Finance Bill

House of Commons

Session 2006 - 07
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Finance Bill

Finance Bill
Schedule 20 — Pension schemes etc: miscellaneous
237

      (4)
In paragraph 24(1) (conditions applying for paragraph 23), for “paragraph
23” substitute “paragraphs 22 and 23”.
      (5)
In paragraph 25(2) (provisions supplementing paragraph 24), for “23(1)”
substitute “22 or 23”.
Transitional provision: primary protection
5
15
In paragraph 11D of Schedule 36 (lump sum death benefits to be taken into
account as part of individual’s pre-commencement rights only if paid under
policy not significantly varied since 5th April 2006), after sub-paragraph (2)
insert—
   “(2A)
A variation of the terms of a policy of life insurance made in order
10
to comply with the Employment Equality (Age) Regulations 2006
or Employment Equality (Age) Regulations (Northern Ireland)
2006 (or any regulations amending or replacing them) is to be
ignored for the purposes of sub-paragraph (2).
     (2B)
Where a policy of life insurance held on 5th April 2006 for the
15
purposes of an occupational pension scheme is surrendered and a
new one is taken out—
(a)
as part of a retirement-benefit activities compliance
exercise, or
(b)
to comply with the Employment Equality (Age)
20
Regulations 2006 or Employment Equality (Age)
Regulations (Northern Ireland) 2006 (or any regulations
amending or replacing them),

the new policy is to be treated for the purposes of sub-paragraph
(2) as if it were the same as the old.
25
     (2C)
For this purpose a policy of life insurance is surrendered and a
new one is taken out as part of a retirement-benefit activities
compliance exercise if—
(a)
the surrender of the old policy and taking out of the new
policy constitute or form part of a transaction the purpose
30
of which is to secure that the activities of the pension
scheme are limited to retirement-benefit activities within
the meaning of section 255 of the Pensions Act 2004 or
Article 232 of the Pensions (Northern Ireland) Order 2005,
and
35
(b)
the rights under the old policy and the new policy are not
significantly different.”
Transitional provision: enhanced protection
16
Schedule 36 (transitional provision) is amended as follows.
17    (1)
Paragraph 12 (when enhanced protection ceases) is amended as follows.
40
      (2)
In paragraph (c) of sub-paragraph (2), for “solely for the purposes of a
permitted transfer” substitute “in permitted circumstances”.
      (3)
After that sub-paragraph insert—
   “(2A)
An arrangement is made in permitted circumstances if it is
made—
45

Finance Bill
Schedule 20 — Pension schemes etc: miscellaneous
238

(a)
for the purposes of a permitted transfer,
(b)
as part of a retirement-benefit activities compliance
exercise, or
(c)
as part of an age-equality compliance exercise.
     (2B)
For the purposes of sub-paragraph (2A)(b) an arrangement (“the
5
new arrangement”) relating to an individual is made as part of a
retirement-benefit activities compliance exercise if—
(a)
it is made in connection with the cancellation of rights
under another arrangement relating to the individual (“the
old arrangement”),
10
(b)
the old arrangement and the new arrangement relate to the
same employment,
(c)
there is a prospective entitlement to pension death benefits
within section 167(1) or lump sum death benefits within
section 168(1) (or both) under both the old arrangement
15
and the new arrangement,
(d)
the making of the new arrangement and the cancellation of
the old arrangement constitute or form part of a
transaction the purpose of which is to secure that the
activities of the pension scheme under which the
20
arrangement is made are limited to retirement-benefit
activities within the meaning of section 255 of the Pensions
Act 2004 or Article 232 of the Pensions (Northern Ireland)
Order 2005, and
(e)
the rights cancelled under the old arrangement and the
25
rights conferred under the new arrangement are not
significantly different.
     (2C)
For the purposes of sub-paragraph (2A)(c) an arrangement (“the
new arrangement”) is made as part of an age-equality compliance
exercise if—
30
(a)
it is made in connection with the cancellation of rights
under another arrangement relating to the individual (“the
old arrangement”),
(b)
the old arrangement and the new arrangement relate to the
same employment,
35
(c)
there is a prospective entitlement to pension death benefits
within section 167(1) or lump sum death benefits within
section 168(1) (or both) under both the old arrangement
and the new arrangement, and
(d)
the new arrangement is made, and the old arrangement
40
cancelled, in order to comply with the Employment
Equality (Age) Regulations 2006 or Employment Equality
(Age) Regulations (Northern Ireland) 2006 (or any
regulations amending or replacing them).”
      (4)
In sub-paragraph (7)—
45
(a)
omit paragraph (a),
(b)
in paragraph (b), omit “held for the purposes of, or representing
accrued rights under, the arrangement”, and
(c)
in paragraph (c), for “those” (in both places) substitute “the”.
      (5)
In paragraph (a) of sub-paragraph (8), omit—
50

