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Session 2002 - 03
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Finance Bill


Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 11 — Miscellaneous

139

 

(6)   

In this section “care” means accommodation, goods or services which it

is necessary or desirable to provide to a person because of—

(a)   

mental or physical impairment, or

(b)   

injury, sickness or other infirmity,

   

which is expected to be permanent.

5

(7)   

In this section “life annuity” means an annuity to which section 656

(read with section 657) applies.

(8)   

The Treasury may by order amend—

(a)   

the definition of “immediate needs annuity” in subsection (3)

above;

10

(b)   

the definitions of “care provider” in subsection (4) above and of

“the relevant enactment” in subsection (5) above.”.

(4)   

The amendment made by subsection (2) has effect in relation to accounting

periods beginning on or after 1st January 2005.

(5)   

For the purposes of section 547(5A)(b) of the Taxes Act 1988 (chargeable event

15

gains: method of charging gain to tax), an immediate needs annuity made

before 1st January 2005 shall not be taken, by virtue of the amendment made

by subsection (2), to fall or to have at any time fallen to be regarded as not

forming part of an insurance company or friendly society’s basic life assurance

and general annuity business the income and gains of which are subject to

20

corporation tax.

(6)   

The amendment made by subsection (3) has effect in relation to annual

payments made on or after 1st October 2004 (whenever the immediate needs

annuity in question was made).

145     

Corporation tax: health service bodies

25

At the end of section 519A of the Income and Corporation Taxes Act 1988 (c. 1)

(health service bodies: exemptions from income and corporation tax) add—

“(3)   

The Treasury may by order disapply subsection (1)(b) in relation to a

specified activity, or class of activity, of an NHS foundation trust.

(4)   

An order under subsection (3) shall make provision for determining the

30

amount of the profits relating to an activity that are to be charged to

corporation tax as a result of the disapplication of subsection (1)(b).

(5)   

An order under subsection (3) may, in particular—

(a)   

make provision for disregarding profits of less than a specified

amount in respect of a financial year or accounting period or a

35

specified part of a financial year or accounting period;

(b)   

make provision for disregarding a specified part of profits in

respect of a financial year or accounting period or a specified

part of a financial year or accounting period;

(c)   

make provision for disregarding all or part of profits relating to

40

activity in respect of which receipts or turnover (as defined by

the order) are less than a specified amount in respect of a

financial year or accounting period or a specified part of a

financial year or accounting period.

(6)   

An order under subsection (3)—

45

 

 

Finance Bill
Part 4 — Pension schemes etc
Chapter 1 — Introduction

140

 

(a)   

may apply, with or without modification, a provision of the Tax

Acts,

(b)   

may disapply a provision of the Tax Acts,

(c)   

may make provision similar to a provision of the Tax Acts, and

(d)   

may make provision generally or in relation to a specified body

5

or class of bodies.

(7)   

The Treasury may make an order under subsection (3) only—

(a)   

in relation to an activity or class of activity that appears to the

Treasury to be of a commercial nature,

(b)   

where it appears to the Treasury to be expedient for the purpose

10

of avoiding, removing or reducing differences between—

(i)   

the fiscal treatment of the body undertaking the activity,

and

(ii)   

the fiscal treatment of another body or class of body

which is of a commercial nature and which undertakes

15

or might undertake the same or a similar activity, and

(c)   

if a draft has been laid before, and approved by resolution of,

the House of Commons.

(8)   

An activity authorised under section 14(1) of the Health and Social Care

(Community Health and Standards) Act 2003 (c. 43) shall not be treated

20

as an activity of a commercial nature for the purposes of subsection

(7)(a).”.

Part 4

Pension schemes etc

Chapter 1

25

Introduction

Introductory

146     

Overview of Part 4

(1)   

This Part contains tax provision about pension schemes and other similar

schemes.

30

(2)   

This Chapter defines some basic concepts.

