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Finance (No.2) Bill


Finance (No.2) Bill
Schedule 21 — Taxable property held by investment-regulated pension schemes

403

 
 

“holding indirectly an interest

paragraph 20(4) of Schedule 29A”;

 
 

in a vehicle (for the purposes of

  
 

the taxable property

  
 

provisions)

  
 

“holding indirectly an interest

paragraph 16(1) of Schedule 29A”;

 

5

 

in property (for the purposes of

  
 

the taxable property

  
 

provisions)

  
 

“investment-regulated pension

paragraphs 1 to 3 of Schedule

 
 

scheme (for the purposes of the

29A”;

 

10

 

taxable property provisions)

  
 

“residential property (for the

paragraphs 7(1), 8 and 9 of

 
 

purposes of the taxable

Schedule 29A”;

 
 

property provisions)

  
 

“scheme-held taxable property

section 185B(3)”;

 

15

 

“sums and assets held for the

paragraph 5 of Schedule 29A”;

 
 

purposes of an arrangement

  
 

(for the purposes of the taxable

  
 

property provisions)

  
 

“taxable property (for the

paragraphs 6, 10 and 11 of

 

20

 

purposes of the taxable

Schedule 29A”;

 
 

property provisions)

  
 

“the taxable property

paragraph 1(3) of Schedule 29A”;

 
 

provisions

  
 

“vehicle (in the taxable

paragraph 20(2) of Schedule 29A”.

 

25

 

property provisions)

  
 

13         

After Schedule 29 insert—

“Schedule 29A

Section 174A

 

Taxable property held by investment-regulated pension schemes

Part 1

30

Investment-regulated pension schemes

Schemes other than occupational pension schemes

1     (1)  

For the purposes of the taxable property provisions a registered

pension scheme which is not an occupational pension scheme is an

investment-regulated pension scheme if one or more of its

35

members meets the condition in sub-paragraph (2).

      (2)  

The condition is that either—

(a)   

the member, or

(b)   

a person related to the member,

           

is or has been able (directly or indirectly) to direct, influence or

40

advise on the manner of investment of any of the sums and assets

 

 

Finance (No.2) Bill
Schedule 21 — Taxable property held by investment-regulated pension schemes

404

 

held for the purposes of an arrangement under the pension

scheme relating to the member.

      (3)  

In this Part “the taxable property provisions” means—

(a)   

section 173(7A) (exception from benefit charge where

taxable property held by investment-regulated pension

5

scheme),

(b)   

section 174A and this Schedule,

(c)   

sections 185A to 185I (income and gains from taxable

property),

(d)   

section 273ZA (member liability for scheme sanction

10

charge where pension scheme non-UK resident), and

(e)   

paragraphs 37A to 37I of Schedule 36 (transitional

provisions).

Occupational pension schemes

2     (1)  

For the purposes of the taxable property provisions a registered

15

pension scheme which is an occupational pension scheme is an

investment-regulated pension scheme if—

(a)   

there are 50 or fewer members of the pension scheme, and

one or more of those members meets the condition in sub-

paragraph (2), or

20

(b)   

at least 10% of the members of the pension scheme meet

that condition.

      (2)  

The condition is that either—

(a)   

the member, or

(b)   

a person related to the member,

25

           

is or has been able (directly or indirectly) to direct, influence or

advise on the manner of investment of any of the sums and assets

held for the purposes of the pension scheme.

Separate self-controlled section

3     (1)  

This paragraph applies in the case of an arrangement under a

30

registered pension scheme if—

(a)   

the pension scheme is an occupational pension scheme,

(b)   

the pension scheme is not an investment-regulated

pension scheme by virtue of paragraph 2, and

(c)   

one or more members of the pension scheme meet the

35

condition in sub-paragraph (2).

      (2)  

The condition is that either—

(a)   

the member, or

(b)   

a person related to the member,

           

is or has been able (directly or indirectly) to direct, influence or

40

advise on the manner of investment of any sums or assets which

are linked to an arrangement relating to the member.

      (3)  

For the purposes of sub-paragraph (2) sums or assets are linked to

an arrangement relating to a member if—

(a)   

they are held for the purposes of an arrangement under the

45

pension scheme relating to the member, but

 

 

Finance (No.2) Bill
Schedule 21 — Taxable property held by investment-regulated pension schemes

405

 

(b)   

they are not held for the purposes of the arrangement

merely by virtue of a just and reasonable apportionment of

the sums and assets held for the purposes of the pension

scheme.

      (4)  

Where this paragraph applies the arrangement is to be treated for

5

the purposes of this Part as if it were an investment-regulated

pension scheme.

