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Finance Bill
Schedule 35 — Pensions: special annual allowance charge

299

 

           

the references to before 22 April 2009 (and to that date) in sub-paragraphs

(1)(b) and (2) are to the date on which the individual became such an active

member pursuant to the application.

      (4)  

In this paragraph “the relevant end date” means the end of the tax year or, if

earlier, the time when the individual ceases to be an active member of the

5

pension scheme by reference to the arrangement.

Protected pension input amounts: existing hybrid arrangements

12    (1)  

This paragraph applies in respect of a hybrid arrangement under a pension

scheme if any one or more of paragraphs 8 to 11 would be applicable in

relation to it.

10

      (2)  

The amount arrived at under paragraph 3(2) in relation to the arrangement

is a protected pension input amount if and to the extent of the greater or

greatest amount that it would be if the arrangement were an arrangement

under whichever (if any) of paragraphs 8 to 11 are applicable in relation to it.

      (3)  

Paragraph 8 is applicable in relation to it as in relation to a defined benefits

15

arrangement if, in any circumstances, the benefits that may be provided to

or in respect of the individual under it are defined benefits.

      (4)  

Paragraph 9 is applicable in relation to it as in relation to a cash balance

arrangement if, in any circumstances, the benefits that may be provided to

or in respect of the individual under it are cash balance benefits.

20

      (5)  

Paragraph 10 or 11 is applicable in relation to it as in relation to a money

purchase arrangement other than a cash balance arrangement if, in any

circumstances, the benefits that may be provided to or in respect of the

individual under it are other money purchase benefits.

Protected pension input amounts: new and re-activated arrangements

25

13    (1)  

This paragraph applies in respect of an arrangement if—

(a)   

the arrangement is made or re-activated on or after 22 April 2009,

(b)   

the arrangement—

(i)   

is under an occupational pension scheme or forms part of a

group personal pension scheme and (in either case) relates to

30

an employment of the individual, or

(ii)   

is a public service pension scheme,

(c)   

there is no material change in the rules of the pension scheme under

which benefits are calculated under the arrangement in the relevant

period or any such material change in the relevant period affects at

35

least 50 active members of the pension scheme, and

(d)   

throughout the relevant period there are at least 20 persons in respect

of whom arrangements subsist under the pension scheme under

which benefits are accruing on the same basis as those under the

arrangement.

40

      (2)  

If the arrangement falls within sub-paragraph (1)(b)(i), this paragraph does

not apply in respect of it if—

(a)   

the provision of benefits under it is not part of the normal pattern of

pension provision made by the person who is the employer in

relation to the employment of the individual for the employees of the

45

employer generally, or

 
 

Finance Bill
Schedule 35 — Pensions: special annual allowance charge

300

 

(b)   

the persons mentioned in sub-paragraph (1)(d) are not employees of

that person.

      (3)  

“The relevant period” is the period—

(a)   

beginning when the arrangement is made or re-activated, and

(b)   

ending at the same time as the tax year or, if earlier, the time when

5

the individual ceases to be an active member of the pension scheme

by reference to the arrangement.

      (4)  

The amount arrived at under paragraph 3(2) in relation to the arrangement

is a protected pension input amount except to the extent that it is attributable

to the payment of added years contributions or additional voluntary

10

contributions.

      (5)  

“Added years contributions” are contributions paid with a view to securing

that the calculation of benefits under the arrangement is by reference to a

period of service in excess of pensionable service by the individual.

      (6)  

An arrangement relates to an employment of the individual if—

15

(a)   

the earnings by reference to which benefits under the arrangement

are calculated are earnings from the employment, or

(b)   

the person who is the employer in relation to the employment pays

contributions under the arrangement in respect of the individual.

      (7)  

An arrangement is “re-activated” if the individual, having ceased to be an

20

active member of the pension scheme by reference to the arrangement, again

becomes such a member.

