Finance (No. 2) Bill

House of Commons

Session 2004 - 05
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Other Bills before Parliament

Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
192

     (14)
After that sub-paragraph insert—
   “(5A)
Where the appropriate three year period ends otherwise than with
the first relevant event, Amount B is what it would be apart from
this sub-paragraph increased by whichever is the greatest of—
(a)
the percentage by which an amount would be increased if
5
it were increased for the period beginning with the date on
which it ends and ending with the date on which the
relevant event occurs at an annual rate of 5%,
(b)
the percentage by which an amount would be increased if
it were increased for that period at an annual percentage
10
rate referred to in regulations made by the Board of Inland
Revenue, or
(c)
the percentage by which the retail prices index for the
month in which the first relevant event occurs is higher
than that for the month in which the appropriate period
15
ends.”
     (15)
In paragraph 17 (enhanced protection: post-commencement earnings limit
for other individuals), after sub-paragraph (5) insert—
    “(6)
Where the appropriate three year period ends otherwise than with
the first relevant event, Amount D is what it would be apart from
20
this sub-paragraph increased by whichever is the greatest of—
(a)
the percentage by which an amount would be increased if
it were increased for the period beginning with the date on
which it ends and ending with the date on which the
relevant event occurs at an annual rate of 5%,
25
(b)
the percentage by which an amount would be increased if
it were increased for that period at an annual percentage
rate referred to in regulations made by the Board of Inland
Revenue, or
(c)
the percentage by which the retail prices index for the
30
month in which the first relevant event occurs is higher
than that for the month in which the appropriate period
ends.”
     (16)
After that paragraph insert—
“17A  (1)
There is an impermissible transfer into a relevant existing
35
arrangement relating to an individual under a pension scheme in
a case where the relevant existing arrangement is a money
purchase arrangement that is not a cash balance arrangement if—
(a)
sums or assets held for the purposes of, or representing
rights under, an arrangement relating otherwise than to
40
the individual are transferred so as to become held for the
purposes of the relevant existing arrangement, otherwise
than pursuant to a pension sharing order or provision,
(b)
sums or assets which are neither held for the purposes of,
nor represent rights under, a pension scheme are so
45
transferred, or
(c)
a transfer lump sum death benefit is paid so as to become
held for the purposes of, or to represent accrued rights
under, the relevant existing arrangement.

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
193

      (2)
Sub-paragraph (1) applies where the relevant existing
arrangement has been a hybrid arrangement as if the references to
sums or assets being transferred, or to a transfer lump sum death
benefit being paid, were to transfer or payment at any time after
5th April 2006.
5
      (3)
There is an impermissible transfer into a relevant existing
arrangement relating to an individual under a pension scheme in
a case where the relevant existing arrangement is a cash balance
arrangement or a defined benefits arrangement, if it becomes a
money purchase arrangement that is not a cash balance
10
arrangement.”
Transitional provisions: persons who may take benefits before normal minimum pension age
54    (1)
Schedule 36 (transitional provisions) is amended as follows.
      (2)
In paragraph 19(5) (individuals permitted to take pension before normal
minimum pension age), omit “and the pension scheme”.
15
      (3)
In the heading before paragraph 21, for “pension” substitute “benefit”.
      (4)
Paragraph 22 (right to take pension before normal minimum pension age:
protected pension scheme where original pension scheme within paragraph
1(1)(a), (b), (c), (d) or (e)) is amended as follows.
      (5)
In sub-paragraph (4)(a) (entitlement to pension at age of less than 55), for “a
20
pension” substitute “any benefit”.
      (6)
In sub-paragraph (7) (retirement condition)—
(a)
in paragraph (a), for “pensions” substitute “benefits”, and
(b)
in paragraph (b), for “a pension” substitute “any benefit”.
      (7)
In sub-paragraph (8) (member’s protected pension age), for “a pension”
25
substitute “any benefit”.
Transitional provisions: block transfers
55    (1)
Schedule 36 (transitional provisions) is amended as follows.
      (2)
Paragraph 22 (right to take pension before normal minimum pension age:
protected pension scheme where original pension scheme within paragraph
30
1(1)(a), (b), (c), (d) or (e)) is amended as follows.
      (3)
In sub-paragraph (5) (condition B: membership due to block transfer from
original pension scheme), for the words after “the pension scheme”
substitute “(“a transferee pension scheme”) as a result of—
(a)
a block transfer from the pension scheme (“the original
35
pension scheme”) in relation to which condition A is met
to the transferee pension scheme, or
(b)
a block transfer to the transferee pension scheme from a
pension scheme that was a transferee pension scheme in
relation to the original pension scheme by virtue of the
40
previous application of paragraph (a) or the previous
application (on one or more occasions) of this paragraph.”

