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(1B) The total amount of contributions in respect of which relief may be given to an individual under this section for any year of assessment must not exceed-
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(a) the permitted maximum for the year, as defined in section 638(4), or |
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(b) the earnings threshold for the year, |
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whichever is the greater.
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(2) Any relief under this section shall be given in accordance with-
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(a) subsections (3) and (4) below, and |
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(b) where applicable, subsection (5A) below. |
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(2A) Relief in accordance with subsections (3) and (4) below shall be subject to such conditions as the Board may prescribe in regulations.".
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(3) For subsection (3) substitute-
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"(3) An individual who is entitled to relief under this section in respect of a contribution shall be entitled, on making the payment, to deduct and retain out of it a sum equal to income tax on the contribution at the basic rate for the year of assessment in which the payment is made.".
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(4) For subsection (4) substitute-
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"(4) Where a sum is deducted under subsection (3) above from a contribution-
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(a) the scheme administrator shall allow the deduction on receipt of the residue; |
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(b) the individual paying the contribution shall be acquitted and discharged of so much money as is represented by the deduction as if the sum had been actually paid; and |
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(c) the sum deducted shall be treated as income tax paid by the scheme administrator.". |
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(5) After subsection (4) insert-
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"(4A) Where payment of a contribution under approved personal pension arrangements is received-
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(a) the scheme administrator shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (4)(c) above is treated as income tax paid by him; and |
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(b) any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the payment of the contribution to which it relates.". |
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(6) In subsection (5) (regulations for carrying subsections (3) and (4) into effect)-
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(a) for "(3) and (4)" substitute "(3) to (4A)"; and |
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(b) in paragraph (a), for "(4)(b)" substitute "(4A)(a)". |
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(7) After subsection (5) insert-
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"(5A) Where-
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(a) an individual is entitled to relief under this section in respect of contributions paid in any year of assessment, and |
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(b) apart from this subsection, income tax at the higher rate is chargeable in respect of any part of his total income for the year, |
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the basic rate limit for that year shall in his case be increased by the addition of the amount of the contributions in respect of which he is entitled to relief under this section.
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(5B) Relief in accordance with subsection (5A) above shall be given only on a claim made for the purpose.".
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(8) In subsection (7) (relief not to be given under section 639 and any other provision of the Income Tax Acts in respect of same contribution) for "under this section is claimed and allowed" substitute "is given under this section".
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(9) This paragraph has effect in relation to contributions paid in the year 2001-02 or any subsequent year of assessment.
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Maximum amount of deductions |
| | 16. - (1) Amend section 640 as follows.
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(2) In subsection (1) (maximum deduction or set off under section 639(1) to be 17.5 per cent. of net relevant earnings)-
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(a) for "that may be deducted or set off" substitute "of contributions in respect of which relief may be given"; and |
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(b) after "shall be" insert- |
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"(a) an amount equal to the earnings threshold for that year; or |
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(3) Amend subsection (3) (limitation on deduction or set off of certain life assurance contributions) in accordance with sub-paragraphs (4) and (5).
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(4) For the words from the beginning to "section 637" substitute-
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"(3) Without prejudice to subsection (1) above, where any contributions are paid in a year of assessment by an individual to secure benefits satisfying the conditions in section 637, the maximum amount of those contributions in respect of which relief may be given by virtue of section 639(1)".
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(5) For "shall be 5 per cent. of the individual's net relevant earnings for that year" substitute "shall be an amount equal to 10 per cent. of the aggregate amount of the relevant pension contributions made in that year by the individual and an employer of his".
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(6) After subsection (3) insert-
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"(3A) In subsection (3) above "relevant pension contribution" means a contribution paid towards securing benefits falling within paragraph (a), (b) or (c) of section 633(1) under arrangements made under a personal pension scheme on or after 6th April 2001.".
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(7) In subsection (4) (reduction of maximum deduction or set off where employer makes contributions) for "that may be deducted or set off" substitute "of contributions in respect of which relief may be given by virtue of section 639(1)".
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(8) Sub-paragraphs (2), (4) and (7) have effect in relation to contributions paid in the year 2001-02 or any subsequent year of assessment.