(3)   

As for the rest of this Part—

   

Chapter 2 is about the registration and de-registration of pension

schemes,

   

Chapter 3 is about the payments that may be made by registered pension

35

schemes and related matters,

   

Chapter 4 deals with tax reliefs and exemptions in connection with

registered pension schemes,

   

Chapter 5 imposes tax charges in connection with registered pension

schemes,

40

   

Chapter 6 is about some schemes that are not registered pension schemes,

   

Chapter 7 makes provision about compliance, and

 

 

Finance Bill
Part 4 — Pension schemes etc
Chapter 1 — Introduction

141

 

   

Chapter 8 contains interpretation and other supplementary provisions.

Main concepts

147     

Meaning of “pension scheme”

(1)   

In this Part “pension scheme” means a scheme or other arrangements,

comprised in one or more instruments or agreements, having or capable of

5

having effect so as to provide benefits to or in respect of persons—

(a)   

on retirement,

(b)   

on death,

(c)   

on having reached a particular age,

(d)   

on the onset of serious ill-health or incapacity, or

10

(e)   

in similar circumstances.

(2)   

A pension scheme is a registered pension scheme for the purposes of this Part

at any time if it is at that time registered under Chapter 2.

(3)   

In this Part “public service pension scheme” means a pension scheme—

(a)   

established by or under any enactment,

15

(b)   

approved by a relevant governmental or Parliamentary person or body,

or

(c)   

specified in an order made by the Treasury.

(4)   

In subsection (3) “a relevant governmental or Parliamentary person or body”

means—

20

(a)   

a Minister of the Crown or a government department,

(b)   

the Scottish Parliament, the Scottish Parliamentary Corporate Body or

a member of the Scottish Executive,

(c)   

the National Assembly for Wales, or

(d)   

the Northern Ireland Assembly, the Northern Ireland Assembly

25

Commission, a Northern Ireland Minister, the head of a Northern

Ireland department or a Northern Ireland department.

(5)   

In this Part “occupational pension scheme” means a pension scheme

established by an employer or employers and having or capable of having

effect so as to provide benefits to or in respect of any or all of the employees

30

of—

(a)   

that employer or those employers, or

(b)   

any other employer,

   

(whether or not it also has or is capable of having effect so as to provide benefits

to or in respect of other persons).

35

(6)   

In this Part “sponsoring employer”, in relation to an occupational pension

scheme, means the employer, or any of the employers, to or in respect of any

or all of whose employees the pension scheme has, or is capable of having,

effect so as to provide benefits.

(7)   

In this Part “recognised overseas pension scheme” means a pension scheme

40

which—

(a)   

is established in a country or territory, other than the United Kingdom,

prescribed by regulations made by the Board of Inland Revenue,

(b)   

is regulated as a pension scheme in the country or territory in which it

is established, and

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Finance Bill
Part 4 — Pension schemes etc
Chapter 1 — Introduction

142

 

(c)   

satisfies any requirements so prescribed.

148     

Meaning of “member”

(1)   

In this Part “member” in relation to a pension scheme, means any active

member, pensioner member, deferred member or pension credit member of

the pension scheme.

5

(2)   

For the purposes of this Part a person is an active member of a pension scheme

if there are presently arrangements made under the pension scheme for the

accrual of benefits to or in respect of the person.

(3)   

For the purposes of this Part a person is a pensioner member of a pension

scheme if the person is entitled to the present payment of benefits under the

10

pension scheme and is not an active member.

(4)   

A person is a deferred member of a pension scheme if the person has accrued

rights under the pension scheme and is neither an active member nor a

pensioner member.

(5)   

A person is a pension credit member of a pension scheme if the person has

15

rights under the pension scheme which are attributable (directly or indirectly)

to pension credits.

149     

Meaning of “arrangement”

(1)   

In this Part “arrangement”, in relation to a member of a pension scheme, means

an arrangement relating to the member under the pension scheme.

20

(2)   

For the purposes of this Part an arrangement 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 cash balance benefits

or other money purchase benefits.