      (5)  

The Treasury may by regulations—

(a)   

amend sub-paragraph (3), and

(b)   

provide for any of the provisions of this Part to apply to the

10

arrangement with modifications.

Related persons

4     (1)  

For the purposes of this Part of this Schedule a person is related to

a member of a pension scheme if—

(a)   

the person and the member are connected persons, or

15

(b)   

the person acts on behalf of the member or a person

connected with the member.

      (2)  

Section 839 of ICTA (connected persons) applies for the purposes

of sub-paragraph (1).

Arrangements

20

5          

Where sums or assets held for the purposes of an investment-

regulated pension scheme—

(a)   

are held otherwise than for the purposes of the

administration or management of the pension scheme, and

(b)   

would not, apart from this paragraph, be treated as held

25

for the purposes of any arrangement relating to a member

under the pension scheme,

           

for the purposes of the taxable property provisions the sums or

assets are to be treated as held for the purposes of the

arrangements under the pension scheme by reference to the

30

respective rights under the scheme of the members to which the

arrangements relate.

Part 2

Taxable property

Taxable property

35

6          

For the purposes of the taxable property provisions property is

taxable property if—

(a)   

it is residential property (see paragraphs 7 to 10), or

(b)   

it is tangible moveable property (but subject to paragraph

11).

40

 

 

Finance (No.2) Bill
Schedule 21 — Taxable property held by investment-regulated pension schemes

406

 

Residential property

7     (1)  

Subject as follows, for the purposes of the taxable property

provisions “residential property” means—

(a)   

a building that is used or suitable for use as a dwelling,

(b)   

any land consisting of, or forming part of, the garden or

5

grounds of such a building (including a building on any

such land) which is used or intended for use for a purpose

connected with the enjoyment of the building,

(c)   

hotel or similar accommodation (but see paragraph 14(2)),

or

10

(d)   

a beach hut,

           

in the United Kingdom or elsewhere.

      (2)  

For the purposes of the taxable property provisions “building”

includes—

(a)   

a structure, and

15

(b)   

part of a building or structure.

8     (1)  

For the purposes of the taxable property provisions a building

used for any of the following purposes is not residential

property—

(a)   

a home or other institution providing residential

20

accommodation for children;

(b)   

a hall of residence for students;

(c)   

a home or other institution providing residential

accommodation with personal care for persons in need of

personal care by reason of old age, disability, past or

25

present dependence on alcohol or drugs or past or present

mental disorder;

(d)   

a hospital or hospice;

(e)   

a prison or similar establishment.

      (2)  

Where—

30

(a)   

a building is used for a purpose specified in sub-paragraph

(1),

(b)   

a building which is not in use was, immediately before it

ceased to be in use, used for such a purpose, or

(c)   

a building which has never been in use is more suitable for

35

use for such a purpose than for use for any other purpose,

           

no account is to be taken for the purposes of the taxable property

provisions of its suitability for use as a dwelling.

9     (1)  

The Treasury may by order amend this Part of this Schedule to

specify descriptions of buildings which are, or are not, to be

40

treated as residential property.

      (2)  

An order under this paragraph which amends this Part of this

Schedule in a way that results in buildings becoming treated as not

being residential property may provide that the amendment has

effect from a date earlier than that on which the order was made.

45

10    (1)  

Residential property is not taxable property in relation to a

pension scheme if Condition A or B is met.

 

 

Finance (No.2) Bill
Schedule 21 — Taxable property held by investment-regulated pension schemes

407

 

      (2)  

Condition A is met if the property is (or, if unoccupied, is to be)

occupied by an employee who—

(a)   

is neither a member of the pension scheme nor connected

with such a member,

(b)   

is not connected with the employer, and

5

(c)   

is required as a condition of employment to occupy the

property.

      (3)  

Condition B is met if the property is (or, if unoccupied, is to be)—

(a)   

occupied by a person who is neither a member of the

pension scheme nor connected with such a member, and

10

(b)   

used in connection with business premises held as an

investment of the pension scheme.

      (4)  

Section 839 of ICTA (connected persons) applies for the purposes

of this paragraph.

Tangible moveable property

15

11    (1)  

The Treasury may by order provide that, for the purposes of the

taxable property provisions, any specified description of tangible

moveable property is treated as not being taxable property.

      (2)  

An order under this paragraph may include provision having

effect in relation to times before it is made.

20

Part 3

Acquisition and holding of taxable property

Acquisition

12    (1)  

For the purposes of the taxable property provisions an

investment-regulated pension scheme acquires an interest in

25

property if it comes to hold the interest.

      (2)  

Sub-paragraph (1) applies however the pension scheme comes to

hold the interest, whether that is—

(a)   

by act of the parties to a transaction,

(b)   

by order of a court or other authority,

30

(c)   

by or under any statutory provision, or

(d)   

by operation of law.

