on 6 April 2012.

Part 6 Interpretation and regulations

Interpretation of Parts 1, 2 and 3

29 (1) 20Expressions used in Part 1, 2 or 3 of this Schedule, and in Part 4 of FA 2004
(pension schemes), have the same meaning in that Part of this Schedule as in
that Part of that Act.

(2) In particular, references to a relieved non-UK pension scheme or a relieved
member of such a scheme are to be read in accordance with paragraphs 13(3)
25and (4) and 18 of Schedule 34 to FA 2004 (application of lifetime allowance
charge provisions to members of overseas pension schemes).

Interpretation of Parts 3 and 4 and this Part

30 In Parts 3 and 4, and this Part, of this Schedule “the Commissioners” means
the Commissioners for Her Majesty’s Revenue and Customs.

30Regulations

31 (1) The Commissioners may by regulations amend Part 1, 2 or 3 of this
Schedule.

(2) Regulations under this paragraph may (for example)—

(a) add to the cases in which paragraph 1(2) is to apply or is to cease to
35apply;

(b) add to the cases in which paragraph 9(2) is to apply.

(3) Regulations under this paragraph may include provision having effect in
relation to a time before the regulations are made, but—

(a) the time must not be earlier than 6 April 2016, and

(b) 40the provision must not increase any person’s liability to tax.

(4) Regulations under this paragraph may include—

(a) supplementary or incidental provision;

(b) consequential amendments of the Table in section 98 of TMA 1970
(information requirements: penalties).

(5) Power to make regulations under this paragraph is exercisable by statutory
5instrument.

(6) A statutory instrument containing regulations under this paragraph is
subject to annulment in pursuance of a resolution of the House of Commons.

Section 22

SCHEDULE 5 Pension flexibility

10Serious ill-health lump sums

1 (1) Part 4 of FA 2004 (registered pension schemes etc) is amended as follows.

(2) Omit section 205A (serious ill-health lump sum charge on payment to
member who has reached 75).

(3) In Part 1 of Schedule 29 (interpretation of lump sum rule), paragraph 4
15(serious ill-health lump sums) is amended in accordance with sub-
paragraphs (4) and (5).

(4) In sub-paragraph (1) (meaning of “serious ill-heath lump sum”)—

(a) at the end of paragraph (b) insert “and”, and

(b) for paragraphs (c) and (d) substitute—

“(ca) 20either—

(i) it is paid in respect of an uncrystallised
arrangement, and it extinguishes the
member’s entitlement to benefits under the
arrangement, or

(ii) 25it is paid in respect of uncrystallised rights
of the member under an arrangement other
than an uncrystallised arrangement, and it
extinguishes the member’s uncrystallised
rights under the arrangement.”

(5) 30After sub-paragraph (2) insert—

“(2A) In subsection (1)(ca)(ii) “uncrystallised rights”, in relation to the
member, means rights of the member that are uncrystallised rights
as defined by section 212(1) and (2).”

2 (1) Section 636A of ITEPA 2003 (exemption for certain lump sums under
35registered pension schemes) is amended as follows.

(2) In the heading, for “Exemption” substitute “Exemptions and liabilities”.

(3) For subsection (3A) (serious ill-health lump sum paid to member who has
reached 75 is taxed only under section 205A of FA 2004) substitute—

“(3A) Section 579A applies in relation to a serious ill-health lump sum
40which is paid under a registered pension scheme to a member who

has reached the age of 75 as it applies to any pension under a
registered pension scheme.”

3 (1) In consequence of the amendment made by paragraph 1(2), in Part 4 of FA
2004—

(a) 5in section 164(2)(b) omit “, the serious ill-health lump sum charge”,

(b) omit section 272A(7)(a)(ii),

(c) in section 280(2) omit the entry for “serious ill-health lump sum
charge”, and

(d) in Schedule 34—

(i) 10omit paragraph 1(3)(ca), and

(ii) in paragraph 5 omit “, serious ill-health lump sum charge”.

(2) In consequence of the amendment made by paragraph 1(2), in section 30(1)
of ITA 2007 omit the entry for section 205A of FA 2004.

(3) In consequence of the amendments made by paragraphs 1 and 2 and sub-
15paragraphs (1) and (2)—

(a) in Schedule 16 to FA 2011, omit paragraphs 28(2)(a), 40, 42(3), 63,
77(4), 81(2) and (4)(b) and 83, and

(b) omit section 2(4) of the Taxation of Pensions Act 2014.

4 The amendments made by paragraphs 1 to 3 have effect in relation to lump
20sums paid after the day on which this Act is passed.

Charity lump sum death benefits

5 (1) In paragraph 18(1A) of Schedule 29 to FA 2004 (when lump sum paid out of
uncrystallised funds is charity lump sum death benefit), omit paragraph (a)
(member must have died after reaching 75).

(2) 25The amendment made by sub-paragraph (1) has effect in relation to lump
sums paid after the day on which this Act is passed.

Dependants’ flexi-access drawdown funds

6 (1) Part 2 of Schedule 28 to FA 2004 (interpretation of pension death benefit
rules) is amended as follows.

