|
| |
|
(c) | on that date the pension scheme holds the interest in the |
| |
property indirectly or (if sub-paragraph (2) of paragraph |
| |
37A applies in relation to the pension scheme and the |
| |
interest in the property) the pension scheme will hold the |
| |
interest indirectly once it has been acquired pursuant to |
| 5 |
| |
(d) | the property is residential property on that date, and |
| |
(e) | improvement works on the property were begun after 5th |
| |
| |
(2) | This paragraph also applies where— |
| 10 |
(a) | sub-paragraph (1) or (2) of paragraph 37A applies in |
| |
relation to a pension scheme and an interest in property, |
| |
(b) | immediately before 6th April 2006 the pension scheme was |
| |
a small self-administered scheme, |
| |
(c) | on that date the pension scheme holds the interest in the |
| 15 |
| |
(d) | the pension scheme acquired the interest before 5th |
| |
| |
(e) | the property is residential property on 6th April 2006, and |
| |
(f) | improvement works on the property were begun after 5th |
| 20 |
| |
(3) | If the works are completed on or after 6th April 2006, paragraph |
| |
37B applies in relation to the pension scheme and the interest in |
| |
the property as if the works were begun on or after that date. |
| |
(4) | If the works are completed before that date— |
| 25 |
(a) | paragraph 37A does not apply in relation to the pension |
| |
scheme and the interest in the property, and |
| |
(b) | unless the pension scheme has still to acquire the interest |
| |
in the property on that date, sub-paragraphs (3) to (5) of |
| |
paragraph 37C apply in relation to the pension scheme and |
| 30 |
| |
(5) | For the purposes of this paragraph improvement works are to be |
| |
taken to have been begun before 6th December 2005 only if— |
| |
(a) | a binding contract for the works was entered into before |
| |
| 35 |
(b) | a substantial amount of the works has been carried out |
| |
| |
37E (1) | This paragraph applies where— |
| |
(a) | paragraph 37A would otherwise apply in relation to a |
| |
pension scheme and an interest in property, |
| 40 |
(b) | immediately before 6th April 2006 the pension scheme was |
| |
a retirement benefits scheme approved under section 590 |
| |
| |
(c) | the pension scheme was approved under that section after |
| |
| 45 |
(2) | Paragraph 37A does not apply in relation to the pension scheme |
| |
and the interest in the property. |
| |
|
| |
|
| |
|
(3) | Unless the pension scheme has still to acquire the interest in the |
| |
property on 6th April 2006, sub-paragraphs (3) to (5) of paragraph |
| |
37C apply in relation to the pension scheme and the interest. |
| |
Post-commencement acquisitions of taxable property |
| |
37F (1) | This paragraph applies where on or after 6th April 2006 an |
| 5 |
investment-regulated pension scheme acquires an interest in |
| |
taxable property consisting of tangible moveable property |
| |
because a person in whom the pension scheme directly or |
| |
indirectly holds an interest comes to hold the interest in the |
| |
| 10 |
(2) | The taxable property provisions (apart from this paragraph and |
| |
paragraph 37G) do not apply in relation to the pension scheme |
| |
and the interest in the property if the conditions in sub-paragraph |
| |
| |
(3) | Those conditions are that— |
| 15 |
(a) | on 6th April 2006 the pension scheme held the interest in |
| |
the person by virtue of acquiring it before that date, |
| |
(b) | immediately before that date the pension scheme was not |
| |
prohibited from holding the interest in the person, |
| |
(c) | at no time during the period beginning with that date and |
| 20 |
ending immediately before the acquisition of the interest in |
| |
the property has the pension scheme’s interest in the |
| |
person been such that, if it had held that interest in the |
| |
person immediately before 6th April 2006, it would have |
| |
been prohibited from holding that interest at that time, and |
| 25 |
(d) | the person acquires the interest in the property so that the |
| |
property may be used for the purposes of a trade, |
| |
profession or vocation carried on by the person or for the |
| |
purposes of its administration or management. |
| |
(4) | This paragraph is subject to paragraph 37G. |
| 30 |
37G (1) | Where Condition A or B is met in relation to the pension scheme |
| |
and an interest in property to which paragraph 37F has applied, |
| |
the pension scheme is to be treated for the purposes of the taxable |
| |
property provisions as acquiring the interest in the property on |
| |
the date on which the Condition is met. |
| 35 |
(2) | Condition A is that there is a change in the pension scheme’s |
| |
