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Finance (No.2) Bill


Finance (No.2) Bill
Schedule 23 — Pension schemes etc: miscellaneous

468

 

(b)   

the terms of the policy had not been varied significantly

during the period beginning with 5th April 2006 and

ending with the death;

           

and any exercise of rights conferred by the policy is to be regarded

for this purpose as a variation.

5

      (3)  

Sub-paragraph (4) applies where any of the lump sum death

benefits mentioned in sub-paragraph (2) of paragraph 11B would

have been payable under an occupational pension scheme.

      (4)  

The lump sum death benefit is only to be taken into account in

arriving at the aggregate mentioned in that sub-paragraph if—

10

(a)   

the individual was employed by a person on 5th April 2006

and continued to be employed by that person or a person

connected with that person until the time when the

individual died,

(b)   

that person was a sponsoring employer in relation to the

15

pension scheme on 5th April 2006, and

(c)   

the individual had not become entitled to the present

payment of benefits in respect of rights under the pension

scheme before the time when the individual died.

      (5)  

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

20

of this paragraph.”

38         

In paragraph 14 (enhanced protection: relevant contributions), after sub-

paragraph (2) insert—

    “(3)  

A contribution is not a relevant contribution for the purposes of

paragraph 13(a) if—

25

(a)   

it may only be applied for or towards the payment of

premiums under a policy of insurance on the life of the

individual,

(b)   

the policy is issued, or issued in respect of insurances

made, before 6th April 2006,

30

(c)   

there is no right to surrender any rights under the policy,

(d)   

the terms of the policy are not varied significantly during

the period beginning with 6th April 2006 and ending with

the individual’s actual death so as to increase the benefits

payable under the policy or extend the period during

35

which benefits are so payable, and

(e)   

no benefits are paid, or other payments made, under (or on

the surrender of rights under) the policy except by reason

of the individual’s death;

           

and any exercise of rights conferred by the policy is to be regarded

40

for this purpose as a variation.

      (4)  

A contribution is not a relevant contribution for the purposes of

paragraph 13(a) if it is paid—

(a)   

by a sponsoring employer,

(b)   

under a relevant hybrid arrangement, and

45

(c)   

solely in respect of the provision in respect of the

individual of lump sum death benefits which are defined

benefits or cash balance benefits.

 

 

Finance (No.2) Bill
Schedule 23 — Pension schemes etc: miscellaneous

469

 

      (5)  

A “relevant hybrid arrangement” is a hybrid arrangement under

an occupational pension scheme—

(a)   

which subsequently becomes a money purchase

arrangement that is not a cash balance arrangement, and

(b)   

under which lump sum death benefits would have been

5

payable in respect of the individual if the individual had

died on 5th April 2006.”

39    (1)  

Paragraph 15 (enhanced protection: “the relevant crystallised amount”) is

amended as follows.

      (2)  

In sub-paragraph (3), for “paragraph 16” substitute “paragraphs 15A and

10

16”.

      (3)  

In sub-paragraph (4), for “is the greater” substitute “is (subject to paragraph

15A) the greater”.

      (4)  

In sub-paragraph (5), after “(4)(a)” insert “and paragraph 15A(2)(a)”.

      (5)  

In sub-paragraph (6), after “(4)(b)” insert “and paragraph 15A(2)(b)”.

15

40         

After that paragraph insert—

“15A  (1)  

This paragraph applies where—

(a)   

a person is paid a defined benefits lump sum death benefit

or an uncrystallised funds lump sum death benefit in

respect of the individual under the arrangement, and

20

(b)   

notice of intention to rely on this paragraph is given to an

officer of Revenue and Customs by that person in

accordance with regulations made by the Commissioners

for Her Majesty’s Revenue and Customs.

      (2)  

For the purposes of paragraph 13(b), if the amount yielded by sub-

25

paragraph (3) is greater than what would otherwise be the

appropriate limit in relation to a relevant event which consists

of—

(a)   

the payment of the lump sum death benefit, or

(b)   

the payment of any other lump sum death benefit in

30

respect of the individual under the arrangement or another

cash balance arrangement or defined benefits arrangement

related to the arrangement,

           

that greater amount is the appropriate limit in relation to such a

relevant event.