Protected pension input amounts: anti-avoidance

14         

No amount is a protected pension input amount by virtue of any of

paragraphs 8 to 13 if the individual is during the tax year a party to a scheme

25

the main purpose, or one of the main purposes, of which is to avoid or

reduce liability to the special annual allowance charge, the annual allowance

charge or the lifetime allowance charge.

Relevant refunded amounts

15    (1)  

The amount arrived at under paragraph 3(2) in relation to an arrangement is

30

a relevant refunded amount to the extent that it does not exceed the amount

of a contributions refund lump sum paid to the individual (or the personal

representatives of the individual).

      (2)  

A lump sum is a contributions refund lump sum if—

(a)   

it is paid to the individual by a pension scheme in respect of an

35

arrangement,

(b)   

it is not a lump sum of any of the descriptions listed in section 166(1)

of FA 2004,

(c)   

it is paid during the period of one year beginning immediately after

the end of the tax year,

40

(d)   

its amount does not exceed the adjusted contributions amount for

the tax year, and

(e)   

the individual is a high-income individual for the tax year.

      (3)  

The adjusted contributions amount for the tax year is the amount of any

relevant relievable pension contributions less any relevant deductions.

45

 
 

Finance Bill
Schedule 35 — Pensions: special annual allowance charge

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      (4)  

“Relevant relievable pension contributions” are contributions which—

(a)   

are relievable pension contributions in relation to the individual, and

(b)   

are paid to the pension scheme under the arrangement in the tax

year,

           

but subject as follows.

5

      (5)  

If the pension scheme is an occupational pension scheme or a public service

pension scheme or forms part of a group personal pension scheme,

contributions are relevant relievable pension contributions only if they—

(a)   

are additional voluntary contributions, and

(b)   

are not relevant additional voluntary contributions within the

10

meaning of paragraph 9(3) or 10(3).

      (6)  

If the pension scheme is not an occupational pension scheme or a public

service pension scheme and does not form part of a group personal pension

scheme—

(a)   

contributions are not relevant relievable pension contributions if

15

they fall within paragraph 11(2), and

(b)   

if the tax year is the tax year 2009-10, contributions paid before 22

April 2009 are not relevant relievable pension contributions if they

were paid pursuant to an agreement for the payment of

contributions on a quarterly or more frequent basis.

20

      (7)  

“Relevant deductions” are—

(a)   

the amount of any previous contributions refund lump sum

previously paid by the pension scheme since the end of the tax year

in respect of the arrangement,

(b)   

the amount of any pension debit to which the rights of the individual

25

under the arrangement became subject in the tax year,

(c)   

where during the tax year there was a transfer relating to the

individual of any sums or assets held for the purposes of, or

representing accrued rights under, the arrangement so as to become

held for the purposes of, or to represent rights under any other

30

pension scheme that is a registered pension scheme or a qualifying

recognised overseas pension scheme, the amount of any sums, and

the market value of any assets, transferred, and

(d)   

the amount crystallised by any benefit crystallisation events which

occurred in relation to the individual and the arrangement in the tax

35

year.

Pre-22 April 2009 pension input amount

16    (1)  

This paragraph makes provision for the extent (if any) to which the amount

arrived at under paragraph 3(2) in relation to an arrangement is a pre-22

April 2009 pension input amount.

40

      (2)  

In relation to a defined benefits arrangement or cash balance arrangement, a

pre-22 April 2009 pension input amount is such proportion of what would

otherwise be the amount arrived at under paragraph 3(2) as, on a just and

reasonable apportionment, relates to the period beginning with 6 April 2009

and ending with 21 April 2009.

45

      (3)  

In relation to a money purchase arrangement that is not a cash balance

arrangement, a pre-22 April 2009 pension input amount is so much of the

amount of the contributions within section 233 of FA 2004 as are paid in the

 
 

Finance Bill
Schedule 35 — Pensions: special annual allowance charge

302

 

period beginning with 6 April 2009 and ending with 21 April 2009, other

than any contributions paid pursuant to an agreement for the payment of

contributions on a quarterly or more frequent basis.

