Finance Bill (HC Bill 47)

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Income tax: limited exemption for sporting testimonial payments

2 After section 306A of ITEPA 2003 (exemption for carers) insert—

Professional sportspersons

306B Limited exemption for sporting testimonial payments

(1) 5This section applies to any sporting testimonial payments which
are—

(a) made out of money raised by a sporting testimonial (“the
sporting testimonial”), and

(b) treated by virtue of section 226E as earnings of a person (“S”).

(2) 10No liability to income tax arises in respect of sporting testimonial
payments to which this section applies.

(3) Subsection (2) has effect subject to and in accordance with the
following provisions.

(4) It only applies—

(a) 15if the controller of the relevant event or activity (or of all the
relevant events or activities in a series) constituting the
sporting testimonial is an independent person,

(b) if S has not already benefitted from an exemption under this
section in relation to one or more sporting testimonial
20payments made out of money raised by another sporting
testimonial, and

(c) where the sporting testimonial consists of a series of relevant
events or activities taking place over more than a year, if the
sporting testimonial payment is made out of money raised by
25events or activities taking place within the period of one year
beginning with the day on which the first event or activity in
the series took place.

(5) It only applies to the first £100,000 of sporting testimonial payments
made out of money raised by the sporting testimonial.

(6) 30If sporting testimonial payments are made (out of money raised by
the sporting testimonial) in two or more tax years, any part of the
exempt amount that is not used in the first of those years is to be
carried forward to the next tax year (and so on).

(7) This section applies to sporting testimonial payments made to or to
35the order of the personal representatives of S (where S has died) but
only if the payments are made within the period of 24 months
beginning with the date of death.

(8) In subsection (4)(a) “independent person” means a person who is not
(or where the controller is a committee, a committee none of whose
40members are)—

(a) S or a person connected with S,

(b) an employer or former employer of S or a person connected
with an employer or former employer of S, or

(c) a person acting for or on behalf of a person mentioned in
45paragraph (a) or (b).

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(9) If the first relevant event or activity in a series took place before 6
April 2017, subsection (4)(c) has effect as if it referred to the year
beginning with 6 April 2017.

(10) Section 993 of ITA 2007 (meaning of “connected” persons) has effect
5for the purposes of this section.

(11) Terms used in this section and section 226E have the same meaning
as in that section.”

Corporation tax: deductions from total profits for sporting testimonial payments and associated
payments

3 10After section 996 of CTA 2010 (miscellaneous provisions: use of different
accounting periods within a group of companies) insert—

“Sporting testimonial payments and associated payments

996A Deductions from total profits for sporting testimonial payments and
associated payments

(1) 15This section applies where a company, in any accounting period—

(a) is the controller of a relevant event or activity that constitutes
or is part of a sporting testimonial, and

(b) makes a relevant sporting testimonial payment out of money
raised by the sporting testimonial.

(2) 20In this section “relevant sporting testimonial payment” means a
sporting testimonial payment that is (or so much of it as is) made out
of proceeds of a relevant event or activity which are brought into
account in determining the company’s total profits or any
component of its total profits.

(3) 25In calculating the amount of corporation tax chargeable for the
accounting period, an amount equal to the aggregate of the following
amounts is allowed as a deduction from the company’s total
profits—

(a) so much of the relevant sporting testimonial payment as is
30paid to or for the benefit of the sportsperson to whom the
sporting testimonial relates,

(b) any income tax or employee’s national insurance
contributions deducted at source from that payment, and

(c) any employer’s national insurance contributions relating to
35that payment.

(4) The amount is deducted—

(a) from the company’s total profits for the accounting period in
which the relevant sporting testimonial payment is made,
and

(b) 40if a claim by the company for relief so requires, previous
accounting periods.

(5) A claim under subsection (4)(b) must be made within 2 years after
the end of the accounting period in which the relevant sporting
testimonial payment is made.

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(6) If for an accounting period deductions under subsection (4) are to be
made for relevant sporting testimonial payments made in more than
one accounting period, the deductions are to be made in the order in
which the payments were made (starting with the earliest of them).

(7) 5The amount of the deduction to be made under subsection (4) for an
accounting period is the amount that cannot be deducted under that
subsection for a subsequent accounting period.

(8) The amount of the deduction to be made for any accounting period
is limited to the amount that reduces the company’s taxable total
10profits for that period to nil.