Finance Bill
Schedule 20 — Pension schemes etc: miscellaneous
239

(a)
“, or two or more money purchase arrangements that are not cash
balance arrangements,”, and
(b)
“or” at the end.
      (6)
After paragraph (b) of that sub-paragraph insert—
“(c)
where the arrangement is a cash balance arrangement or a
5
defined benefits arrangement relating to a present or
former employment, they are transferred in connection
with a relevant business transfer so as to become held for
the purposes of, or to represent rights under, a cash
balance arrangement or defined benefits arrangement
10
made under a registered pension scheme or recognised
overseas pension scheme, or
(d)
where the arrangement (“the old arrangement”) is a cash
balance arrangement or a defined benefits arrangement,
they are transferred as part of a retirement-benefit
15
activities compliance exercise so as to become held for the
purposes of, or to represent rights under, a cash balance
arrangement or defined benefits arrangement (“the new
arrangement”) relating to the same employment as the old
arrangement and made under a registered pension scheme
20
or recognised overseas pension scheme.”
      (7)
After that sub-paragraph insert—
   “(8A)
For the purposes of sub-paragraph (8)(c) “relevant business
transfer” means a transfer of an undertaking or a business (or part
of an undertaking or a business) from one person to another—
25
(a)
which involves the transfer of at least 20 employees, and
(b)
in the case of which, if the transferor and the transferee are
bodies corporate, they would not be treated as members of
the same group for the purposes of Chapter 4 of Part 10 of
ICTA.
30
     (8B)
For the purposes of sub-paragraph (8)(d) sums or assets held for
the purposes of, or representing accrued rights under, the old
arrangement are transferred as part of a retirement-benefit
activities compliance exercise if—
(a)
there is a prospective entitlement to pension death benefits
35
within section 167(1) or lump sum death benefits within
section 168(1) (or both) under both the old arrangement
and the new arrangement, and
(b)
the transfer constitutes or forms part of a transaction the
purpose of which is to secure that the activities of the
40
pension scheme under which the old arrangement was
made are limited to retirement-benefit activities within the
meaning of section 255 of the Pensions Act 2004 or Article
232 of the Pensions (Northern Ireland) Order 2005.”
      (8)
In sub-paragraph (9)—
45
(a)
in paragraph (a), omit “, or each of the arrangements,” and “and” at
the end,
(b)
in paragraph (b), after “(8)(b)” insert “or (d)” and after “15” insert “to
17”, and

Finance Bill
Schedule 20 — Pension schemes etc: miscellaneous
240

(c)
after that paragraph insert “and
(c)
if the transfer is a permitted transfer by virtue of
sub-paragraph (8)(c), this paragraph (and
paragraphs 13, 15 to 17 and 17A(3)) apply as if the
arrangement to which the transfer is made were the
5
same as that from which it is made and (if the
employment is transferred) as if the employment
with the transferee were the employment with the
transferor.”
      (9)
After that sub-paragraph insert—
10
   “(10)
The Treasury may by order amend sub-paragraph (8) (and make
other amendments consequential on any amendment of that sub-
paragraph).”
18
In paragraph 14 (relevant contributions), after sub-paragraph (3) insert—
   “(3A)
A variation of the terms of a policy made in order to comply with
15
the Employment Equality (Age) Regulations 2006 or Employment
Equality (Age) Regulations (Northern Ireland) 2006 (or any
regulations amending or replacing them) is to be ignored for the
purposes of sub-paragraph (3).
     (3B)
Where a policy of insurance on the life of the individual issued, or
20
issued in respect of insurances made, before 6th April 2006 is
surrendered and a new one is taken out—
(a)
as part of a retirement-benefit activities compliance
exercise, or
(b)
as part of an age-equality compliance exercise.
25