(3)   

For the purposes of this Part a money purchase arrangement is a “cash balance

25

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.

(4)   

In this Part “money purchase benefits”, in relation to a member of a pension

scheme, means benefits the rate or amount of which is calculated by reference

to an amount available for the provision of benefits to or in respect of the

30

member (whether the amount so available is calculated by reference to

payments made under the pension scheme by the member or any other person

in respect of the member or any other factor).

(5)   

In this Part “cash balance benefits” means benefits the rate or amount of which

is calculated by reference to an amount available for the provision of benefits

35

to or in respect of the member calculated otherwise than wholly by reference

to payments made under the arrangement by the member or by any other

person in respect of the member (or transfers or other credits).

(6)   

For the purposes of this Part an arrangement is a “defined benefits

arrangement” at any time if, at that time, all the benefits that may be provided

40

to or in respect of the member under the arrangement are defined benefits.

(7)   

In this Part “defined benefits”, in relation to a member of a pension scheme,

means benefits which are not money purchase benefits (but which are

 

 

Finance Bill
Part 4 — Pension schemes etc
Chapter 2 — Registration of pension schemes

143

 

calculated by reference to earnings or service of the member or any other factor

other than an amount available for their provision).

(8)   

For the purposes of this Part an arrangement is a “hybrid arrangement” at any

time if, at that time, all of the benefits that may be provided to or in respect of

the member under the arrangement are, depending on the circumstances, to be

5

of one of any two or three of the following varieties—

(a)   

cash balance benefits,

(b)   

other money purchase benefits, and

(c)   

defined benefits.

(9)   

Where not all of the benefits that may be provided under an arrangement to or

10

in respect of the member are of the same one of those varieties of benefits, the

arrangement is to be treated for the purposes of this Part as being two or three

separate arrangements one of which relates to each of the two or three varieties

of benefits that may be so provided.

Chapter 2

15

Registration of pension schemes

Registration

150     

Registration of pension schemes

(1)   

An application may be made to the Inland Revenue for a pension scheme to be

registered.

20

(2)   

The application—

(a)   

must contain any information which is reasonably required by the

Inland Revenue in any form specified by the Board of Inland Revenue,

and

(b)   

must be accompanied by a declaration that the application is made by

25

the scheme administrator (see section 264) and any other declarations

by the scheme administrator which are reasonably required by the

Inland Revenue.

(3)   

The declarations which the Inland Revenue may require to accompany an

application for the registration of a pension scheme include, in particular, a

30

declaration that the instruments or agreements by which it is constituted do

not entitle any person to unauthorised payments (see section 157(5)).

(4)   

On receipt of an application for a pension scheme to be registered the Inland

Revenue must decide whether or not to register the pension scheme.

(5)   

The Inland Revenue’s decision must be to register the pension scheme unless

35

it appears that—

(a)   

any information contained in the application is incorrect, or

(b)   

any declaration accompanying it is false.

(6)   

The Inland Revenue must notify the scheme administrator of the decision on

the application.

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Finance Bill
Part 4 — Pension schemes etc
Chapter 2 — Registration of pension schemes

144

 

(7)   

Unless the Inland Revenue’s decision is not to register the pension scheme, the

notification must state the day on and after which the pension scheme will be

a registered pension scheme.

(8)   

An annuity contract—

(a)   

by means of which benefits under a registered pension scheme have

5

been secured, but

(b)   

which does not provide for the immediate payment of benefits,

   

is to be treated as having become a registered pension scheme on the day on

which it is made.

(9)   

Schedule 34 contains (in Part 1) provisions treating certain pension schemes in

10

existence immediately before 6th April 2006 as registered pension schemes

(and related provisions).

151     

Persons by whom registered pension scheme may be established

(1)   

An application to register a pension scheme may be made only if the pension

scheme is an occupational pension scheme or has been established by—

15

(a)   

an insurance company (see section 269),

(b)   

a unit trust scheme manager,

(c)   

an operator, trustee or depositary of a recognised EEA collective

investment scheme,

(d)   

an authorised open-ended investment company,

20

(e)   

a building society,

(f)   

a bank, or

(g)   

an EEA investment portfolio manager.