(2) 30In paragraph 15 (meaning of “dependant”), after sub-paragraph (2) insert—

“(2A) A child of the member is a dependant of the member if the child—

(a) has reached the age of 23, and

(b) is not within sub-paragraph (2)(b).

(2B) But this paragraph, so far as it has effect for the purpose of
35determining the meaning of “dependant”—

(a) in paragraphs 16 to 17 and 27A, and

(b) in paragraph 18 of Schedule 29,

has effect with the omission of sub-paragraph (2A).”

(3) In paragraph 22 (meaning of “dependant’s drawdown pension fund”)—

(a) 40in sub-paragraph (2)(a) and (aa) omit “to the dependant”, and

(b) in sub-paragraph (3), after “representing a” insert “person’s”.

(4) The amendments made by this paragraph come into force on the day after
the day on which this Act is passed.

(5) The sub-paragraphs inserted by sub-paragraph (2)—

(a) apply for the purpose of determining whether a payment of an
5annuity is a payment of a dependants’ short-term annuity only if the
annuity is purchased after the day on which this Act is passed, and

(b) apply for the purpose of determining whether a payment to a person
is a payment of dependants’ income withdrawal if, but only if, the
person reaches the age of 23 after the day on which this Act is passed.

(6) 10In sub-paragraph (5) “dependants’ short-term annuity” and “dependants’
income withdrawal” have the same meaning as in Part 4 of FA 2004.

Trivial commutation lump sum

7 (1) Paragraph 7 of Schedule 29 to FA 2004 (interpretation of lump sum rule:
meaning of “trivial commutation lump sum”) is amended as follows.

(2) 15In sub-paragraph (1)(aa) (sum must be paid in respect of a defined benefits
arrangement), after “arrangement,” insert “or in respect of a scheme pension
payable by the scheme administrator to which the member has become
entitled under a money purchase arrangement (an “in-payment money-
purchase in-house scheme pension”), or partly in respect of the former and
20partly in respect of the latter,”.

(3) In sub-paragraph (1)(d) (sum must extinguish member’s entitlement to
defined benefits under the scheme), after “defined benefits” insert “, and any
entitlement to payments of in-payment money-purchase in-house scheme
pensions,”.

8 (1) 25Section 636B of ITEPA 2003 (taxation of trivial commutation, and winding-
up, lump sums) is amended as follows.

(2) In subsection (3) (taxation of lump sum where member has uncrystallised
rights under the pension scheme)—

(a) in the words before paragraph (a) omit “(within the meaning of
30section 212 of FA 2004)”, and

(b) in paragraph (b), for “the uncrystallised rights calculated in
accordance with that section” substitute “any uncrystallised rights
extinguished by the lump sum”.

(3) After subsection (4) insert—

“(5) 35In this section “uncrystallised rights” has the same meaning as in
section 212 of FA 2004; and the value for the purposes of this section
of any uncrystallised rights is to be calculated in accordance with
that section.”

9 The amendments made by paragraphs 7 and 8 have effect in relation to lump
40sums paid after the day on which this Act is passed.

Top-up of dependants’ death benefits

10 (1) In paragraph 15 of Schedule 29 to FA 2004 (uncrystallised funds lump sum
death benefits), after sub-paragraph (2) insert—

“(2A) Where—

(a) the arrangement is a cash balance arrangement,

(b) under the arrangement, a dependant of the member is
entitled to be paid after the member’s death an amount by
way of a lump sum,

(c) 5the dependant’s entitlement to a lump sum of that amount
under the arrangement comes into being at a time no later
than the member’s death,

(d) such of the sums and assets held for the purposes of the
arrangement immediately the member’s death as are held
10for the purpose of meeting the liability to pay the lump
sum are insufficient for that purpose (including where that
is because none are held for that purpose), and

(e) a person who was an employer in relation to the member
pays a contribution to the scheme—

(i) 15for or towards making good that insufficiency, and

(ii) of no more than is needed for making good the
insufficiency,

the sums and assets held for the purposes of the arrangement that
represent the contribution are to be treated as “relevant
20uncrystallised funds” for the purposes of this paragraph.”

(2) The amendment made by sub-paragraph (1) has effect in relation to
contributions paid after the day on which this Act is passed.

Inheritance tax as respects cash alternatives to annuities for dependants etc

11 (1) In section 152 of the Inheritance Tax Act 1984 (where annuity payable on
25person’ death to dependant etc, person treated as not beneficially entitled to
sum that could have been paid to personal representatives instead of being
used for annuity), for “or dependant” substitute “, dependant or nominee”.

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

(a) is to be treated as having come into force on 6 April 2015, and

(b) 30has effect where the person on whose death an annuity is payable
dies on or after that date.

Section 39

SCHEDULE 6 Deduction of income tax at source

Part 1 35Abolition of duty to deduct tax from interest on certain investments

1 In Chapter 2 of Part 15 of ITA 2007 (deduction of income tax at source by
deposit-takers and building societies) omit—

(a) section 851 (duty to deduct when making payment of interest on
relevant investment), and

(b) 40the italic heading preceding it.