(9) The deduction is only available if and to the extent that the amount
mentioned in subsection (3) is not otherwise deductible in
calculating the company’s total profits or any component of its total
profits.

(10) 15Terms used in this section and in section 226E of ITEPA 2003 have
the same meaning as in that section.”

Application of this Schedule

4 (1) The amendments made by this Schedule have effect in relation to a sporting
testimonial payment made out of money raised by a sporting testimonial
20if—

(a) the sporting testimonial was made public on or after 25 November
2015, and

(b) the payment is made out of money raised by one or more relevant
events or activities which take place on or after 6 April 2017.

(2) 25Terms used in sub-paragraph (1) and section 226E of ITEPA 2003 (as inserted
by paragraph 1) have the same meaning as in that section.

SCHEDULE 3 Section 16 Employee share schemes: minor amendments

Enterprise management incentives and employee ownership trusts

1 (1) 30In section 534 of ITEPA 2003 (disqualifying events relating to relevant
company), at the end insert—

(7) Subsection (1)(a) and (b) do not apply where the relevant company
is subject to an employee-ownership trust (within the meaning of
paragraph 27(4) to (6) of Schedule 2).”

(2) 35The amendment made by this paragraph is treated as having come into force
on 1 October 2014.

Share incentive plans

2 (1) Schedule 2 to ITEPA 2003 (share incentive plans) is amended as follows.

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(2) In paragraph 1 (introduction), after sub-paragraph (4) insert—

(5) Sub-paragraph (A1) is also subject to Part 10A of this Schedule
(disqualifying events).”

(3) After Part 10 insert—

5“Part 10A Disqualifying events

(1) A SIP ceases to be a Schedule 2 SIP if (and with effect from the time
when) a disqualifying event occurs.

(2) The following are disqualifying events—

(a) 10an alteration being made in—

(i) the share capital of a company any of whose shares
are subject to the plan trust, or

(ii) the rights attaching to any shares of such a
company,

15that materially affects the value of the shares that are
subject to the plan trust;

(b) shares of a class of shares that is subject to the plan trust
receiving different treatment in any respect from the other
shares of that class.

(3) 20Sub-paragraph (2)(b) applies in particular to different treatment in
respect of—

(a) the dividend payable,

(b) repayment, or

(c) any offer of substituted or additional shares, securities or
25rights of any description in respect of the shares.

(4) Sub-paragraph (2)(b) does not however apply where the
difference in treatment arises from—

(a) a key feature of the plan, or

(b) any of the participants’ shares being subject to any
30restriction.

(5) Nor does sub-paragraph (2)(b) apply as a result only of the fact
that shares which have been newly issued receive, in respect of
dividends payable with respect to a period beginning before the
date on which they were issued, treatment less favourable than
35that accorded to shares issued before that date.

(6) For the purposes of this paragraph a “key feature” of a plan is a
provision of it that is necessary to meet the requirements of this
Schedule.

(7) This paragraph does not affect the operation of the SIP code in
40relation to shares awarded to participants in the plan before the
disqualifying event occurred.”

(4) The amendments made by this paragraph have effect in relation to
disqualifying events occurring on or after the day on which this Act is
passed.

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Notification of plans and schemes to HMRC

3 (1) In Schedule 2 to ITEPA 2003 (share incentive plans), Part 10 (notification of
plans etc) is amended as follows.

(2) In paragraph 81A (notice of SIP to be given to HMRC), after sub-paragraph
5(5) insert—

(5A) Sub-paragraph (5) does not apply if the company satisfies HMRC
(or, on an appeal under paragraph 81K, the tribunal) that there is
a reasonable excuse for failing to give notice on or before the initial
notification deadline.

(5B) 10Paragraph 81C(9) (what constitutes a reasonable excuse) applies
for the purposes of sub-paragraph (5A).

(5C) Where HMRC are required under sub-paragraph (5A) to consider
whether there was a reasonable excuse, HMRC must notify the
company of their decision within the period of 45 days beginning
15with the day on which HMRC received the company’s request to
consider the excuse.

(5D) Where HMRC are required to notify the company as specified in
sub-paragraph (5C) but do not do so—

(a) HMRC are to be treated as having decided that there was
20no reasonable excuse, and

(b) HMRC must notify the company of the decision which
they are treated as having made.”