interest in the person who holds the interest in the property |
| |
directly such that, if the change had occurred immediately before |
| |
6th April 2006, the pension scheme would have been prohibited |
| |
from holding the interest in the person at that time. |
| 40 |
(3) | Condition B is that the property ceases to be used for the purposes |
| |
| |
(a) | a trade, profession or vocation carried on by the person, or |
| |
(b) | its administration or management. |
| |
(4) | For the purposes of Schedule 29A the total taxable amount in |
| 45 |
relation to any unauthorised payment which the pension scheme |
| |
is treated as having made by reason of the acquisition is the |
| |
|
| |
|
| |
|
market value on the relevant date of the interest in the property |
| |
| |
37H (1) | This paragraph applies where on or after 6th April 2006 an |
| |
investment-regulated pension scheme acquires an interest in |
| |
taxable property consisting of residential property because a |
| 5 |
person in whom the pension scheme directly or indirectly holds an |
| |
interest comes to hold the interest in the property directly. |
| |
(2) | The taxable property provisions (apart from this paragraph and |
| |
paragraph 37I) do not apply in relation to the pension scheme and |
| |
the interest in the property if the conditions in sub-paragraph (3) |
| 10 |
| |
(3) | Those conditions are that— |
| |
(a) | on 6th April 2006 the pension scheme held the interest in |
| |
the person by virtue of acquiring it before that date, |
| |
(b) | immediately before that date the pension scheme was not |
| 15 |
prohibited from holding the interest in the person, |
| |
(c) | immediately before that date the person had a business |
| |
involving the holding and letting of residential property |
| |
and held directly five or more assets consisting of interests |
| |
in residential property for the purposes of that business, |
| 20 |
(d) | at no time during the period beginning with that date and |
| |
ending immediately before the acquisition of the interest in |
| |
the property has the pension scheme’s interest in the |
| |
person been such that, if it had held that interest in the |
| |
person immediately before 6th April 2006, it would have |
| 25 |
been prohibited from holding that interest at that time, |
| |
(e) | the person acquires the interest in the property for the |
| |
purposes of its property rental business, and |
| |
(f) | after the acquisition of the interest in the property, the |
| |
property is not occupied or used by a member of the |
| 30 |
pension scheme or a person connected with such a |
| |
| |
(4) | This paragraph is subject to paragraph 37I. |
| |
(5) | Section 839 of ICTA (connected persons) applies for the purposes |
| |
| 35 |
37I (1) | Where Condition A, B or C is met in relation to the pension scheme |
| |
and an interest in property to which paragraph 37H has applied, |
| |
the pension scheme is to be treated for the purposes of the taxable |
| |
property provisions as acquiring, on the date on which the |
| |
Condition is met, each interest in property— |
| 40 |
(a) | which it holds on that date, and |
| |
(b) | to which paragraph 37H has applied before that date. |
| |
(2) | Condition A is that there is a change in the pension scheme’s |
| |
interest in the person who holds the interest in the property |
| |
directly such that, if the change had occurred immediately before |
| 45 |
6th April 2006, the pension scheme would have been prohibited |
| |
from holding the interest in the person at that time. |
| |
|
| |
|
| |
|
(3) | Condition B is that the property ceases to be used for the purposes |
| |
of the person’s property rental business. |
| |
(4) | Condition C is that the property is occupied or used by a member |
| |
of the pension scheme or a person connected with such a member. |
| |
(5) | For the purposes of Schedule 29A the total taxable amount in |
| 5 |
relation to any unauthorised payment which the pension scheme |
| |
is treated as having made by reason of an acquisition of an interest |
| |
in property treated as made by virtue of this paragraph is— |
| |
(a) | the market value on the relevant date of the interest in the |
| |
property held by the person who holds it directly, or |
| 10 |
(b) | if the interest in the property is a lease at a rent, the amount |
| |
of consideration that would be treated as given by the |
| |
person for the lease by virtue of paragraph 34 of Schedule |
| |
29A if it were assigned to the person on that date.” |
| |
| 15 |
| |
Pension schemes: inheritance tax |
| |
| |
1 | IHTA 1984 is amended as follows. |
| |
| |
2 | In section 12 (dispositions conferring retirement benefits), after subsection |
| 20 |
| |
