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Committee of the whole House: 25 April 2017              

8

 

Finance (No. 2) Bill, continued

 
 

arrangement” at any time if, at that time, all the

 

benefits that may be provided to or in respect of the

 

member under the arrangement are cash balance

 

benefits;

 

an arrangement relating to a member of a

 

superannuation fund is a “defined benefits

 

arrangement” at any time if, at that time, all the

 

benefits that may be provided to or in respect of the

 

member under the arrangement are defined benefits;

 

an arrangement relating to a member of a

 

superannuation fund is a “money purchase

 

arrangement” at any time if, at that time, all the

 

benefits that may be provided to or in respect of the

 

member under the arrangement are money purchase

 

benefits;

 

“cash balance benefits”, “defined benefits” and “money

 

purchase benefits” have the meaning given by section

 

152 of the Finance Act 2004, but for this purpose

 

reading references in that section to a pension scheme

 

as references to a superannuation fund;

 

“member”, in relation to a superannuation fund, has the

 

meaning given by section 151 of the Finance Act

 

2004, but for this purpose reading references in that

 

section to a pension scheme as references to a

 

superannuation fund;”;

 

(b)    

at the end insert—

 

““the valuation assumptions” has the meaning given by

 

section 277 of the Finance Act 2004.””

 

Chancellor of the Exchequer

 

21

 

Parliamentary Star    

Schedule  3,  page  167,  line  16,  at end insert—

 

    “( )  

After subsection (10) insert—

 

“(11)    

Where the conditions in subsection (6)(a) to (c) are met in the case of

 

a superannuation fund (“the actual fund”)—

 

(a)    

any disqualifying contributions made under an arrangement

 

relating to a member of the actual fund are treated for the

 

purposes of the Income Tax Acts as instead made under an

 

arrangement relating to the member under a separate

 

superannuation fund (“the shadow fund” for the actual fund),

 

(b)    

any disqualifying increase in the value of a person’s rights

 

under an arrangement relating to a member of the actual fund

 

is treated for the purposes of the Income Tax Acts as instead

 

being an increase under an arrangement relating to the

 

member under the shadow fund for the actual fund, and

 

(c)    

any reference in this or any other Act (including the reference

 

in subsection (3) and any reference enacted after the coming

 

into force of this subsection) to a fund, or superannuation

 

fund, to which subsection (3) applies does not include so

 

much of the actual fund as—

 

(i)    

represents any contribution treated as made under, or

 

any increase in the value of any rights treated as an


 
 

Committee of the whole House: 25 April 2017              

9

 

Finance (No. 2) Bill, continued

 
 

increase under, the shadow fund of the actual fund or

 

the shadow fund of any other superannuation fund, or

 

(ii)    

arises, or (directly or indirectly) derives, from

 

anything within sub-paragraph (i) or this sub-

 

paragraph.

 

(12)    

For the purposes of subsection (11) a contribution, or an increase in the

 

value of any rights, is “disqualifying” if it would (ignoring that

 

subsection) cause the benefit accrual condition not to be met in the

 

case of the actual fund.

 

(13)    

For the purposes of the provisions of this section relating to the benefit

 

accrual condition, where there is a recognised transfer—

 

(a)    

any transfer of sums or assets to the recipient fund by the

 

recognised transfer is to be categorised as not being “a

 

contribution” to the recipient fund, and

 

(b)    

any increase in the value of rights under the recipient fund that

 

occurs at the time of the recognised transfer is to be treated as

 

not being an increase in that value if the increase is solely a

 

result of the transfer effected by the recognised transfer.

 

(14)    

For the purposes of subsection (13), where there is a transfer such that

 

sums or assets held for the purposes of, or representing accrued rights

 

under, an arrangement relating to a member of a superannuation fund

 

(“the transferor fund”) are transferred so as to become held for the

 

purposes of, or to represent rights under, an arrangement relating to

 

that person as a member of another superannuation fund, the transfer

 

is a “recognised transfer” if—

 

(a)    

the conditions in subsection (6)(a) to (c) are met in the case of

 

each of the funds, and

 

(b)    

none of the sums and assets transferred—

 

(i)    

represents any contribution treated as made under, or

 

any increase in the value of any rights treated as an

 

increase under, the shadow fund of the transferor fund

 

or the shadow fund of any other superannuation fund,

 

or

 

(ii)    

arises, or (directly or indirectly) derives, from

 

anything within sub-paragraph (i) or this sub-

 

paragraph.””

