Finance (No. 2) Bill

House of Commons

Session 2004 - 05
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Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 9 — Stamp duty land tax and stamp duty: removal of disadvantaged areas relief for non-residential property
157

      (7)
In paragraph 10 (land partly situated in a disadvantaged area: cases where
part so situated is partly non-residential and partly residential)—
(a)
for the first sentence of sub-paragraph (1) substitute—

“This paragraph applies, where the land situated in a
disadvantaged area is partly non-residential property and
5
partly residential property, in relation to the consideration
attributable to land that is residential property.”;
(b)
in the second sentence of that sub-paragraph omit “land that is non-
residential property or”;
(c)
omit sub-paragraphs (2) and (3).
10
Stamp duty
2     (1)
The Stamp Duty (Disadvantaged Areas) (Application of Exemptions)
Regulations 2003 (S.I. 2003/1056) are amended as follows.
      (2)
After regulation 2 insert—
“2A
Disapplication of exemptions conferred by section 92 or by Schedule
15
30 where all of land is non-residential property
An exemption conferred by section 92 or by Schedule 30 shall not
apply where none of the land in question is residential property.”.
      (3)
In regulation 5 (application of exemptions conferred by section 92 or by
Schedule 30 where land only partly residential property), after paragraph (3)
20
insert—
“(3A)
An exemption conferred by section 92 or by Schedule 30 shall not
apply in relation to any duty chargeable in respect of relevant
consideration, or the rate or average rate of rent, attributed to the
land in question to the extent that it is not residential property.”.
25
3
The insertion by paragraph 2 of provisions into the Stamp Duty
(Disadvantaged Areas) (Application of Exemptions) Regulations 2003 is
without prejudice to the power to amend or revoke those provisions by
further regulations under section 92A of FA 2001.
Commencement and transitional provisions
30
4     (1)
Subject to sub-paragraph (2), paragraph 1 applies in relation to any
transaction of which the effective date is after 16th March 2005.
      (2)
That paragraph does not apply—
(a)
in relation to any transaction that is effected in pursuance of a
contract entered into and substantially performed on or before 16th
35
March 2005, or
(b)
(subject to sub-paragraph (3)) in relation to any other transaction that
is effected in pursuance of a contract entered into on or before that
date.
      (3)
The exclusion by sub-paragraph (2)(b) of transactions effected in pursuance
40
of contracts entered into on or before 16th March 2005 does not apply—
(a)
if there is any variation of the contract or assignment of rights under
the contract after that date,

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
158

(b)
if the transaction is effected in consequence of the exercise after that
date of any option, right of pre-emption or similar right, or
(c)
if after that date there is an assignment, subsale or other transaction
(relating to the whole or part of the subject-matter of the contract) as
a result of which a person other than the purchaser under the
5
contract becomes entitled to call for a conveyance to him.
      (4)
In this paragraph “effective date” and “substantially performed” have the
same meaning as in Part 4 of FA 2003.
5     (1)
Subject to sub-paragraph (2), paragraph 2 applies in relation to instruments
executed after 16th March 2005.
10
      (2)
That paragraph does not apply in relation to an instrument giving effect to
a contract entered into on or before 16th March 2005, unless—
(a)
the instrument is made in consequence of the exercise after that date
of any option, right of pre-emption or similar right, or
(b)
the instrument transfers the property in question to, or vests it in, a
15
person other than the purchaser under the contract, because of an
assignment (or, in Scotland, assignation) or further contract made
after that date.
Schedule 10
Section 101

Pension schemes etc.
20
Introduction
1
Part 4 of FA 2004 (pension schemes etc.) is amended in accordance with
paragraphs 2 to 58.
Deferred annuities
2
In section 153(8) (deferred annuity contract to be registered pension
25
scheme), after “contract” insert “made with an insurance company”.
Orders for return of unauthorised payments
3
In section 153 (registration of pension schemes), after subsection (8) insert—
“(8A)
Where an order has been made under section 19(4) or 21(2)(a) of the
Pensions Act 2004 or Article 15(4) or 17(2)(a) of the Pensions
30
(Northern Ireland) Order 2005 (restitution by order of court or
Pensions Regulator) that property or money be transferred, or a sum
be paid, towards an annuity contract made with an insurance
company, the annuity contract is to be treated as having become a
registered pension scheme on the day on which it is made.”
35