the new policy is to be treated for the purposes of sub-paragraph
(3) as if it were the same as the old.
     (3C)
For the purposes of sub-paragraph (3B)(a) a policy is surrendered,
and a new policy of life insurance is taken out, as part of a
retirement-benefit activities compliance exercise if—
30
(a)
the surrender of the old policy and the taking out of the
new policy constitute or form part of a transaction the
purpose of which is to secure that the activities of the
pension scheme under which the arrangement is made are
limited to retirement-benefit activities within the meaning
35
of section 255 of the Pensions Act 2004 or Article 232 of the
Pensions (Northern Ireland) Order 2005, and
(b)
the rights under the old policy and the new policy are not
significantly different.
     (3D)
For the purposes of sub-paragraph (3B)(b) a policy is surrendered,
40
and a new policy of life insurance is taken out, as part of an age-
equality compliance exercise if—
(a)
the old policy is surrendered, and the new policy is taken
out, in order to comply with the Employment Equality
(Age) Regulations 2006 or Employment Equality (Age)
45
Regulations (Northern Ireland) 2006 (or any regulations
amending or replacing them), and
(b)
any significant difference between the rights under the old
policy and the rights under the new policy is attributable

Finance Bill
Schedule 20 — Pension schemes etc: miscellaneous
241

to the need to comply with those Regulations (or any
regulations amending or replacing them).”
19    (1)
Paragraph 15 (relevant benefit accrual) is amended as follows.
      (2)
In sub-paragraph (2), after “arrangement” (in both places) insert “which are
transferred”.
5
      (3)
In sub-paragraph (7), for “15 and 16” substitute “16 and 17”.
Inheritance tax: lump sum death benefits
20
In section 58 of IHTA 1984 (settlements: “relevant property”), after
subsection (2) insert—
“(2A)
For the purposes of subsection (1)(d) above—
10
(a)
property applied to pay lump sum death benefits within
section 168(1) of the Finance Act 2004 in respect of a member
of a registered pension scheme is to be taken to be held for the
purposes of the scheme from the time of the member’s death
until the payment is made, and
15
(b)
property applied to pay lump sum death benefits in respect
of a member of a section 615(3) scheme is to be taken to be so
held if the benefits are paid within the period of two years
beginning with the earlier of the day on which the member’s
death was first known to the trustees or other persons having
20
the control of the fund and the day on which they could first
reasonably be expected to have known of it.”
Benefits under employer-financed retirement benefits schemes
21
In section 393B of ITEPA 2003 (employer-financed retirement benefits
schemes: relevant benefits), after subsection (4) insert—
25
“(4A)
Regulations under subsection (3)(d) may include provision having
effect in relation to times before they are made.”
Consequential amendments
22    (1)
In section 167(2) of FA 2004 (meaning of “pension death benefit”), for
““Pension” substitute “In this Part “pension”.
30
      (2)
In section 280(2) of that Act (index of expressions), insert at the appropriate
place—

“pension death benefit
section 167(2)”.

23    (1)
In section 1(1) of the Pension Schemes Act 1993 (c. 48) (categories of pension
schemes), in paragraph (b) of the definition of “personal pension scheme”,
35
omit “any of the paragraphs of”.
      (2)
In section 1(1) of the Pension Schemes (Northern Ireland) Act 1993 (c. 49)
(categories of pension schemes), in paragraph (b) of the definition of
“personal pension scheme”, omit “any of the paragraphs of”.