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
194

      (4)
For paragraph (b) of sub-paragraph (6) substitute—
“(b)
either the member was not a member of the pension
scheme to which the transfer is made before the transfer or
he has been a member of that pension scheme for no longer
than such period as is prescribed by regulations made by
5
the Board of Inland Revenue.”
      (5)
In paragraph 23(5) (right to take pension before normal minimum pension
age: condition B in case of protected pension scheme where original pension
scheme within paragraph 1(1)(f) or (g)), for the words after “the pension
scheme” substitute “(“a transferee pension scheme”) as a result of—
10
(a)
a block transfer from the pension scheme (“the original
pension scheme”) in relation to which condition A is met
to the transferee pension scheme, or
(b)
a block transfer to the transferee pension scheme from a
pension scheme that was a transferee pension scheme in
15
relation to the original pension scheme by virtue of the
previous application of paragraph (a) or the previous
application (on one or more occasions) of this paragraph.”
      (6)
In paragraph 31(7) (entitlement to lump sums exceeding 25% of
uncrystallised rights: condition B), for the words after “the pension scheme”
20
substitute “(“a transferee pension scheme”) as a result of—
(a)
a block transfer from the pension scheme (“the original
pension scheme”) in relation to which condition A is met
to the transferee pension scheme, or
(b)
a block transfer to the transferee pension scheme from a
25
pension scheme that was a transferee pension scheme in
relation to the original pension scheme by virtue of the
previous application of paragraph (a) or the previous
application (on one or more occasions) of this paragraph.”
      (7)
In paragraph 51(5) (pre-commencement entitlement to corresponding
30
relief), for the words after “a pension scheme” insert “(“a transferee pension
scheme”) if there has been—
(a)
a block transfer from the pension scheme within sub-
paragraph (1) (“the original pension scheme”) to the
transferee pension scheme, or
35
(b)
a block transfer to the transferee pension scheme from a
pension scheme that was a transferee pension scheme in
relation to the original pension scheme by virtue of the
previous application of paragraph (a) or the previous
application (on one or more occasions) of this paragraph.”
40
Transitional provisions: lump sums before normal minimum pension age
56
In Schedule 36 (transitional provisions), after paragraph 23 insert—
“23A  (1)
Where—
(a)
paragraph 19 applies to a benefit crystallisation event
occurring in relation to an individual, and
45
(b)
the benefit crystallisation event consists in the individual
becoming entitled to a pension or a pension
commencement lump sum,

Finance (No. 2) Bill
Schedule 10 — Pension schemes etc.
195


paragraph 2(6) of Schedule 29 has effect as if CSLA were the
current standard lifetime allowance reduced by the relevant
percentage (within the meaning of paragraph 19).
      (2)
Sub-paragraph (3) applies where, after the occurrence in relation
to an individual of a benefit crystallisation event in relation to
5
which paragraph 19 has had effect, another benefit crystallisation
event occurs in relation to the individual.
      (3)
If the amount crystallised on the previous benefit crystallisation
event exceeded the available amount of the individual’s lifetime
allowance at the time of that benefit crystallisation event,
10
paragraph 2(6) of Schedule 29 has effect as if, for the purposes of
AAC, the amount crystallised were the available amount of the
individual’s lifetime allowance at that time.”
Transitional provisions: lump sums exceeding 25% of uncrystallised rights
57
In the substituted sub-paragraph (7) set out in paragraph 34(2) of Schedule
15
36 (entitlement to lump sums exceeding 25% of uncrystallised rights), in the
definition of “ALSA”, for “additional lump sum amount” substitute “greater
of the additional lump sum amount and nil”.
Transitional provisions: inheritance tax
58    (1)
Schedule 36 (transitional provisions) is amended as follows.
20
      (2)
In paragraph 57(1) and (2) (no contributions under scheme after 5th April
2006), for “proportion”, in each place, substitute “percentage”.
      (3)
In paragraph 58(6)(b) (other cases), after “any” insert “relevant”.
Trivial commutation and winding-up lump sums
59
In section 636B(3) of ITEPA 2003 (trivial commutation and winding-up lump
25
sums: taxable pension income to be 75% of lump sum where member has not
become entitled to any benefits under pension scheme), for the words after
“member” substitute “has uncrystallised rights (within the meaning of
section 212 of FA 2004) under any one or more arrangements under the
pension scheme, the amount of the taxable pension income—
30
(a)
if all his rights under the pension scheme are uncrystallised
rights, is 75% of the lump sum, and
(b)
otherwise, is reduced by 25% of the value of the
uncrystallised rights calculated in accordance with that
section.”
35
Application of PAYE to annuities etc.
60
In section 683(3) of ITEPA 2003 (PAYE pension income), after the entry
relating to section 579B of that Act insert—
“section 612, so far as relating to annuities to which section 610
applies (annuities under non-registered occupational
40
pension schemes),”.
61
In Schedule 36 to FA 2004 (transitional provisions), omit—