(3) In paragraph 81K (appeals)—

(a) at the beginning insert—

(A1) 25The company may appeal against a decision of HMRC
under paragraph 81A(5A) that there was no reasonable
excuse for its failure to give notice on or before the initial
notification deadline.”;

(b) in sub-paragraph (6), before paragraph (a) insert—

(za) 30in the case of an appeal under sub-paragraph (A1),
notice of HMRC’s decision is given to the
company;”;

(c) in sub-paragraph (7), after “sub-paragraph” insert “(A1),”.

(4) The amendments made by this paragraph have effect in relation to notices
35given under paragraph 81A of Schedule 2 to ITEPA 2003 on or after 6 April
2016.

4 (1) In Schedule 3 to ITEPA 2003 (SAYE option schemes), Part 8 (notification of
schemes etc) is amended as follows.

(2) In paragraph 40A (notice of scheme to be given to HMRC), after sub-
40paragraph (5) insert—

(5A) Sub-paragraph (5) does not apply if the scheme organiser satisfies
HMRC (or, on an appeal under paragraph 40K, the tribunal) that
there is a reasonable excuse for the failure to give notice on or
before the initial notification deadline.

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(5B) Paragraph 40C(9) (what constitutes a reasonable excuse) applies
for the purposes of sub-paragraph (5A).

(5C) Where HMRC are required under sub-paragraph (5A) to consider
whether there was a reasonable excuse, HMRC must notify the
5scheme organiser of their decision within the period of 45 days
beginning with the day on which HMRC received the scheme
organiser’s request to consider the excuse.

(5D) Where HMRC are required to notify the scheme organiser as
specified in sub-paragraph (5C) but do not do so—

(a) 10HMRC are to be treated as having decided that there was
no reasonable excuse, and

(b) HMRC must notify the scheme organiser of the decision
which they are treated as having made.”

(3) In paragraph 40K (appeals)—

(a) 15at the beginning insert—

(A1) The scheme organiser may appeal against a decision of
HMRC under paragraph 40A(5A) that there was no
reasonable excuse for the failure to give notice on or before
the initial notification deadline.”;

(b) 20in sub-paragraph (5), before paragraph (a) insert—

(za) in the case of an appeal under sub-paragraph (A1),
notice of HMRC’s decision is given to the scheme
organiser;”;

(c) in sub-paragraph (6), after “sub-paragraph” insert “(A1),”.

(4) 25The amendments made by this paragraph have effect in relation to notices
given under paragraph 40A of Schedule 3 to ITEPA 2003 on or after 6 April
2016.

5 (1) In Schedule 4 to ITEPA 2003 (CSOP schemes), Part 7 (notification of schemes
etc) is amended as follows.

(2) 30In paragraph 28A (notice of scheme to be given to HMRC), after sub-
paragraph (5) insert—

(5A) Sub-paragraph (5) does not apply if the scheme organiser satisfies
HMRC (or, on an appeal under paragraph 28K, the tribunal) that
there is a reasonable excuse for the failure to give notice on or
35before the initial notification deadline.

(5B) Paragraph 28C(9) (what constitutes a reasonable excuse) applies
for the purposes of sub-paragraph (5A).

(5C) Where HMRC are required under sub-paragraph (5A) to consider
whether there was a reasonable excuse, HMRC must notify the
40scheme organiser of their decision within the period of 45 days
beginning with the day on which HMRC received the scheme
organiser’s request to consider the excuse.

(5D) Where HMRC are required to notify the scheme organiser as
specified in sub-paragraph (5C) but do not do so—

(a) 45HMRC are to be treated as having decided that there was
no reasonable excuse, and

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(b) HMRC must notify the scheme organiser of the decision
which they are treated as having made.”

(3) In paragraph 28K (appeals)—

(a) at the beginning insert—

(A1) 5The scheme organiser may appeal against a decision of
HMRC under paragraph 28A(5A) that there was no
reasonable excuse for the failure to give notice on or before
the initial notification deadline.”;

(b) in sub-paragraph (5), before paragraph (a) insert—

(za) 10in the case of an appeal under sub-paragraph (A1),
notice of HMRC’s decision is given to the scheme
organiser;”;

(c) in sub-paragraph (6), after “sub-paragraph” insert “(A1),”.

(4) The amendments made by this paragraph have effect in relation to notices
15given under paragraph 28A of Schedule 4 to ITEPA 2003 on or after 6 April
2016.

Price for acquisition of shares under share option

6 (1) In Schedule 3 to ITEPA 2003 (SAYE option schemes), paragraph 28
(requirements as to price for acquisition of shares) is amended as follows.