(2)   

But subsection (1) does not apply to a public service pension scheme.

(3)   

Section 152 defines terms used in subsection (1)(b) to (g).

25

(4)   

The Treasury may by order amend this section and section 152.

152     

Persons by whom scheme may be established: supplementary

(1)   

This section has effect for defining terms used in section 151(1)(b) to (g).

(2)   

“Unit trust scheme manager” means—

(a)   

a person who has permission under Part 4 of FISMA 2000 to manage

30

unit trust schemes authorised under section 243 of FISMA 2000, or

(b)   

a firm which has permission under paragraph 4 of Schedule 4 to FISMA

2000 (as a result of qualifying for authorisation under paragraph 2 of

that Schedule: Treaty firms) to manage unit trust schemes authorised

under that section.

35

(3)   

“Recognised EEA collective investment scheme” means a collective investment

scheme (within the meaning given by section 235 of FISMA 2000) which is

recognised by virtue of section 264 of FISMA 2000 (schemes constituted in

other EEA States).

(4)   

“Authorised open-ended investment company” has the meaning given by

40

section 237(3) of FISMA 2000.

(5)   

“Building society” means a building society within the Building Societies Act

1986 (c. 53).

 

 

Finance Bill
Part 4 — Pension schemes etc
Chapter 2 — Registration of pension schemes

145

 

(6)   

“Bank” means—

(a)   

a person falling within section 840A(1)(b) of ICTA (persons, other than

building societies etc. permitted to accept deposits), or

(b)   

a body corporate which is a subsidiary or holding company of a person

falling within section 840A(1)(b) of ICTA or is a subsidiary of the

5

holding company of such a person.

   

In paragraph (b) “subsidiary” and “holding company” are to be read in

accordance with section 736 of the Companies Act 1985 (c. 6) or Article 4 of the

Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)).

(7)   

“EEA investment portfolio manager” means an institution which—

10

(a)   

is an EEA firm of the kind mentioned in paragraph 5(a), (b) or (c) of

Schedule 3 to FISMA 2000 (certain credit and financial institutions),

(b)   

qualifies for authorisation under paragraph 12(1) or (2) of that

Schedule, and

(c)   

has permission under FISMA 2000 to manage portfolios of investments.

15

153     

Appeal against decision not to register

(1)   

This section applies where, on an application for a pension scheme to be

registered, the Inland Revenue’s decision is not to register the pension scheme.

(2)   

The scheme administrator may appeal against the decision.

(3)   

The appeal is to the General Commissioners, except that the scheme

20

administrator may elect (in accordance with section 46(1) of TMA 1970) to

bring the appeal before the Special Commissioners instead of the General

Commissioners.

(4)   

Paragraphs 1, 2, 8 and 9 of Schedule 3 to TMA 1970 (rules for assigning

proceedings to General Commissioners) have effect to identify the General

25

Commissioners before whom an appeal under this section is to be brought, but

subject to modifications specified in an order made by the Board of Inland

Revenue.

(5)   

An appeal under this section against a decision must be brought within the

period of 30 days beginning with the day on which the scheme administrator

30

was notified of the decision.

(6)   

The Commissioners before whom an appeal under this section is brought must

consider whether the pension scheme ought to have been registered by the

Inland Revenue.

(7)   

If they decide that the pension scheme ought not to have been registered by the

35

Inland Revenue, they must dismiss the appeal.

(8)   

If they decide that the pension scheme ought to have been registered by the

Inland Revenue, the pension scheme is to be treated as having been registered

on such date as the Commissioners determine (but subject to any further

appeal or any determination on, or in consequence of, a case stated).

40

De-registration

154     

De-registration

(1)   

The Inland Revenue may withdraw the registration of a pension scheme.

 

 

 
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