35

      (3)  

The amount yielded by this sub-paragraph is the greater of—

(a)   

the value of the individual’s pre-commencement rights to

death benefits, as increased by the relevant indexation

percentage (see sub-paragraph (5) of paragraph 15), or

(b)   

what would be the value of the individual’s pre-

40

commencement rights to death benefits on the

assumptions specified in sub-paragraph (6) of that

paragraph (but subject to the modifications in sub-

paragraph (7) of this paragraph).

      (4)  

The value of the individual’s pre-commencement rights to death

45

benefits is the aggregate of the maximum amounts that could have

 

 

Finance (No.2) Bill
Schedule 23 — Pension schemes etc: miscellaneous

470

 

been paid in respect of the individual as uncrystallised rights

lump sum death benefits under—

(a)   

the arrangement, or

(b)   

any other cash balance arrangement or defined benefits

arrangement related to the arrangement,

5

           

if the individual had died on 5th April 2006.

      (5)  

Lump sum death benefits are “uncrystallised rights lump sum

death benefits” if they are attributable to rights in respect of which

the individual had not, on 5th April 2006, become entitled to the

present payment of benefits.

10

      (6)  

Paragraphs 11C and 11D apply in arriving at the aggregate

mentioned in sub-paragraph (4) as in arriving at that mentioned in

paragraph 11B(2) but as if—

(a)   

each of the references to paragraph 11B(2) were to sub-

paragraph (4) of this paragraph, and

15

(b)   

in paragraph 11D(1), for “of a pension scheme” there were

substituted “of any arrangement within paragraph 15A(4)

under a pension scheme”.

      (7)  

In their operation for the purposes of this paragraph sub-

paragraphs (6) to (11) of paragraph 15 have effect as if—

20

(a)   

for the references in sub-paragraphs (6)(a) and (7)(a) and

(10) to the time of the first relevant event there were

substituted a reference to the time immediately before the

individual’s death, and

(b)   

the words in parentheses in sub-paragraph (6)(a) were

25

omitted.”

Transitional protection: right to take benefits before normal pension age

41    (1)  

Paragraph 22 of Schedule 36 (right to take benefits before normal minimum

pension age: schemes within paragraph 1(1)(a) to (e) of Schedule 36) is

amended as follows.

30

      (2)  

In sub-paragraph (7), for paragraph (b) substitute—

“(b)   

in a case where on 5th April 2006 the member had an actual

or prospective right under the pension scheme to any

benefit from an age of less than 50, Condition 1 is met or,

in any other case, Condition 2 or 3 is met.”

35

      (3)  

After that sub-paragraph insert—

   “(7A)  

Condition 1 is met if—

(a)   

the member is not, after becoming entitled to the benefits

mentioned in sub-paragraph (7)(a), employed by a person

who is a sponsoring employer in relation to the pension

40

scheme and with whom the member is connected, and

(b)   

the member’s becoming entitled to those benefits is not

part of an arrangement the main purpose (or one of the

main purposes) of which is the avoidance of tax or national

insurance contributions.

45

     (7B)  

Condition 2 is met if—

 

 

Finance (No.2) Bill
Schedule 23 — Pension schemes etc: miscellaneous

471

 

(a)   

the member is not, after becoming entitled to the benefits

mentioned in sub-paragraph (7)(a), employed by a person

specified in sub-paragraph (7C), and

(b)   

the member’s becoming entitled to those benefits is not

part of an arrangement the main purpose (or one of the

5

main purposes) of which is the avoidance of tax or national

insurance contributions.

     (7C)  

The persons referred to in sub-paragraph (7B)(a) are—

(a)   

any person who was a sponsoring employer in relation to

the pension scheme at any time during the period of six

10

months ending with the day on which the member became

entitled to the benefits mentioned in sub-paragraph (7)(a)

and by whom the member was employed at any time

during that period,

(b)   

any person who is connected with any such person, or

15

(c)   

any person who is a sponsoring employer in relation to the

pension scheme and with whom the member is connected.

     (7D)  

If the member has become entitled to the benefits payable under

arrangements under the pension scheme by reason of service in

the armed forces of the Crown, any employment on compulsory

20

recall is to be disregarded for the purposes of sub-paragraph

(7B)(a).

