|
| |
|
| |
(a) | for the words from “that” to “per cent.” substitute “amount that |
| |
could be transferred by a chargeable transfer made (under section 4 |
| |
above) on the dependant’s death if it were to be wholly chargeable at |
| |
the rate of nil per cent. (assuming, if necessary, that the value of the |
| |
dependant’s estate were sufficient but otherwise having regard to |
| |
the circumstances of the dependant)”, and |
| |
(b) | for “that chargeable transfer” substitute “the chargeable transfer so |
| |
| |
(3) | In subsection (4), insert at the appropriate place— |
| |
““dependants’ alternatively secured pension” has the meaning |
| |
given by paragraph 19 of that Schedule;” and |
| |
““dependants’ unsecured pension” has the meaning given by |
| |
paragraph 18 of that Schedule;”, |
| |
| and in the definition of “dependant’s alternatively secured pension fund”, |
| |
for “Schedule 28 to that Act” substitute “that Schedule”. |
| |
10 | After section 151C insert— |
| |
“151D | Unauthorised payment where person dies over 75 with pension or |
| |
| |
(1) | This section applies where— |
| |
(a) | a member of a registered pension scheme, or a dependant of |
| |
such a member, dies after reaching the age of 75; |
| |
(b) | immediately before death the member or dependant has |
| |
under the pension scheme an actual right to payments under |
| |
a relevant pension or relevant annuity or a prospective right |
| |
to payments under a relevant pension; and |
| |
(c) | at any time after the death a relevant unauthorised payment |
| |
is made by the pension scheme. |
| |
(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 |
| |
| |
(a) | the amount of the relevant unauthorised payment; and |
| |
(b) | the amount of any liability to income tax which has arisen |
| |
under Part 4 of the Finance Act 2004 by virtue of the making |
| |
of the relevant unauthorised payment. |
| |
| |
“dependant” has the meaning given by paragraph 15 of |
| |
Schedule 28 to the Finance Act 2004; |
| |
“dependants’ annuity” has the same meaning as in that Part of |
| |
that 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); |
| |
“lifetime annuity” has the same meaning as in that Part of that |
| |
Act (see paragraph 3 of that Schedule); |
| |
“relevant annuity” means a lifetime annuity or dependants’ |
| |
annuity purchased by the application of sums or assets held |
| |
for the purposes of the pension scheme; |
| |
|
| |
|
| |
|
“relevant pension” means a scheme pension or dependants’ |
| |
scheme pension provided by the scheme administrator or as |
| |
a result of the application of sums or assets held for the |
| |
purposes of the pension scheme; |
| |
“relevant unauthorised payment” means an unauthorised |
| |
payment (within the meaning of Part 4 of the Finance Act |
| |
2004: see section 160(5) of that Act) which— |
| |
(a) | consists of the payment of a lump sum in respect of |
| |
the dead member or dependant; or |
| |
(b) | is treated as made by virtue of the operation of section |
| |
172B of that Act by reason of the death; and |
| |
“scheme pension” has the same meaning as in Part 4 of that Act |
| |
(see paragraph 2 of Schedule 28 to that Act). |
| |
151E | Rate or rates of charge under section 151D |
| |
(1) | Tax charged under section 151D above shall be charged at the rate or |
| |
rates at which it would be charged if the amount on which it is |
| |
charged, and any amount on which tax was previously charged |
| |
under that section in relation to the death of the member or |
| |
dependant, were part of the value transferred by the transfer of value |
| |
made on the death of the member or dependant. |
| |
(2) | The rate or rates at which tax is charged on that amount shall be |
| |
determined as if that amount had formed the highest part of that |
| |
| |
(3) | Subsection (4) below applies where, before the time when the |
| |
unauthorised payment is made, there have been one or more |
| |
reductions of tax by virtue of the coming into force of a substitution |
| |
of a new Table in Schedule 1 to this Act since the death of the member |
| |
| |
(4) | The rate or rates at which tax is charged under section 151D above is |
| |
to be determined as if the new Table effecting the reduction of tax (or |
| |
the most recent reduction of tax) (“the applicable Table”) had been in |
| |