Finance (No. 2) Bill
Schedule 11 — Repeals
Part 1 — Excise duties
196

(a)
paragraph 43 (continuation of Chapter 9 of Part 9 of ITEPA 2003 for
certain annuity contracts with continued exclusion from PAYE), and
(b)
paragraph 46 (application of PAYE to certain existing annuity
contracts taxable under section 612 of ITEPA 2003).
62
In sections 348(1A) and 349(1A) of ICTA (deduction of tax), omit—
5
(a)
paragraph (b), and
(b)
in paragraph (c), “, 610”.
House of Commons Members’ Fund
63
Section 613(1) and (2) of ICTA (tax relief for contributions to House of
Commons Members’ Fund) shall be treated as not having been repealed by
10
ITEPA 2003.
Commencement
64    (1)
Subject as follows, the preceding provisions of this Schedule come into force
on 6th April 2006.
      (2)
Paragraphs 60 to 62 come into force on 6th April 2007.
15
      (3)
Paragraph 63 comes into force on the day on which this Act is passed.
Schedule 11
Section 104

Repeals
Part 1
Excise duties
20
Vehicle excise duty

Short title and chapter
Extent of repeal

Vehicle Excise and Registration
In section 4, subsection (3) and, in subsection

Act 1994 (c. 22)
(7), the words “or (3)”.

In Schedule 1, paragraph 10(3A) and (3B).

25

Finance Act 1995 (c. 4)
In Schedule 4, paragraph 14(7)(b), (8)(b) and (9).

Finance Act 1999 (c. 16)
Section 8(4).

Finance Act 2001 (c. 9)
In Schedule 2, paragraph 6.

Finance Act 2003 (c. 14)
Section 14(1)(a) and (2).


These repeals have effect in accordance with section 7 of this Act.
30

Finance (No. 2) Bill
Schedule 11 — Repeals
Part 2 — Income tax, corporation tax and capital gains tax
197

Part 2
Income tax, corporation tax and capital gains tax
(1) Extension of outplacement services etc exemption: part-time employees

Short title and chapter
Extent of repeal

Income Tax (Earnings and
In section 310(4), “full-time”.

5

Pensions) Act 2003 (c. 1)
In section 311—

(a)
in subsection (3), paragraph (d) and the

word “and” before it;

(b)
in subsection (4)(c), “full-time”.


These repeals have effect in accordance with section 18(5) of this Act.
10
(2) Employee securities

Short title and chapter
Extent of repeal

Taxation of Chargeable Gains
In section 119A(3), the words following the

Act 1992 (c. 12)
paragraphs.


This repeal has effect in accordance with section 22 of this Act.
15
(3) Films: restrictions on relief for production and acquisition expenditure

Short title and chapter
Extent of repeal

Finance (No. 2) Act 1992 (c. 48)
Section 40A(5).

In section 42—

(a)
in subsection (2), the word “and”

20

immediately before paragraph (b), and

(b)
in subsection (3), the word “and”

immediately before paragraph (b).

In section 43(1), the definitions of “master disc”,

“master negative” and “master tape”.

25

Finance (No. 2) Act 1997 (c. 58)
Section 48(3), (4) and (5).

Finance Act 2002 (c. 23)
Section 101.

Finance (No. 2) Bill
Schedule 11 — Repeals
Part 2 — Income tax, corporation tax and capital gains tax
198

Short title and chapter
Extent of repeal

Income Tax (Trading and Other
In section 138 (as substituted by this Act), in

Income) Act 2005 (c. 5)
subsection (5), in Calculation 2, paragraph (c)

and the word “and” immediately before it.

In section 138A(5), Calculation 2.

5

In section 139—

(a)
in subsection (1), the word “and”

immediately before paragraph (e), and

(b)
in subsection (5)(d) the words “, or

section 42 of that Act (but not as applied

10

by section 48(1) and (2) of F(No.2)A

1997),”.

In section 140—

(a)
in subsection (1), paragraph (b) and the

word “and” immediately before

15

paragraph (f),

(b)
subsection (2), and

(c)
in subsection (6)(d), the words “, or

section 42 of that Act (but not as applied

by section 48(1) to (3) of F(No.2)A

20

1997),”.

1
The repeals in section 40A(5) and 43(1) of F(No.2)A 1992 have effect in
accordance with paragraph 31(3) of Schedule 3 to this Act.
2
The repeals in section 42 of that Act have effect in accordance with
paragraph 1(6) to (8) of that Schedule.
25
3
The repeals in section 48 of F(No.2)A 1997 have effect in accordance with
paragraph 10(2) to (4) of that Schedule.
4
The repeal of section 101 of FA 2002 has effect in accordance with paragraph
2(2) and (3) of that Schedule.
5
The repeals in section 138 of ITTOIA 2005 have effect in accordance with
30
paragraph 11(5) to (7) of that Schedule.
6
The repeal in section 138A of that Act has effect in accordance with
paragraph 12(6) to (8) of that Schedule.
7
The repeal in section 139(1) of that Act has effect in accordance with
paragraph 4(4) and (5) of that Schedule.
35
8
The repeal in section 139(5) of that Act has effect in accordance with
paragraph 13 of that Schedule.
9
The repeal in section 140(6) of that Act has effect in accordance with
paragraph 14 of that Schedule.
10
The remaining repeals in that section have effect in accordance with
40
paragraph 5(4) to (6) of that Schedule.