“(2A) | Subsection (2B) below applies where a person who is a member of a |
| |
registered pension scheme, and who has not reached the age of 75, |
| |
has omitted to exercise pension rights under the pension scheme |
| |
and, if the words “(or latest time)” were omitted from subsection (3) |
| 25 |
| |
(a) | that subsection would have treated the person as having |
| |
made a disposition by reason of omitting to exercise the |
| |
| |
(b) | section 10 above would have prevented the disposition being |
| 30 |
| |
(2B) | Section 3(3) above does not actually treat the person as making a |
| |
disposition by reason of omitting to exercise the pension rights (at |
| |
the latest time when the person could have exercised them) unless |
| |
the condition in subsection (2C) below is satisfied. |
| 35 |
(2C) | That condition is that— |
| |
(a) | the person makes an actual pensions disposition under the |
| |
pension scheme which is not prevented from being a transfer |
| |
of value by section 10 above within the period of two years |
| |
ending with the date of his death, and |
| 40 |
(b) | it is not shown that, when he made the actual pensions |
| |
disposition, he had no reason to believe that he would die |
| |
| |
|
| |
|
| |
|
(2D) | A disposition treated by virtue of section 3(3) above as made by any |
| |
person who is a member of a registered pension scheme, and who |
| |
has not reached the age of 75, by reason of omitting to exercise |
| |
pension rights under the pension scheme is not a transfer of value to |
| |
the extent that it results in— |
| 5 |
(a) | the provision of a lump sum death benefit or pension death |
| |
benefit (or both) to a relevant dependant, or |
| |
(b) | the making of a payment to a charity. |
| |
(2E) | A disposition made by a person who is a member of a registered |
| |
pension scheme, and who has reached the age of 75, is not a transfer |
| 10 |
of value if the disposition consists in the person— |
| |
(a) | making an actual pensions disposition under the pension |
| |
| |
(b) | omitting to exercise pension rights under the pension |
| |
| 15 |
(2F) | For the purposes of this section— |
| |
(a) | a person omits to exercise pension rights under a pension |
| |
scheme if he does not become entitled to the whole or any |
| |
part of a pension or lump sum (or both) under the pension |
| |
scheme at a time when he was eligible to become so entitled |
| 20 |
(whether or not he does become entitled to any other benefits |
| |
under the pension scheme); and |
| |
(b) | a person makes an actual pensions disposition under a |
| |
registered pension scheme if he makes a disposition within |
| |
section 3(1) above by doing anything in relation to, or to |
| 25 |
rights under, the pension scheme. |
| |
| |
“entitled”, in relation to a pension or lump sum, shall be |
| |
construed in accordance with section 165(3) or 166(2) of the |
| |
| 30 |
“lump sum death benefit” has the same meaning as in Part 4 of |
| |
that Act (see section 168(2) of that Act); |
| |
“pension” has the same meaning as in that Part of that Act (see |
| |
section 165(2) of that Act); |
| |
“pension death benefit” has the meaning given by section 167(2) |
| 35 |
| |
“relevant dependant”, in relation to a person, means a |
| |
dependant (within the meaning given by paragraph 15 of |
| |
Schedule 28 to that Act) who is the person’s spouse or civil |
| |
partner immediately before his death or someone who is |
| 40 |
financially dependent on the person at that time.”; |
| |
| and, in the sidenote, for “retirement benefits” substitute “benefits under |
| |
| |
| |
3 | In subsection (2) of section 151 (treatment of pension rights etc) insert at the |
| 45 |
beginning “Subject to sections 151A and 151C below,”. |
| |
|
| |
|
| |
|
4 | After that section insert— |
| |
“151A | Person dying with alternatively secured pension fund |
| |
(1) | This section applies where a member of a registered pension scheme |
| |
has an alternatively secured pension fund in respect of an |
| |
arrangement under the pension scheme immediately before his |
| 5 |
| |
(2) | In determining for the purposes of this Act the value of his estate |
| |
immediately before his death he shall be treated as if he had been |
| |
beneficially entitled to property with a value equal to the relevant |
| |
| 10 |
(3) | The relevant amount is— |
| |
(a) | the aggregate of the amount of the sums and the value of the |
| |
assets forming part of the member’s alternatively secured |
| |
pension fund immediately before his death, less |
| |
(b) | the aggregate of the amount of the sums and the value of the |
| 15 |
assets expended on dependants’ benefits within the period of |
| |