(2) 20In sub-paragraph (1)—

(a) in paragraph (b), for “at that time” substitute

(i) at that time, or

(ii) at such earlier time as may be determined in
accordance with guidance issued by the
25Commissioners for Her Majesty’s Revenue
and Customs.”

(b) for “sub-paragraphs (2) and (3)” substitute “sub-paragraph (3)”.

7 (1) In Schedule 4 to ITEPA 2003 (CSOP schemes), paragraph 22 (requirements
30as to price for acquisition of shares) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (b), for “at the time when the option is granted”
substitute

(i) at the time when the option is granted, or

(ii) 35at such earlier time as may be determined in
accordance with guidance issued by the
Commissioners for Her Majesty’s Revenue
and Customs.”;

(b) for “sub-paragraphs (2) and (3)” substitute “sub-paragraph (3)”.

Tag-along rights

8 (1) In Schedule 5 to ITEPA 2003 (enterprise management incentives), in
paragraph 39 (company reorganisations: introduction), in sub-paragraph
(2)(c), after “982” insert “or 983 to 985”.

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(2) The amendment made by this paragraph is treated as having come into force
on 17 July 2013.

Exercise of EMI options

9 (1) In section 238A of TCGA 1992 (share schemes and share incentives), in
5subsection (2), omit paragraph (d) and the preceding “and”.

(2) In Schedule 7D to TCGA 1992 (share schemes and share incentives), omit
Part 4.

(3) In section 527 of ITEPA 2003 (enterprise management incentives: qualifying
options), in subsection (3)—

(a) 10after paragraph (a) insert “and”;

(b) omit paragraph (c) and the preceding “and”.

(4) The amendments made by this paragraph do not affect—

(a) the application of paragraph 14(4) of Schedule 7D to TCGA 1992 in
relation to a disqualifying event occurring before 6 April 2016, or

(b) 15the application of paragraph 16 of that Schedule in relation to an
allotment for payment mentioned in section 126(2)(a) of that Act
taking place before 6 April 2016.

SCHEDULE 4 Section 19 Pensions: lifetime allowance: transitional provision

20Part 1 “Fixed protection 2016”

The protection

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

(a) 25each of the conditions specified in paragraph 2 is met,

(b) there is no protection-cessation event (see paragraph 3) in the period
beginning with 6 April 2016 and ending with the particular time,

(c) paragraph 1(2) of Schedule 6 to FA 2014 (“individual protection
2014”) does not apply in the individual’s case at the particular time,
30and

(d) 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-
paragraph (2).

(2) Part 4 of FA 2004 has effect in relation to the individual as if the standard
35lifetime allowance were the greater of the standard lifetime allowance and
£1,250,000.

The initial conditions

2 The conditions mentioned in paragraph 1(1)(a) are—

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(a) that, on 6 April 2016, the individual has one or more arrangements
under—

(i) a registered pension scheme, or

(ii) a relieved non-UK pension scheme of which the individual is
5a relieved member,

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

(c) that paragraph 12 of that Schedule (enhanced protection) does not
10apply in the individual’s case on 6 April 2016,

(d) that paragraph 14 of Schedule 18 to FA 2011 (transitional provision
relating to new standard lifetime allowance for the tax year 2012-13)
does not apply in the individual’s case on 6 April 2016, and

(e) that paragraph 1 of Schedule 22 to FA 2013 (“fixed protection 2014”
15relating 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 There is a protection-cessation event if—

(a) there is benefit accrual in relation to the individual under an
20arrangement under a registered pension scheme,

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

(c) a transfer of sums or assets held for the purposes of, or representing
accrued rights under, any such arrangement is made that is not a
25permitted transfer, or

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

Protection-cessation events: interpretation: “benefit accrual”

4 (1) For the purposes of paragraph 3(a) there is benefit accrual in relation to the
30individual 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
arrangement on or after 6 April 2016,

(b) in the case of a cash balance arrangement or defined benefits
35arrangement, 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) in the case of a hybrid arrangement—

(i) where the benefits that may be provided to or in respect of
40the individual under the arrangement include money
purchase benefits other than cash balance benefits, if a
relevant contribution is paid under the arrangement on or
after 6 April 2016, and

(ii) in any case, if there is an increase in the value of the
45individual’s rights under the arrangement at any time on or
after that date (but subject to sub-paragraph (5)).