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
159

4
After section 266 insert—
“Relief from liability in respect of returned unauthorised member payments
266A
Member’s liability
(1)
This section applies where—
(a)
a liability to the unauthorised payments charge, or to both the
5
unauthorised payments charge and the unauthorised
payments surcharge, has arisen in respect of an unauthorised
member payment, and
(b)
property or money is transferred, or a sum paid, towards a
registered pension scheme pursuant to an order under
10
section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article
15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order
2005 (restitution by order of court or Pensions Regulator) as
a result of the unauthorised member payment.
(2)
The member of the registered pension scheme to or in respect of
15
whom the unauthorised member payment was made (or, if it was
paid after his death, the recipient) may claim relief from—
(a)
the relevant proportion of the unauthorised payments
charge, and
(b)
if a liability to the unauthorised payments surcharge has
20
arisen and subsection (4) is satisfied, the relevant proportion
of the unauthorised payments surcharge.
(3)
The claim must be made within the period of one year beginning
with the day on which the property or money is transferred, or the
sum paid.
25
(4)
This subsection is satisfied if no part of the unauthorised member
payment and no asset or sum representing it—
(a)
has been received by (or on behalf of) the member or a person
connected with the member, or
(b)
has been held for more than 180 days by a person or
30
succession of persons, other than the member or a person
connected with the member, involved in any transaction by
which the unauthorised member payment was made.
(5)
The relevant proportion of the unauthorised payments charge or the
unauthorised payments surcharge is—
35
where—
ASO is the amount subject to the order, that is the aggregate of
the market value of any property and the amount of any
money transferred, or the amount of the sum paid, towards a
registered pension scheme pursuant to the order under
40
section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article
15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order
2005 in respect of the unauthorised member payment, and
UMP is the amount of the unauthorised member payment.

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
160

(6)
But if ASO is greater than UMP, the relevant proportion of the
unauthorised payments charge or the unauthorised payments
surcharge is the whole of it.
(7)
Section 839 of ICTA (connected persons) applies for the purposes of
this section.
5
266B
Scheme’s liability
(1)
This section applies where—
(a)
the scheme administrator of a registered pension scheme has
become liable to the scheme sanction charge in respect of an
unauthorised member payment, and
10
(b)
property or money is transferred, or a sum paid, towards a
registered pension scheme pursuant to an order under
section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article
15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order
2005 (restitution by order of court or Pensions Regulator) as
15
a result of the unauthorised member payment.
(2)
The scheme administrator may, within the period of one year
beginning with the day on which the property or money is
transferred, or the sum paid, claim relief from the relevant
proportion of the scheme sanction charge.
20
(3)
The relevant proportion of the scheme sanction charge is—
where—
ASO is the amount subject to the order, that is the aggregate of
the market value of any property and the amount of any
money transferred, or the amount of the sum paid, towards a
25
registered pension scheme pursuant to the order under
section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article
15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order
2005 in respect of the unauthorised member payment, and
UMP is the amount of the unauthorised member payment.
30
(4)
But if ASO is greater than UMP, the relevant proportion of the
scheme sanction charge is the whole of it.”
Unauthorised member payments
5
In section 161(5) (payment made to person who is connected with member,
or was connected with member at his death, to be treated as made in respect
35
of member), after “scheme to” insert “or in respect of”.
Unauthorised payments: loans to person connected with member or sponsoring employer
6     (1)
Section 162 (meaning of “loan”) is amended as follows.
      (2)
In subsection (3) (guarantee of loan to or in respect of member or sponsoring
employer to be treated as loan), after “scheme” insert “, or to or in respect of
40
a person who is connected with a member or sponsoring employer of a
registered pension scheme but is not a member or sponsoring employer of
the pension scheme,”.

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
161

      (3)
In subsection (4) (debt of member or sponsoring employer not required to be
repaid at normal time to be treated as loan), after “registered pension
scheme” insert “or a person who is connected with a member or sponsoring
employer of a registered pension scheme but is not a member or sponsoring
employer of the pension scheme”.
5
      (4)
After subsection (5) insert—
“(6)
Section 839 of ICTA (connected persons) applies for the purposes of
this section.”
Abatement of public service pensions
7
In section 165(3) (when a person becomes entitled to a pension), insert at the
10
end (not as part of paragraph (b)) “and, for this purpose, the abatement of a
scheme pension under a public service pension scheme is not to be taken to
affect the right to receive it.”
8     (1)
Schedule 32 (benefit crystallisation events: supplementary) is amended as
follows.
15
      (2)
In paragraph 9 (benefit crystallisation event 2: meaning of “P”), after sub-
paragraph (1) insert—
   “(1A)
If the pension is under a public service pension scheme, any
abatement of the pension is to be left out of account in determining
the amount of the pension which will be payable for the purposes
20
of sub-paragraph (1).”
      (3)
After that paragraph insert—
“Benefit crystallisation event 3: disregarding abatement
9A
For the purposes of benefit crystallisation event 3, any abatement
of the scheme pension is to be left out of account in determining
25
for the purposes of column 1 —
(a)
the increased annual rate of the pension, and
(b)
the rate at which it was payable on the day on which the
individual became entitled to it.”
      (4)
In paragraph 11 (benefit crystallisation event 3: permitted margin in case of
30
post-5th April 2006 pension), after sub-paragraph (7) insert—
    “(8)
If the pension is under a public service pension scheme, any
abatement of the pension is to be left out of account in determining
for the purposes of this paragraph the annual amount of the
pension at the rate at which it was payable on the day on which the
35
individual became entitled to it.”
      (5)
In paragraph 12 (benefit crystallisation event 3: permitted margin in case of
pre-5th April 2006 pension), after sub-paragraph (3) insert—
    “(4)
If the pension is under a public service pension scheme, any
abatement of the pension is to be left out of account in determining
40
for the purposes of this paragraph the annual amount of the
pension at the rate at which it was payable on the day on which the
individual became entitled to it.”