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(9) Sub-paragraphs (5) and (6) have effect in relation to contributions paid to secure benefits satisfying the conditions in section 637 of the Taxes Act 1988 where the contract of life assurance concerned is made on or after 6th April 2001.
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Carry-back of contributions |
| | 17. No election shall be made under section 641 in respect of contributions paid on or after 6th April 2001.
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Election for contributions to be treated as paid in previous year |
| | 18. - (1) After section 641 insert-
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| "Election for contributions to be treated as paid in previous year. |
641A. - (1) A person who pays a contribution under approved personal pension arrangements on or before the 31st January in any year of assessment may, at or before the time when he pays the contribution, irrevocably elect that the contribution, or part of it, shall be treated as paid in the preceding year of assessment.
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(2) Where an election is made under this section in respect of a contribution or part of a contribution, the other provisions of this Chapter shall have effect as if the contribution or part had been paid in the year specified in the election and not in the year in which it was actually paid.".
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(2) This paragraph has effect in relation to contributions paid in the year 2001-02 or any subsequent year of assessment.
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Abolition of carry-forward of relief |
| | 19. No relief shall be given by virtue of section 642 (carry-forward of relief) in the year 2001-02 or any subsequent year of assessment.
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Earnings from pensionable employment |
| | 20. - (1) Amend section 645 as follows.
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(2) In subsection (3) (definition of "a relevant superannuation scheme") omit the word "and" immediately preceding paragraph (c) and at the end of that paragraph add "; and
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(d) which is not an approved converted scheme". |
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Meaning of "net relevant earnings" |
| | 21. - (1) Amend section 646 as follows.
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(2) In subsection (5) (cases where the whole or part of a deduction under subsection (2)(d) falls to be made from income other than relevant earnings) for "an amount is deducted or set off under section 639(1) against the net relevant earnings" substitute "the basic rate limit is increased in accordance with section 639(5A) in the case".
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(3) In subsection (6) (reduction of net relevant earnings in subsequent years) for "under section 639(1)" substitute "in accordance with section 639(5A)".
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(4) Omit subsection (7) (net relevant earnings to be computed without regard to any deduction or set off under section 639(1)).
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(5) This paragraph has effect for the year 2001-02 and subsequent years of assessment.
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Presumption of same level of relevant earnings etc for 5 years |
| | 22. - (1) After section 646A insert-
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| "Presumption of same level of relevant earnings etc for 5 years. |
646B. - (1) This section applies where an individual (the "relevant member") who is or becomes a member of a personal pension scheme provides to the scheme administrator the requisite evidence of the relevant amounts for any year of assessment (the "basis year").
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(2) For the purposes of this section, the "relevant amounts" for any year of assessment are the amounts which need to be known in order to calculate the relevant member's net relevant earnings for that year.
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(3) The basis year need not be a year of assessment in which the relevant member is a member of the personal pension scheme concerned.
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(4) Where this section applies, it shall be presumed for the purposes of this Chapter in the case of the relevant member and the personal pension scheme concerned that, for each of the five years of assessment following the basis year, the relevant amounts (and, accordingly, the relevant member's net relevant earnings) are the same as for the basis year.
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(5) Subsection (4) above is subject to-
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(a) subsections (6) to (9) below; and |
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(b) such conditions or exceptions as may be prescribed. |
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(6) For the purposes of this section, the requisite evidence provided for a later basis year (the "later basis year") supersedes the requisite evidence provided for an earlier basis year (the "earlier basis year").
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(7) Subsection (6) above has effect subject to, and in accordance with, subsections (8) and (9) below.
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(8) If-
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(a) the actual net relevant earnings for the later basis year, |
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exceed
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(b) the actual net relevant earnings for the earlier basis year, |
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the supersession effected by subsection (6) above has effect as respects the later basis year and subsequent years of assessment (and subsection (4) above applies accordingly).
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(9) Where the condition in subsection (8) above is not satisfied, the supersession effected by subsection (6) above has effect only as respects years of assessment later than the last of the five years of assessment following the earlier basis year (and subsection (4) above applies accordingly).
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(10) It is immaterial for the purposes of this section whether the requisite evidence for a later year of assessment is provided before or after, or at the same time as, the requisite evidence for an earlier year of assessment.
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(11) This section is subject to section 646D.
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