     (7E)  

Condition 3 is met if —

(a)   

paragraph (a) of sub-paragraph (7B) is not satisfied but one

of the re-employment conditions is met, and

25

(b)   

paragraph (b) of that sub-paragraph is satisfied.

     (7F)  

The re-employment conditions are—

(a)   

that the member is not employed as mentioned in sub-

paragraph (7B)(a) during the period of six months

beginning with the day on which the member becomes

30

entitled to the benefits mentioned in sub-paragraph (7)(a),

and

(b)   

that the member is not employed as mentioned in sub-

paragraph (7B)(a) during the period of one month

beginning with that day, but is so employed during the

35

period of five months beginning at the end of that period,

and either the pension abatement condition or the

materially different employment condition is met.

     (7G)  

The pension abatement condition is met if—

(a)   

the pension scheme is a public service pension scheme,

40

and

(b)   

the member’s benefits under the scheme consist of or

include a scheme pension which is liable to reduction by

abatement while the member is employed as mentioned in

sub-paragraph (7B)(a) and is under the age of 55.

45

     (7H)  

The materially different employment condition is met—

(a)   

in a case where the member is employed as mentioned in

sub-paragraph (7B)(a) in more than one employment

 

 

Finance (No.2) Bill
Schedule 24 — Stamp duty land tax: amendments of Schedule 15 to FA 2003

472

 

during the period of five months mentioned in sub-

paragraph (7F)(b), if each of those employments, and

(b)   

otherwise, if the employment in which the member is so

employed during that period,

           

is materially different in nature from the employment in which the

5

member was employed immediately before becoming entitled to

the benefits mentioned in sub-paragraph (7)(a).

     (7I)  

For the purposes of sub-paragraph (7D) “employment on

compulsory recall” means permanent service—

(a)   

under Part 4 of the Reserve Forces Act 1996,

10

(b)   

under Part 5 of that Act,

(c)   

under a call-out or recall order made under that Act,

(d)   

having been called out or recalled under the Reserve

Forces Act 1980, or

(e)   

because of any other call-out or recall obligation of an

15

officer.

     (7J)  

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

of this paragraph.”

Transitional provisions: minor corrections

42         

Schedule 36 (transitional provisions) is amended as follows.

20

43         

In paragraphs 9(4)(a) and 26(3)(a) (primary protection: maximum permitted

pension and maximum permitted lump sum), for “611(1)(a)” substitute

“611A(1)(a)”.

44         

In paragraph 54(1)(b) (benefits taxable under Chapter 2 of Part 6 of ITEPA

2003 where contributions taxed pre-commencement: old schemes), for “1st

25

September 1993” substitute “1st December 1993”.

Schedule 24

Section 163

 

Stamp duty land tax: amendments of Schedule 15 to FA 2003

Introduction

1          

Schedule 15 to FA 2003 (stamp duty land tax: partnerships) is amended as

30

follows.

Transfer of chargeable interest to a partnership

2     (1)  

In paragraph 10 (transfer of chargeable interest to a partnership: general), for

sub-paragraphs (2) to (4) substitute—

    “(2)  

The chargeable consideration for the transaction shall (subject to

35

paragraph 13) be taken to be equal to—equation: times[char[M],cross[char[V],times[id[plus[num[100.0000000000000000,"100"],minus[

times[char[S],char[L],char[P]]]]],string["%"]]]]

           

where—

 

 

Finance (No.2) Bill
Schedule 24 — Stamp duty land tax: amendments of Schedule 15 to FA 2003

473

 

MV is the market value of the interest transferred, and

SLP is the sum of the lower proportions.”

      (2)  

In sub-paragraph (6) of that paragraph, omit “(instead of sub-paragraphs (2)

to (5))”.

3          

In paragraph 11 (transfer of chargeable interest to a partnership: chargeable

5

consideration including rent), for sub-paragraphs (2) to (7) substitute—

    “(2)  

Schedule 5 (amount of tax chargeable: rent) has effect with the

modifications set out in sub-paragraphs (2A) to (2C).

     (2A)  

In paragraph 2—

(a)   

for “the net present value of the rent payable over the term

10

of the lease” substitute “the relevant chargeable proportion

of the net present value of the rent payable over the term

of the lease”, and

(b)   

for “the net present values of the rent payable over the

terms of all the leases” substitute “the relevant chargeable

15

proportions of the net present values of the rent payable

over the terms of all the leases”.