      (4)  

In relation to a hybrid arrangement, a pre-22 April 2009 pension input

amount is the greater or greatest of the amounts under the sub-paragraph or

5

sub-paragraphs applicable in relation to it.

      (5)  

For this purpose—

(a)   

sub-paragraph (2) is applicable in relation to the arrangement if, in

any circumstances, the benefits that may be provided to or in respect

of the individual under it are defined benefits or cash balance

10

benefits, and

(b)   

sub-paragraph (3) is applicable in relation to the arrangement if, in

any circumstances, the benefits that may be provided to or in respect

of the individual under it are other money purchase benefits.

Taxation of contributions refund lump sums

15

17         

Part 4 of FA 2004 applies in relation to a contributions refund lump sum as

if it were a short service refund lump sum in excess of the limit specified in

section 205(4)(a) of that Act (so that it is not an unauthorised payment and is

liable to tax at the rate chargeable on a short service refund lump sum).

Power to amend

20

18    (1)  

The Treasury may by order made by statutory instrument amend paragraph

1(8) so as to vary the rate of the special annual allowance charge.

      (2)  

An order under sub-paragraph (1) may make provision for there to be

different rates in different circumstances.

      (3)  

The Treasury may by order made by statutory instrument amend

25

paragraphs 2 to 17.

      (4)  

An order under sub-paragraph (3) may make provision having effect in

relation to times before it is made if it does not increase any person’s liability

to tax.

      (5)  

No order may be made under sub-paragraph (1) unless a draft of the

30

statutory instrument containing it has been laid before, and approved by a

resolution of, the House of Commons.

      (6)  

A statutory instrument containing an order under sub-paragraph (3) is

subject to annulment in pursuance of a resolution of the House of Commons.

Currently-relieved non-UK pension schemes

35

19    (1)  

The Treasury may by order made by statutory instrument make provision

for this Schedule to apply in relation to individuals who are members of

currently-relieved non-UK pension schemes subject to such modifications as

are specified in the order.

      (2)  

An order under sub-paragraph (1) may—

40

(a)   

include provision having effect in relation to times before it is made,

(b)   

confer discretion on the Commissioners for Her Majesty’s Revenue

and Customs or officers of Revenue and Customs, and

 
 

Finance Bill
Schedule 35 — Pensions: special annual allowance charge

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(c)   

make different provision for different cases.

      (3)  

A statutory instrument containing an order under sub-paragraph (1) is

subject to annulment in pursuance of a resolution of the House of Commons.

Tax years to which Schedule applies

20    (1)  

This Schedule has effect for the tax year 2009-10 and subsequent tax years

5

(with the result that paragraph 17 has effect for the tax year 2010-11 and

subsequent tax years).

      (2)  

But the Treasury may by order make provision for this Schedule to cease to

have effect after the tax year specified in the order (but so that paragraph 17

continues to have effect for the following tax year).

10

Minor amendment

21         

In paragraph 49 of Schedule 36 to FA 2004 (annual allowance charge:

enhanced protection), insert at the end—

    “(3)  

This paragraph does not apply for the purposes of the special

annual allowance charge.”

15

Interpretation

22    (1)  

In this Schedule—

“group personal pension scheme” means arrangements administered

on a group basis under a personal pension scheme which are

available to employees of the same employer or of employers which

20

are members of the same group of companies;

“personal pension scheme” means a pension scheme that is neither an

occupational pension scheme nor a public service pension scheme;

“scheme” (otherwise than in the expression “pension scheme”) includes

any arrangement, agreement, understanding, transaction or series of

25

transactions (whether or not legally enforceable).

      (2)  

For the purposes of the definition of “group personal pension scheme” a

company and all of its 75% subsidiaries form a group; and if any of those

subsidiaries have 75% subsidiaries the group includes them and their 75%

subsidiaries, and so on; and for this purpose “75% subsidiary” has the

30

meaning given by section 838 of ICTA.

      (3)  

Expressions used in this Schedule and in any provisions of Part 4 of FA 2004

have the same meaning in this Schedule as they have in the provisions of

that Part in which they are used.

 
 

 
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