      (3)  

For instances of deemed acquisition, see paragraphs 27 to 29.

Holding

13    (1)  

For the purposes of the taxable property provisions an

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investment-regulated pension scheme holds an interest in

property if the scheme holds the interest directly or indirectly.

      (2)  

In the taxable property provisions references to a person holding

an interest in property include, in the case of an investment-

regulated pension scheme, an arrangement under a pension

40

scheme or a trust which is not a pension scheme a reference to the

 

 

Finance (No.2) Bill
Schedule 21 — Taxable property held by investment-regulated pension schemes

408

 

interest in the property being held for the purposes of the pension

scheme, the arrangement or the trust.

Direct holding

14    (1)  

For the purposes of the taxable property provisions a person holds

an interest in property directly if the person (whether jointly, in

5

common or alone)—

(a)   

holds the property or any estate, interest, right or power in

or over the property,

(b)   

has the right to use, or participate in arrangements relating

to the use of, that property or a description of property to

10

which that property belongs, or

(c)   

has the benefit of any obligation, restriction or condition

affecting the value of any estate, interest, right or power in

or over the property,

           

under the law of any country or territory.

15

      (2)  

But a person does not hold an interest in residential property

consisting of hotel accommodation directly unless—

(a)   

the person holds part only of the hotel accommodation or

any estate, interest, right or power in or over such a part

and, as a result, any person has a right to use or occupy that

20

or any other part of the hotel accommodation, or

(b)   

the person has a right to use, or participate in

arrangements relating to the use of, part only of the hotel

accommodation or a description of property to which that

part belongs.

25

      (3)  

For the purposes of the taxable property provisions a person holds

an interest in property directly if the person is entitled (whether

jointly, in common or alone) to receive payments determined by

reference to the value of or the income from the property.

      (4)  

Sub-paragraph (3) is subject to paragraph 15.

30

Exception to direct holding

15    (1)  

A person does not hold an interest in taxable property directly by

virtue of paragraph 14(3) where Conditions A to C are met.

      (2)  

Condition A is that—

(a)   

the person is entitled to receive the payments by virtue of

35

a policy of life insurance, a contract for a life annuity or a

capital redemption policy, and

(b)   

the policy or contract is issued by an insurance company.

      (3)  

Condition B is that the property—

(a)   

does not constitute a linked asset, or

40

(b)   

has been appropriated by the insurance company to an

internal linked fund.

      (4)  

Condition C is that—

(a)   

where the person is an occupational pension scheme, the

policy or contract, either by itself or taken together with

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Finance (No.2) Bill
Schedule 21 — Taxable property held by investment-regulated pension schemes

409

 

one or more associated policies, does not entitle the

pension scheme, either alone or together with one or more

associated persons, to receive payments representing 10%

or more of the market value of or the income from the

property,

5

(b)   

where the person is a pension scheme other than an

occupational pension scheme, the policy or contract, either

by itself or taken together with one or more associated

policies, does not entitle an arrangement under the

pension scheme, either alone or together with one or more

10

associated persons, to receive such payments, or

(c)   

otherwise, the policy or contract does not entitle the person

to receive such payments.

      (5)  

But for the purposes of applying paragraph 14(3) for determining

whether a pension scheme holds an interest in taxable property

15

directly or indirectly, this paragraph does not apply if the purpose

or one of the purposes for which the person holds rights under the

policy or contract is to enable a member of the pension scheme or

a person connected with such a member to occupy or use the

property.

20

      (6)  

For the purposes of sub-paragraph (4) “associated policy” means

a policy or contract which entitles an associated person to receive

payments determined by reference to the value of or the income

from the property.

      (7)  

For the definition of “associated person” see paragraph 30.

25

      (8)  

For the purposes of this paragraph—

“capital redemption policy” means a contract made in the

course of a capital redemption business, as defined in

section 458(3) of ICTA;

“internal linked fund” has the meaning given by—

30

(a)   

the Interim Prudential Sourcebook for Insurers made

by the Financial Services Authority under FISMA

2000, or

(b)   

rules made by the Authority under that Act and

having effect for the time being in place of the

35

Sourcebook; and

“linked asset” means an asset of the insurance company

which is identified in its records as an asset by reference to

the value of which benefits provided for under a policy or

contract are to be determined.

40

      (9)  

For the purposes of this paragraph an annuity is a life annuity if it

is—

(a)   

granted for consideration in money or money’s worth in

the ordinary course of a business of granting annuities on

human life, and

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(b)   

payable for a term ending at a time ascertainable only by

reference to the end of a human life,

           

and for this purpose it does not matter that the annuity may in

some circumstances end before or after the life.

 

 

 
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