Finance Bill
Schedule 21 — Exemptions from stamp duty and SDRT: intermediaries, repurchases etc
242

Commencement
24    (1)
The amendments made by paragraphs 2 to 4 and 23 are deemed to have
come into force on 6th April 2007.
      (2)
The amendment made by paragraph 5 has effect in relation to payments
made on or after 6th April 2007.
5
      (3)
The amendments made by paragraphs 6, 7(2), 9 to 11, 15 to 19 and 22 are
deemed always to have had effect.
      (4)
The amendment made by paragraph 7(3) has effect in relation to reductions
occurring on or after 6th April 2007.
      (5)
The amendments made by paragraph 8 have effect in relation to
10
notifications given on or after 6th December 2006.
      (6)
The amendments made by paragraph 12 have effect in relation to lump sums
paid on or after 6th April 2006.
      (7)
The amendments made by paragraph 13 have effect in relation to deaths
occurring on or after 6th April 2006.
15
      (8)
The amendments made by paragraph 14 are deemed to have come into force
on 1st January 2007.
      (9)
The amendment made by paragraph 20 has effect in relation to lump sum
death benefits paid on or after 6th April 2006.
Schedule 21
20
Section 72

Exemptions from stamp duty and SDRT: intermediaries, repurchases etc
Intermediaries
1     (1)
Section 80A of FA 1986 (exemption from stamp duty: sales to intermediaries)
is amended as follows.
      (2)
For subsections (1) to (3) substitute—
25
“(1)
Stamp duty shall not be chargeable on an instrument transferring
stock of a particular kind on sale to a person or the person’s nominee
if—
(a)
the person is a member of a regulated market on which stock
of that kind is regularly traded; and
30
(b)
the person is an intermediary and is recognised as such by the
market in accordance with arrangements approved by the
Commissioners.
(1A)
Stamp duty shall not be chargeable on an instrument transferring
stock of a particular kind on sale to a person or the person’s nominee
35
if—
(a)
the person is a member of a multilateral trading facility, or a
recognised foreign exchange, on which stock of that kind is
regularly traded;

Finance Bill
Schedule 21 — Exemptions from stamp duty and SDRT: intermediaries, repurchases etc
243

(b)
the person is an intermediary and is recognised as such by the
facility or exchange in accordance with arrangements
approved by the Commissioners; and
(c)
the sale is effected on the facility or exchange.
(1B)
Stamp duty shall not be chargeable on an instrument transferring
5
stock of a particular kind on sale to a person or the person’s nominee
if—
(a)
the person is an intermediary who is approved for the
purposes of this section by the Commissioners; and
(b)
stock of that kind is regularly traded on a regulated market.
10
(1C)
Stamp duty shall not be chargeable on an instrument transferring
stock of a particular kind on sale to a person or the person’s nominee
if—
(a)
the person is an intermediary who is approved for the
purposes of this section by the Commissioners;
15
(b)
stock of that kind is regularly traded on a multilateral trading
facility or a recognised foreign exchange; and
(c)
the sale is effected on the facility or exchange.
(2)
Stamp duty shall not be chargeable on an instrument transferring
stock of a particular kind on sale to a person or the person’s nominee
20
if—
(a)
the person is a member of a regulated market, a multilateral
trading facility or a recognised foreign options exchange;
(b)
options to buy or sell stock of that kind are regularly traded
on, and are listed by or quoted on, that market, facility or
25
exchange;
(c)
the person is an options intermediary and is recognised as
such by that market, facility or exchange in accordance with
arrangements approved by the Commissioners; and
(d)
stock of that kind is regularly traded on a regulated market.
30
(2A)
Stamp duty shall not be chargeable on an instrument transferring
stock of a particular kind on sale to a person or the person’s nominee
if—
(a)
the person is a member of a regulated market, a multilateral
trading facility or a recognised foreign options exchange;
35
(b)
options to buy or sell stock of that kind are regularly traded
on, and are listed by or quoted on, that market, facility or
exchange;
(c)
the person is an options intermediary and is recognised as
such by that market, facility or exchange in accordance with
40
arrangements approved by the Commissioners; and
(d)
the sale is effected on a relevant qualifying exchange on
which stock of that kind is regularly traded or is effected on
a relevant qualifying exchange pursuant to the exercise of a
relevant option and options to buy or sell stock of that kind
45
are regularly traded on, and are listed by or quoted on, that
exchange;

and in paragraph (d) “relevant qualifying exchange” means a
multilateral trading facility, a recognised foreign options exchange
or a recognised foreign exchange.
50