force at the time of the death of the member or dependant, but subject |
| |
to subsections (5) and (8) below. |
| |
(5) | The nil-rate band maximum in the applicable Table is to be treated |
| |
for the purposes of this section as reduced by the used-up percentage |
| |
of the difference between— |
| |
(a) | that nil-rate band maximum, and |
| |
(b) | the nil-rate band maximum which was actually in force at the |
| |
time of the death of the member or dependant. |
| |
(6) | For the purposes of subsection (5) above “the used-up percentage” |
| |
is—![equation: plus[num[100.0000000000000000,"100"],minus[id[cross[over[char[E],times[char[N],char[
R],char[B],char[M]]],num[100.0000000000000000,"100"]]]]]](missing.gif) |
| |
| |
E is the amount by which M is greater than VT under section |
| |
8A(2) above in the case of the member or dependant; and |
| |
NRBM is the nil-rate band maximum at the time of the death of |
| |
| |
|
| |
|
| |
|
(7) | The following provisions apply where— |
| |
(a) | tax is charged under section 151D above, and |
| |
(b) | immediately before the death of the member or dependant, |
| |
the member or dependant had a spouse or civil partner (“the |
| |
| |
(8) | If the survivor died before the time when the unauthorised payment |
| |
is made, tax is charged as if the personal nil-rate band maximum of |
| |
the member or dependant were appropriately reduced. |
| |
(9) | In subsection (8) above— |
| |
“the personal nil-rate band maximum of the member or |
| |
dependant” is the nil rate band maximum in the applicable |
| |
Table, increased in accordance with section 8A above where |
| |
that section effected an increase in that nil-rate band |
| |
maximum in the case of the member or dependant (as a |
| |
survivor of another deceased person), and |
| |
“appropriately reduced” means reduced by the amount (if any) |
| |
by which the amount on which tax was charged at the rate of |
| |
nil per cent. on the death of the survivor was increased by |
| |
reason of the operation of section 8A above by virtue of the |
| |
position of the member or dependant. |
| |
(10) | If the survivor did not die before the time when the unauthorised |
| |
payment is made, tax is to be charged on the death of the survivor as |
| |
if the percentage referred to in section 8A(3) above in the case of the |
| |
member or dependant were that specified in subsection (11) below. |
| |
(11) | That percentage is—![equation: cross[over[times[char[A],char[E]],times[char[A],char[N],char[R],char[B],char[M]]],
num[100.0000000000000000,"100"]]](missing.gif) |
| |
| |
AE is the adjusted excess, that is the amount by which M would |
| |
be greater than VT under section 8A(2) above in the case of |
| |
the member or dependant if— |
| |
(a) | the amount on which tax is charged under section |
| |
151D above were included in the value transferred by |
| |
the chargeable value made on the death of the |
| |
| |
(b) | the nil-rate band maximum at the time of the death |
| |
| |
ANRBM is the adjusted nil-rate band maximum, that is the nil- |
| |
rate band maximum in the applicable Table (as reduced |
| |
under subsection (5) above where that subsection applies).” |
| |
11 | In section 210 (persons liable), after subsection (2) insert— |
| |
“(3) | The person liable for tax chargeable under section 151D— |
| |
(a) | if the tax is charged by reason of an unauthorised payment |
| |
actually made by any person other than the scheme |
| |
administrator of the pension scheme, that person, and |
| |
(b) | otherwise, the scheme administrator of the pension scheme.” |
| |
12 (1) | Section 216 (delivery of accounts) is amended as follows. |
| |
|
| |
|
| |
|
(2) | In subsection (1)(bca), after “210(2)” insert “or (3)”. |
| |
(3) | In subsection (6)(ac), after “scheme” insert “otherwise than by reason of a |
| |
liability to tax under section 210(3)”. |
| |
(4) | In subsection (7), for “or 126” substitute “, 126 or 151D”. |
| |
13 | In section 226(4) (payment), for “or 151B” substitute “, 151B or 151D”. |
| |
14 | In section 233(1)(c) (interest on unpaid tax), for “or 151B” substitute “, 151B |
| |
| |
| |
15 (1) | The amendments made by paragraph 2 have effect in relation to |
| |
assignments or agreements to assign made on or after 10 October 2007. |
| |
(2) | The amendments made by paragraph 3 have effect in relation to surrenders |
| |