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
162

      (6)
In paragraph 13 (benefit crystallisation event 3: meaning of “XP”), after sub-
paragraph (2) insert—
    “(3)
If the pension is under a public service pension scheme, any
abatement of the pension is to be left out of account in determining
for the purposes of sub-paragraph (1)—
5
(a)
the increased annual rate of the pension, and
(b)
the rate at which it was payable on the day on which the
individual became entitled to it.”
9
In section 279(1) (definitions), before the definition of “the Board of Inland
Revenue” insert—
10
““abatement”, in relation to a scheme pension under a public
service pension scheme, means the reduction of the pension
(including its reduction to nil) in accordance with the rules of
the pension scheme by reason of re-employment in public
service,”.
15
10
In the table in section 280(2) (index of defined expressions), insert at the
appropriate place—

“abatement
section 279(1)”.

Scheme pensions
11    (1)
Paragraph 2 of Schedule 28 (scheme pensions) is amended as follows.
20
      (2)
Omit sub-paragraph (1) (special provisions for pension scheme with fewer
than 50 members).
      (3)
In sub-paragraph (2) (pension scheme with 50 or more members), for “In the
case of a pension scheme with 50 or more members, a” substitute “A”.
      (4)
In sub-paragraph (3)(b) (no reduction in rate of pension)—
25
(a)
for “in respect of any” substitute “at any time during any”, and
(b)
for “in respect of the previous 12 month period” substitute “at the
relevant time”.
      (5)
After that sub-paragraph insert—
   “(3A)
“The relevant time” is—
30
(a)
in the case of the first relevant 12 month period, the day on
which the member becomes entitled to the pension, and
(b)
in the case of any other relevant 12 month period,
immediately before the beginning of that period.”
      (6)
In sub-paragraph (4) (things not preventing condition in sub-paragraph (3)
35
being satisfied), omit “or” at the end of paragraph (b) and insert at the end—
“(d)
the reduction of the pension in consequence of a pension
sharing order or provision,
(e)
forfeiture of entitlement to the pension in circumstances
prescribed by regulations made by the Board of Inland
40
Revenue,
(f)
the reduction of the pension in consequence of an order of
a court,

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
163

(g)
if the pension is under a public service pension scheme, its
reduction by abatement, or
(h)
the reduction of the pension in any other circumstances
prescribed by regulations made by the Board of Inland
Revenue.”
5
      (7)
After that sub-paragraph insert—
   “(4A)
In sub-paragraph (4) references to the reduction of a pension
include its ceasing to be payable (whether temporarily or
permanently).”
      (8)
After sub-paragraph (6) insert—
10
   “(6A)
The Board of Inland Revenue may by regulations provide that if—
(a)
a scheme pension payable by an insurance company
selected by the scheme administrator of a registered
pension scheme (“the original scheme pension”) ceases to
be payable, and
15
(b)
in consequence of the transfer of sums or assets (or both)
from the insurance company to another insurance
company in connection with the original scheme pension
ceasing to be payable, another scheme pension becomes
payable by the other insurance company (“the new scheme
20
pension”),

the new scheme pension is to be treated, to such extent as is
prescribed by the regulations and for such of the purposes of this
Part as are so prescribed, as if it were the original scheme
pension.”
25
      (9)
Insert at the end—
    “(8)
Regulations under sub-paragraph (4)(e) and (h) may include
provision having effect in relation to times before they are made.”
12
In Schedule 28 (authorised pensions), after paragraph 2 insert—
“2A   (1)
Where this paragraph applies in relation to a pension payable to
30
the member, the pension scheme is to be treated as making an
unauthorised payment to the member of the appropriate amount.
      (2)
This paragraph applies to a pension if it fails to satisfy the
condition in sub-paragraph (3) of paragraph 2—
(a)
by reason of not complying with paragraph (a) of that sub-
35
paragraph, or
(b)
by reason of not complying with paragraph (b) of that sub-
paragraph because a substantial reduction occurs in the
rate of the pension,

or if it is a pension the rate of which is reduced in accordance with
40
paragraph (b) of sub-paragraph (4) of paragraph 2 but the
reduction is part of avoidance arrangements.
      (3)
For the purposes of sub-paragraph (2)(b) a substantial reduction
occurs in the rate of a pension if the rate at which the pension is
payable at any time during any relevant 12 month period (within
45
the meaning of paragraph 2(7)) is less than 80% of the rate payable
when the member became entitled to the pension.