 

Chancellor of the Exchequer

 

22

 

Parliamentary Star    

Schedule  3,  page  167,  line  19,  leave out sub-paragraphs (6) to (8)

 

Chancellor of the Exchequer

 

23

 

Parliamentary Star    

Schedule  3,  page  169,  line  13,  leave out “Subsection (4) does not” and insert

 

“Subsections (7A) and (7B)”

 

Chancellor of the Exchequer

 

24

 

Parliamentary Star    

Schedule  3,  page  169,  line  20,  at end insert—

 

“(7A)    

If the lump sum is wholly in respect of rights which have accrued on or after 6

 

April 2017, there is no reduction under subsection (4).


 
 

Committee of the whole House: 25 April 2017              

10

 

Finance (No. 2) Bill, continued

 
 

(7B)    

If the lump sum is wholly or partly in respect of rights which accrued before 6

 

April 2017, the amount of any reduction under subsection (4) is given by—
equation: cross[char[R],over[char[A],times[char[L],char[S]]]]

 

    

where—

 

A is so much of the lump sum as is in respect of rights which accrued before

 

6 April 2017,

 

LS is the amount of the lump sum, and

 

R is the amount which (ignoring this subsection) is given by subsection (4)

 

as the amount of the reduction.”

 

Chancellor of the Exchequer

 

25

 

Parliamentary Star    

Schedule  3,  page  170,  line  22,  at beginning insert—

 

    

“Where the lump sum is paid under a pension scheme that was an employer-

 

financed retirement benefits scheme immediately before 6 April 2017, deduct so

 

much of the lump sum left after Step 1 as is deductible in accordance with

 

subsection (5A).

 

    

Where the lump sum is paid otherwise than under such a scheme,”

 

Chancellor of the Exchequer

 

26

 

Parliamentary Star    

Schedule  3,  page  170,  line  23,  leave out “rights, which accrued before 6 April

 

2017,” and insert “the value immediately before 6 April 2017 of rights, accrued by then,”

 

Chancellor of the Exchequer

 

27

 

Parliamentary Star    

Schedule  3,  page  170,  line  39,  at end insert—

 

“(5A)    

These rules apply for the purposes of the first sentence of Step 2—

 

(a)    

“the post-Step 1 amount” means so much of the lump sum as is left after

 

Step 1;

 

(b)    

“the relevant amount” means so much of the post-Step 1 amount as is

 

paid in respect of rights specifically to receive benefits by way of lump

 

sum payments;

 

(c)    

“reckonable service” means service in respect of which the rights to

 

receive the relevant amount accrued (whether or not service in the same

 

employment or with the same employer, and even if the rights originally

 

accrued under a different employer-financed retirement benefits scheme

 

established in or outside the United Kingdom);

 

(d)    

“pre-6 April 2017 reckonable service” means reckonable service that is

 

service before 6 April 2017;

 

(e)    

“pre-6 April 2017 reckonable foreign service” means pre-6 April 2017

 

reckonable service that is foreign service;

 

(f)    

the deductible amount is the value immediately before 6 April 2017 of

 

the rights then accrued to payment of so much of the relevant amount as

 

is paid in respect of pre-6 April 2017 reckonable service if—

 

(i)    

at least 75% of pre-6 April 2017 reckonable service is made up

 

of foreign service, or

 

(ii)    

the period of pre-6 April 2017 reckonable service exceeds 10

 

years and the whole of the last 10 years of that period is made up

 

of foreign service, or


 
 

Committee of the whole House: 25 April 2017              

11

 

Finance (No. 2) Bill, continued

 
 

(iii)    

the period of pre-6 April 2017 reckonable service exceeds 20

 

years and at least 50% of that period, including any 10 of the last

 

20 years, is made up of foreign service;

 

(g)    

otherwise, the deductible amount is the appropriate fraction of the value

 

immediately before 6 April 2017 of the rights then accrued to payment of

 

so much of the relevant amount as is paid in respect of pre-6 April 2017

 

reckonable service;

 

(h)    

“the appropriate fraction” is given by—
equation: over[char[F],char[R]]

 

    

where—

 

F is the period of pre-6 April 2017 reckonable foreign service, and

 

R is the period of pre-6 April 2017 reckonable service.”