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(2) For the purposes of sub-paragraphs (1)(b) and (c)(ii) and (5) whether there is
an 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
5under which cash balance benefits may be provided to or in respect
of the individual under the arrangement), by reference to whether
there 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) 10in the case of a defined benefits arrangement (or a hybrid
arrangement under which defined benefits may be provided to or in
respect 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—


15

where—

  • LS is the lump sum to which the individual would, on the valuation
    assumptions, be entitled under the arrangement (otherwise than by
    commutation of pension),

  • 20P is the annual rate of the pension which would, on the valuation
    assumptions, be payable to the individual under the arrangement,
    and

  • RVF is the relevant valuation factor.

(4) Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid
25under 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
be ignored for the purposes of sub-paragraph (1)(b) or (c)(ii) if in no tax year
do they exceed the relevant percentage.

(6) 30The 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
during the tax year at an annual rate specified in the rules of the
pension scheme (or a predecessor registered pension scheme) on 9
35December 2015—

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

(ii) the relevant statutory increase percentage;

(b) 40otherwise—

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

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

(7) 45In sub-paragraph (6)(a)—

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

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  • “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
    arrangement under the pension scheme directly or indirectly derive.

(8) 5In 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) an increase in accordance with section 15 of the Pension Schemes Act
101993 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
Act 1993 or section 12 of the Pension Schemes (Northern Ireland) Act
151993 (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
20Schemes 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) 25Sub-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
30be 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
35the 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 40Paragraph 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
452016.

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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 5Sub-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
10as 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
15of 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
applied 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
20as occurring at the end of the tax year.

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

(a) in a tax year there occurs a benefit crystallisation event in relation to
the individual (whether in relation to the arrangement or to any
25other 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
230 to 237 of FA 2004 greater than nil in respect of the arrangement
for the tax year,

30and, in such a case, the benefit accrual is treated as occurring immediately
before the benefit crystallisation event.

Part 2 “Individual protection 2016”

The protection

9 (1) 35Sub-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-
paragraph (3)) on 5 April 2016,

(b) the individual’s relevant amount at the particular time is greater
40than £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 allowance enhancement factor in
relation to the individual,

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(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-
5paragraph (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
10£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) 15a 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) 20The 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) 25paragraph 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
30on and after the transfer day, the individual’s relevant amount is reduced (or
further reduced) by the following amount—


where—

  • X is the appropriate amount,

  • 35Y is 5% of X, and

  • Z is the number of tax years beginning after 5 April 2016 and ending on
    or before the transfer day.

(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
40relation 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—

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(a) apply sub-paragraph (2) if a benefit crystallisation event has
occurred 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) 5If this sub-paragraph is to be applied, amount A is—


where—

  • ARP is (subject to sub-paragraph (3)) an amount equal to—

    (a)

    the annual rate at which any relevant existing pension was
    10payable to the individual at the time immediately before the
    benefit crystallisation event occurred, or

    (b)

    if more than one relevant existing pension was payable to the
    individual at that time, the sum of the annual rates at which
    each of the relevant existing pensions was so payable, and

  • 15SLT is an amount equal to what the standard lifetime allowance was at
    the time the benefit crystallisation event occurred.

(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
20time immediately before the benefit crystallisation event occurred).

(4) If 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
25crystallisation event occurred.

(5) If 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—


30

25 × ARP

where ARP is (subject to sub-paragraph (7)) an amount equal to—

(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
35individual at the end of 5 April 2016, the sum of the annual rates at
which 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
40April 2016).

(8) In 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) 45to the payment of which the individual had, at the end of 5 April
2006, an actual (rather than a prospective) right.

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(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
5provision 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) 10identify 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
152004 if relevant), and

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


where SLT is an amount equal to what the standard lifetime
allowance was at the time when the benefit crystallisation event in
20question occurred.

(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
25end 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) 30identify 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) 35in 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-
40paragraph (1)(b)(ii).

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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
5for 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) 10may 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) 15made 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) 20the 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
25why 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) 30containing 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
35event (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) 40the 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
45become subject to a relevant pension debit, the appropriate
amount and transfer day for each such pension debit,

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(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
(“individual protection 2014”) does not apply in the
5individual’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) In sub-paragraph (3)(f)(iii) and this sub-paragraph—

  • 10“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
    day on which the application is made, and

    (b)

    15the 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
    liability in respect of the pension credit corresponding to the
    20pension debit;

  • “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)).