and agreements to surrender made on or after that date. |
| |
(3) | The amendments made by paragraphs 4, 7(2), 8, 10 and 11 to 14 have effect |
| |
in relation to deaths occurring on or after 6 April 2008. |
| |
| |
| |
Further provision about pension schemes |
| |
Authorised member payments |
| |
1 (1) | Part 4 of FA 2004 (pension schemes etc) is amended as follows. |
| |
(2) | In section 164 (authorised member payments)— |
| |
(a) | the existing provision becomes subsection (1), and |
| |
(b) | after that subsection insert— |
| |
“(2) | Regulations under subsection (1)(f) may— |
| |
(a) | provide that for the purposes of Part 9 of ITEPA 2003 |
| |
all or part of a prescribed payment is to be treated as |
| |
pension under a registered pension scheme, or as a |
| |
lump sum of a prescribed description, |
| |
(b) | provide that all or part of a prescribed payment is |
| |
subject to the short service refund lump sum charge |
| |
or the special lump sum death benefits charge, |
| |
(c) | provide that a prescribed event in relation to a |
| |
prescribed payment is to be treated for the purposes |
| |
of the lifetime allowance charge as a benefit |
| |
crystallisation event, and make provision as to the |
| |
amount crystallised by that event, |
| |
(d) | include provision having effect in relation to times |
| |
before the regulations are made if that provision does |
| |
not increase any person’s liability to tax, |
| |
| and “prescribed” means prescribed in regulations under |
| |
| |
|
| |
|
| |
|
(3) | In the table in section 216 (benefit crystallisation events and amounts |
| |
crystallised), insert at the end— |
| |
| “9. If regulations under section |
| | | | | 164(1)(f) so provide, the happening |
| accordance with the regulations” |
| | | | of an event prescribed in the |
| | | | | regulations in relation to a payment |
| | | | | prescribed in the regulations |
| | | |
|
Transfer of lifetime annuities and dependants’ annuities |
| |
2 (1) | Schedule 28 to FA 2004 (authorised pensions etc) is amended as follows. |
| |
(2) | In paragraph 3 (lifetime annuities), after sub-paragraph (2C) insert— |
| |
“(2CA) | The regulations may include provision having effect in relation to |
| |
times before they are made if that provision does not increase any |
| |
person’s liability to tax.” |
| |
(3) | In paragraph 17 (dependants’ annuities), after sub-paragraph (4) insert— |
| |
“(4A) | The regulations may include provision having effect in relation to |
| |
times before they are made if that provision does not increase any |
| |
person’s liability to tax.” |
| |
Definition of investment-regulated pension schemes |
| |
3 (1) | In Schedule 29A to FA 2004 (taxable property etc), omit paragraph 2(1)(b) |
| |
| |
(2) | The amendment made by sub-paragraph (1) is treated as having come into |
| |
| |
Benefit crystallisation event 3 |
| |
4 | Part 4 of FA 2004 (pension schemes etc) is amended as follows. |
| |
5 | In the table in section 216(1) (benefit crystallisation events), in benefit |
| |
crystallisation event 3 (becoming entitled to pension at increased annual |
| |
rate), in column 1 after “rate which” insert “— |
| |
(a) | exceeds the threshold annual rate, and |
| |
| |
6 | Schedule 32 (benefit crystallisation events: supplementary) is amended as |
| |
| |
7 (1) | Paragraph 10 (benefit crystallisation event 3: excepted circumstances) is |
| |
| |
(2) | The existing provision becomes sub-paragraph (1). |
| |
(3) | For paragraph (b) of that sub-paragraph substitute— |
| |
“(b) | that the individual is one of a class of at least 20 pensioner |
| |
members of the pension scheme, and all the scheme |
| |
pensions being paid under the pension scheme to |
| |
|
| |
|
| |
|
pensioner members of that class are at that time increased |
| |
| |
(4) | After that sub-paragraph insert— |
| |
“(2) | A class may consist of all the pensioner members of the pension |
| |
| |
(3) | Sub-paragraph (4) applies where— |
| |
(a) | the annual rate of the individual’s pension is increased in |
| |
excepted circumstances (“the excepted increase”), |
| |
(b) | before the end of the period of 12 months beginning with |
| |
the date of the excepted increase, the annual rate of the |
| |
individual’s pension is increased in circumstances which |
| |
would (apart from that sub-paragraph) be excepted |
| |
circumstances (“the subsequent increase”), and |
| |