 

Chancellor of the Exchequer

 

28

 

Parliamentary Star    

Schedule  3,  page  170,  line  42,  at end insert—

 

““foreign service” has the meaning given by section 395C,”

 

Chancellor of the Exchequer

 

29

 

Parliamentary Star    

Schedule  3,  page  171,  line  17,  at end insert—

 

“Relief from tax under Part 9 of ITEPA 2003 not to give rise to tax under other provisions

 

13  (1)  

In section 393B(2)(a) of ITEPA 2003 (tax on benefits under employer-

 

financed retirement benefit schemes: “relevant benefits” do not include

 

benefits charged to tax under Part 9), after “646E” insert “or any deductions

 

under section 574A(3)”.

 

      (2)  

The amendment made by this paragraph has effect in relation to benefits by

 

way of lump sums paid on or after 6 April 2017.”

 


 

Chancellor of the Exchequer

 

30

 

Parliamentary Star    

Schedule  4,  page  172,  line  23,  after “sub-paragraph” insert “(6C) or”

 

Chancellor of the Exchequer

 

31

 

Parliamentary Star    

Schedule  4,  page  174,  line  21,  at end insert—

 

  “(4A)  

In sub-paragraph (4) (power to specify whether payments by scheme are

 

referable to relevant transfer fund), after “payments or transfers made (or

 

treated as made) by” insert “, or other things done by or to or under or in respect

 

of or in the case of,”.”

 

Chancellor of the Exchequer

 

32

 

Parliamentary Star    

Schedule  4,  page  176,  line  28,  leave out “with the next 5” and insert “immediately

 

before the next 6”


 
 

Committee of the whole House: 25 April 2017              

12

 

Finance (No. 2) Bill, continued

 
 

Chancellor of the Exchequer

 

33

 

Parliamentary Star    

Schedule  4,  page  177,  line  1,  leave out “with the next 5” and insert “immediately

 

before the next 6”

 

Chancellor of the Exchequer

 

34

 

Parliamentary Star    

Schedule  4,  page  178,  line  8,  leave out “for the purposes of sections 244L and 254”

 

Chancellor of the Exchequer

 

35

 

Parliamentary Star    

Schedule  4,  page  178,  line  28,  leave out “for the purposes of sections 244L and

 

254”

 

Chancellor of the Exchequer

 

36

 

Parliamentary Star    

Schedule  4,  page  178,  line  48,  leave out “for the purposes of sections 244L and

 

254”

 

Chancellor of the Exchequer

 

37

 

Parliamentary Star    

Schedule  4,  page  179,  line  18,  leave out “for the purposes of sections 244L and

 

254”

 

Chancellor of the Exchequer

 

38

 

Parliamentary Star    

Schedule  4,  page  180,  line  19,  leave out “was” and insert “has been”

 

Chancellor of the Exchequer

 

39

 

Parliamentary Star    

Schedule  4,  page  180,  line  21,  leave out “was” and insert “has been”

 

Chancellor of the Exchequer

 

40

 

Parliamentary Star    

Schedule  4,  page  183,  line  17,  leave out from beginning to fourth “the”

 

Chancellor of the Exchequer

 

41

 

Parliamentary Star    

Schedule  4,  page  184,  leave out lines 30 to 38

 

Chancellor of the Exchequer

 

42

 

Parliamentary Star    

Schedule  4,  page  188,  line  8,  at end insert—

 

“17A      

In Schedule 32 (benefit crystallisation events: supplementary provision), after

 

paragraph 2 insert—

 

“Avoiding double counting of refunded amounts of overseas transfer charge

 

2A  (1)  

This paragraph applies where an amount of overseas transfer charge

 

is repaid (whether or not under section 244M) to the scheme

 

administrator of one of the relevant pension schemes.


 
 

Committee of the whole House: 25 April 2017              

13

 

Finance (No. 2) Bill, continued

 
 

      (2)  

The amount crystallised by the first benefit crystallisation event that

 

occurs in respect of the individual and a benefited scheme after

 

receipt of the repayment is to be reduced (but not below nil) by the

 

amount of the repayment.

 

      (3)  

If the amount of the repayment exceeds the reduction under sub-

 

paragraph (2), the excess is to be set sequentially until exhausted

 

against the amounts crystallised by subsequent benefit

 

crystallisation events occurring in respect of the individual and a

 

benefited scheme.