six months beginning with the end of the month in which his |
| |
| |
(4) | For this purpose sums or assets are expended on dependants’ |
| |
benefits at any time if they (or sums or assets directly or indirectly |
| 20 |
deriving from them) are at that time— |
| |
(a) | applied towards the provision of a dependants’ scheme |
| |
pension for a relevant dependant, |
| |
(b) | applied towards the provision of a dependants’ annuity for a |
| |
| 25 |
(c) | designated as available for the payment of dependants’ |
| |
unsecured pension to a relevant dependant, or |
| |
(d) | designated as available for the payment of dependants’ |
| |
alternatively secured pension to a relevant dependant, |
| |
| or if the sums (or sums directly or indirectly deriving from the sums |
| 30 |
or assets) are at that time paid as a charity lump sum death benefit. |
| |
| |
“alternatively secured pension fund” has the same meaning as |
| |
in Part 4 of the Finance Act 2004 (see paragraph 11 of |
| |
Schedule 28 to that Act); |
| 35 |
“charity lump sum death benefit” has the meaning given by |
| |
paragraph 18 of Schedule 29 to that Act; |
| |
“dependants’ alternatively secured pension” has the meaning |
| |
given by paragraph 19 of Schedule 28 to that Act; |
| |
“dependants’ annuity” has the same meaning as in Part 4 of that |
| 40 |
Act (see paragraph 17 of that Schedule); |
| |
“dependants’ scheme pension” has the same meaning as in that |
| |
Part of that Act (see paragraph 16 of that Schedule); |
| |
“dependants’ unsecured pension” has the meaning given by |
| |
paragraph 18 of that Schedule; and |
| 45 |
“relevant dependant”, in relation to a member of a registered |
| |
pension scheme who dies, means a dependant (within the |
| |
meaning of paragraph 15 of that Schedule) who— |
| |
|
| |
|
| |
|
(a) | is the person’s spouse or civil partner immediately |
| |
| |
(b) | is financially dependent on the person at that time. |
| |
151B | Relevant dependant with pension fund inherited from member over |
| |
| 5 |
(1) | This section applies where— |
| |
(a) | a relevant dependant of a person who, immediately before |
| |
his death, was a member of a registered pension scheme has |
| |
a dependant’s unsecured pension fund, or a dependant’s |
| |
alternatively secured pension fund, in respect of an |
| 10 |
arrangement under the pension scheme immediately before |
| |
his death or immediately before ceasing to be a relevant |
| |
| |
(b) | the member had reached the age of 75 at the time of his death |
| |
and had an alternatively secured pension fund in respect of |
| 15 |
an arrangement under the pension scheme immediately |
| |
| |
(c) | sums or assets forming part of that fund were designated as |
| |
available for the payment of dependants’ unsecured pension, |
| |
or dependants’ alternatively secured pension, to the relevant |
| 20 |
dependant within the period of six months beginning with |
| |
the end of the month in which the member’s death occurs. |
| |
(2) | Where this section applies tax shall be charged under this section. |
| |
(3) | The amount on which tax is charged under this section shall be the |
| |
aggregate of the amount of the sums and the value of the assets |
| 25 |
forming part of the dependant’s unsecured pension fund, or the |
| |
dependant’s alternatively secured pension fund, in respect of the |
| |
arrangement immediately before the relevant dependant died or |
| |
ceased to be a relevant dependant of the member. |
| |
(4) | But where tax is chargeable under this section by reason of the death |
| 30 |
of the relevant dependant, that amount is reduced by so much of |
| |
sums forming part of the dependant’s unsecured pension fund, or |
| |
the dependant’s alternatively secured pension fund, (or sums |
| |
directly or indirectly deriving from sums or assets forming part of |
| |
that fund) as are paid to a charity within the period of six months |
| 35 |
beginning with the end of the month in which his death occurs. |
| |
(5) | Tax charged under this section shall be charged at the rate or rates at |
| |
which it would have been charged on the death of the member if— |
| |
(a) | the amount mentioned in subsection (3) above (as reduced |
| |
under subsection (4) above) had been included in the value |
| 40 |
transferred by the chargeable transfer made on his death, and |
| |
(b) | the amount on which the tax is charged had formed the |
| |
highest part of that value. |
| |
| |
“alternatively secured pension fund” has the same meaning as |
| 45 |
in Part 4 of the Finance Act 2004 (see paragraph 11 of |
| |
Schedule 28 to that Act); |
| |
“dependants’ alternatively secured pension” has the meaning |
| |
given by paragraph 19 of that Schedule; |
| |
|
| |
|