(c) | the class by virtue of which sub-paragraph (1)(b) is |
| |
satisfied on the subsequent increase (“the new class”) is not |
| |
the class by virtue of which it was satisfied on the excepted |
| |
| |
(4) | If the purpose, or one of the main purposes, of the individual’s |
| |
being included in the new class is to increase the annual rate of the |
| |
individual’s pension without benefit crystallisation event 3 |
| |
occurring, the subsequent increase is not in excepted |
| |
| |
8 | After that paragraph insert— |
| |
“Benefit crystallisation event 3: threshold annual rate |
| |
10A (1) | This paragraph applies for the purposes of benefit crystallisation |
| |
| |
(2) | The threshold annual rate is the annual rate of the pension on the |
| |
date of which the increase date is the first anniversary, increased |
| |
| |
(a) | the relevant percentage rate, |
| |
(b) | the relevant indexation percentage, and |
| |
| |
| and rounded up in accordance with sub-paragraph (8). |
| |
(3) | But if the person became entitled to the pension after the date of |
| |
which the increase date is the first anniversary, the threshold |
| |
annual rate is the annual rate of the pension on the date on which |
| |
the person became entitled to the pension, increased and rounded |
| |
up as mentioned in sub-paragraph (2). |
| |
(4) | The increase date is the date on which the individual becomes |
| |
entitled to payment of the pension at the increased annual rate. |
| |
(5) | The relevant percentage rate is— |
| |
(a) | in a case where the pension is paid under a pension |
| |
scheme, or an arrangement under a pension scheme, in |
| |
relation to which the relevant valuation factor is a number |
| |
greater than 20, the rate agreed by the Commissioners for |
| |
|
| |
|
| |
|
Her Majesty’s Revenue and Customs and the scheme |
| |
| |
| |
(6) | The relevant indexation percentage means— |
| |
(a) | if the retail prices index for the reference month is higher |
| |
than the retail prices index for the same calendar month in |
| |
the previous year, the percentage increase in the retail |
| |
| |
| |
(7) | The scheme administrator may select as the reference month any |
| |
month in the period of 12 months ending with the month in which |
| |
| |
(8) | An amount is rounded up in accordance with this sub-paragraph |
| |
if it is rounded up to the next greatest amount which— |
| |
(a) | where the pension is payable monthly, gives an amount of |
| |
whole pounds when divided by 12, or |
| |
(b) | where the pension is payable weekly, gives an amount of |
| |
whole pounds when divided by 52. |
| |
(9) | If the pension is under a public service pension scheme, any |
| |
abatement of the pension is to be left out of account in determining |
| |
for the purposes of this paragraph the annual rate of the pension |
| |
on the date of which the increase date is the first anniversary (or, |
| |
where sub-paragraph (3) applies, the date on which the person |
| |
became entitled to the pension). |
| |
(10) | An individual who becomes entitled to payment of a scheme |
| |
pension at an increased annual rate on 29 February in any year is |
| |
to be treated for the purposes of this paragraph as having become |
| |
so entitled on 28 February in that year. |
| |
(11) | The Treasury may by order substitute for the amount for the time |
| |
being specified in sub-paragraph (2)(c) a different amount |
| |
(including an amount to be calculated as a percentage of the |
| |
standard lifetime allowance).” |
| |
9 (1) | Paragraph 11 (benefit crystallisation event 3: permitted margin) is amended |
| |
| |
(2) | In sub-paragraph (6)— |
| |
(a) | for “month in which the individual becomes entitled to payment of |
| |
the pension at the increased rate” substitute “reference month”, and |
| |
(b) | for “month in which the individual became entitled to the pension” |
| |
| |
(3) | After sub-paragraph (7) insert— |
| |
“(7A) | The scheme administrator may select as the reference month any |
| |
month in the period of 12 months ending with the month in which |
| |
the individual becomes entitled to payment of the pension at the |
| |
| |
(7B) | The base month is the month which is the same number of months |
| |
before the month in which the individual became entitled to the |
| |
pension, as the reference month is before the month in which the |
| |
|
| |
|