 

      (4)  

In sub-paragraphs (2) and (3) “benefited scheme” means—

 

(a)    

the scheme to which the repayment is made, and

 

(b)    

any other pension scheme if as a result of a recognised

 

transfer, or a chain of two or more recognised transfers,

 

sums or assets representing the repayment are held for the

 

purposes of, or represent rights under, that other scheme.””

 

Chancellor of the Exchequer

 

43

 

Parliamentary Star    

Schedule  4,  page  188,  line  38,  at end insert—

 

  “(1A)  

In those Regulations, after regulation 13 insert—

 

“14    

Claims for repayments of overseas transfer charge

 

(1)    

This regulation applies where the scheme administrator of a registered

 

pension scheme becomes aware that the scheme administrator may be

 

entitled to a repayment under section 244M of the Act in respect of

 

overseas transfer charge on a transfer.

 

(2)    

The scheme administrator must, no later than 60 days after the date on

 

which the scheme administrator becomes aware of that, make a claim

 

for the repayment to the Commissioners for Her Majesty’s Revenue

 

and Customs.

 

(3)    

The claim must provide the following information—

 

(a)    

the member’s name, date of birth and principal residential

 

address,

 

(b)    

the date of the transfer and, if different, the date of the event

 

triggering payability of the charge on the transfer,

 

(c)    

the date on which the scheme manager accounted for the

 

charge on the transfer,

 

(d)    

why the charge on the transfer has become repayable, and

 

(e)    

the amount in respect of which the claim is made.

 

(4)    

In a case where the 60 days mentioned in paragraph (2) ends with a day

 

earlier than 14 November 2017, paragraph (2) is to be treated as

 

requiring the claim to be made no later than 14 November 2017.””

 

Chancellor of the Exchequer

 

44

 

Parliamentary Star    

Schedule  4,  page  188,  line  39,  leave out “this paragraph” and insert “sub-paragraph

 

(1)”


 
 

Committee of the whole House: 25 April 2017              

14

 

Finance (No. 2) Bill, continued

 
 

Chancellor of the Exchequer

 

45

 

Parliamentary Star    

Schedule  4,  page  188,  line  42,  at end insert—

 

    “( )  

The amendment made by sub-paragraph (1A) is to be treated as having been

 

made by the Commissioners for Her Majesty’s Revenue and Customs under

 

the powers to make regulations conferred by section 244M(8) of FA 2004.”

 

Chancellor of the Exchequer

 

46

 

Parliamentary Star    

Schedule  4,  page  190,  line  3,  at end insert—

 

  “(4A)  

In regulation 3(3)(a) (reporting duty under regulation 3(2) expires after 10

 

years from creation of relevant transfer fund), after “beginning” insert “—

 

(i)    

if the payment is in respect of one or more of the

 

relevant member’s ring-fenced transfer funds

 

(whether or not it is also in respect of anything else),

 

with the key date for that fund or (as the case may be)

 

the later or latest of the key dates for those funds, and

 

(ii)    

if the payment is not to any extent in respect of the

 

relevant member’s ring-fenced transfer funds,”.”

 

Chancellor of the Exchequer

 

47

 

Parliamentary Star    

Schedule  4,  page  191,  line  26,  after “take” insert “place”

 

Chancellor of the Exchequer

 

48

 

Parliamentary Star    

Schedule  4,  page  192,  line  26,  at end insert—

 

“3AEA

 Information provided by member to QROPS: inward and outward

 

transfers

 

(1)    

Paragraph (2) applies where—

 

(a)    

a recognised transfer or onward transfer is made to a QROPS, or an

 

onward transfer is made by a QROPS or former QROPS, and

 

(b)    

either—

 

(i)    

the overseas transfer charge arises in the case of the transfer, or

 

(ii)    

the transfer is required by section 244B or 244C to be initially

 

assumed to be excluded from the overseas transfer charge by that

 

section.

 

(2)    

Each time during the relevant period for the transfer that the member—

 

(a)    

becomes resident in a country or territory, or

 

(b)    

ceases to be resident in a country or territory,

 

    

the member must, within 60 days after the date that happens, inform the scheme

 

manager of the QROPS or former QROPS that it has happened.

 

(3)    

In a case where the 60 days mentioned in paragraph (2) ends with a day earlier

 

than 30 June 2017, paragraph (2) is to be treated as requiring the information to

 

be given no later than 30 June 2017.”


 
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Revised 24 April 2017