     (2B)  

In paragraph 9(2A)—

(a)   

for “the annual rent” substitute “the relevant chargeable

proportion of the annual rent”, and

20

(b)   

for “the total of the annual rents” substitute “the relevant

chargeable proportion of the total of the annual rents”.

     (2C)  

For paragraph 9(4) substitute—

     “(4)  

Tax chargeable under this Schedule is in addition to any

tax chargeable under section 55 as it has effect by virtue

25

of paragraph 10 of Schedule 15.”.

     (2D)  

For the purposes of sub-paragraphs (2A) and (2B) the relevant

chargeable proportion is—equation: times[id[plus[num[100.0000000000000000,"100"],minus[times[char[S],char[L],char[P]]]]],

string["%"]]

           

where SLP is the sum of the lower proportions.”

4     (1)  

In paragraph 13 (transfer of chargeable interest to a partnership consisting

30

wholly of bodies corporate), in sub-paragraph (3), for “sub-paragraphs (2) to

(5)” substitute “sub-paragraphs (2) and (5)”.

      (2)  

For sub-paragraphs (4) to (7) of that paragraph substitute—

   “(4A)  

In paragraph 11(2), for “sub-paragraphs (2) to (2C)” substitute

“sub-paragraph (2C)”.

35

      (5)  

In paragraph 11, omit sub-paragraphs (2A), (2B), (2D) and (8).”

Transfer of chargeable interest from a partnership

5     (1)  

In paragraph 18 (transfer of chargeable interest from a partnership: general),

 

 

Finance (No.2) Bill
Schedule 24 — Stamp duty land tax: amendments of Schedule 15 to FA 2003

474

 

for sub-paragraphs (2) to (4) substitute—

    “(2)  

The chargeable consideration for the transaction shall (subject to

paragraph 24) be taken to be equal to—equation: times[char[M],cross[char[V],times[id[plus[num[100.0000000000000000,"100"],minus[

times[char[S],char[L],char[P]]]]],string["%"]]]]

           

where—

MV is the market value of the interest transferred, and

5

SLP is the sum of the lower proportions.”

      (2)  

In sub-paragraph (6) of that paragraph, omit “(instead of sub-paragraphs (2)

to (5))”.

6          

In paragraph 19 (transfer of chargeable interest from a partnership:

chargeable consideration including rent), for sub-paragraphs (2) to (7)

10

substitute—

    “(2)  

Schedule 5 (amount of tax chargeable: rent) has effect with the

modifications set out in sub-paragraphs (2A) to (2C).

     (2A)  

In paragraph 2—

(a)   

for “the net present value of the rent payable over the term

15

of the lease” substitute “the relevant chargeable proportion

of the net present value of the rent payable over the term

of the lease”, and

(b)   

for “the net present values of the rent payable over the

terms of all the leases” substitute “the relevant chargeable

20

proportions of the net present values of the rent payable

over the terms of all the leases”.

     (2B)  

In paragraph 9(2A)—

(a)   

for “the annual rent” substitute “the relevant chargeable

proportion of the annual rent”, and

25

(b)   

for “the total of the annual rents” substitute “the relevant

chargeable proportion of the total of the annual rents”.

     (2C)  

For paragraph 9(4) substitute—

     “(4)  

Tax chargeable under this Schedule is in addition to any

tax chargeable under section 55 as it has effect by virtue

30

of paragraph 18 of Schedule 15.”.

     (2D)  

For the purposes of sub-paragraphs (2A) and (2B) the relevant

chargeable proportion is—equation: times[id[plus[num[100.0000000000000000,"100"],minus[times[char[S],char[L],char[P]]]]],

string["%"]]

           

where SLP is the sum of the lower proportions.”

7     (1)  

In paragraph 24 (transfer of chargeable interest from a partnership

35

consisting wholly of bodies corporate), in sub-paragraph (3), for “sub-

paragraphs (2) to (5)” substitute “sub-paragraphs (2) and (5)”.

      (2)  

For sub-paragraphs (4) to (8) of that paragraph substitute—

   “(4A)  

In paragraph 19(2), for “sub-paragraphs (2) to (2C)” substitute

“sub-paragraph (2C)”.

40

 

 

 
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