|
| |
|
| |
| “But, in a case where the member had not reached the age |
| |
of 75 at the date of the member’s death, a lump sum death |
| |
benefit is an uncrystallised funds lump sum death benefit |
| |
only if it is paid before the end of the relevant two-year |
| 5 |
| |
(3) | After that sub-paragraph insert— |
| |
“(1A) | “The relevant two-year period” means the period of two years |
| |
beginning with the earlier of the day on which the scheme |
| |
administrator first knew of the member’s death and the day on |
| 10 |
which the scheme administrator could first reasonably be |
| |
expected to have known of it.” |
| |
36 (1) | Paragraph 16 (annuity protection lump sum death benefit) is amended as |
| |
| |
(2) | In sub-paragraph (1), omit paragraph (a). |
| 15 |
(3) | In sub-paragraph (3), for the definition of “AC” substitute— |
| |
| |
(a) | in a case where the member became entitled to the |
| |
pension or annuity before reaching the age of 75, the |
| |
amount crystallised by reason of the member |
| 20 |
becoming entitled to the pension or annuity, |
| |
disregarding paragraphs 3 and 4 of Schedule 32, and |
| |
(b) | in a case where the member became entitled to the |
| |
pension or annuity after having reached that age, the |
| |
amount that would have been so crystallised |
| 25 |
(disregarding those paragraphs) but for paragraph 2 |
| |
| |
37 (1) | Paragraph 17 (unsecured pension fund lump sum death benefit) is amended |
| |
| |
(2) | For sub-paragraph (1) substitute— |
| 30 |
“(1) | For the purposes of this Part a lump sum death benefit is a |
| |
drawdown pension fund lump sum death benefit if— |
| |
(a) | it is paid in respect of income withdrawal to which the |
| |
member was entitled under an arrangement at the date of |
| |
| 35 |
(b) | it is not a charity lump sum death benefit.” |
| |
(3) | In sub-paragraph (2)— |
| |
(a) | for “an unsecured pension fund lump sum death benefit” substitute |
| |
“a drawdown pension fund lump sum death benefit”; |
| |
| 40 |
(c) | at the end of paragraph (c) insert “, and |
| |
(d) | it is not a charity lump sum death benefit.” |
| |
(4) | In sub-paragraph (3), for “an unsecured pension fund lump sum death |
| |
benefit” substitute “a drawdown pension fund lump sum death benefit”. |
| |
(5) | In sub-paragraph (4), for “unsecured pension fund” substitute “drawdown |
| 45 |
| |
|
| |
|
| |
|
(6) | The heading before paragraph 17 becomes “Drawdown pension fund lump sum |
| |
| |
38 (1) | Paragraph 18 (charity lump sum death benefit) is amended as follows. |
| |
(2) | In sub-paragraph (1)— |
| |
| 5 |
(b) | in paragraph (c), for the words from “in respect of” to “Schedule 28)” |
| |
substitute “in respect of the member’s drawdown pension fund”; |
| |
(c) | in paragraph (d), omit from “(or, if the member” to the end. |
| |
(3) | After sub-paragraph (1) insert— |
| |
“(1A) | A lump sum death benefit is also a charity lump sum death benefit |
| 10 |
| |
(a) | the member had reached the age of 75 at the date of the |
| |
| |
(b) | there are no dependants of the member, |
| |
(c) | it is paid in respect of relevant uncrystallised funds in |
| 15 |
respect of a money purchase arrangement at the date of the |
| |
| |
(d) | it is paid to a charity nominated by the member. |
| |
(1B) | “Relevant uncrystallised funds” has the meaning given by |
| |
| 20 |
(4) | In sub-paragraph (2)— |
| |
| |
(b) | in paragraph (d), for “the dependant’s alternatively secured pension |
| |
fund” substitute “the dependant’s drawdown pension fund”; |
| |
(c) | in paragraph (e), omit from “(or, if neither the member” to the end. |
| 25 |
(5) | In sub-paragraph (4), for the words from “representing” to “pension fund” |
| |
substitute “representing what is the member’s or dependant’s drawdown |
| |
| |
39 | In paragraph 20(1) (trivial commutation lump sum death benefit), omit— |
| |
| 30 |
(b) | paragraph (c) (but not the “and” after it). |
| |
Serious ill-health lump sum charge |
| |
40 | In Part 4 of FA 2004 (pension schemes etc), after section 205 insert— |
| |
“205A | Serious ill-health lump sum charge |
| |
(1) | A charge to income tax, to be known as the serious ill-health lump |
| 35 |
sum charge, arises where a serious ill-health lump sum is paid by a |
| |
registered pension scheme to a member who has reached the age of |
| |
| |
(2) | The person liable to the serious ill-health lump sum charge is the |
| |
| 40 |
(3) | The scheme administrator is liable to the serious ill-health lump sum |
| |
| |
(a) | the scheme administrator, and |
| |
|
| |
|
| |
|
(b) | the person to whom the serious ill-health lump sum is paid, |
| |
| are resident, ordinarily resident or domiciled in the United |
| |
| |
(4) | The rate of the charge is 55% in respect of the lump sum. |
| |
(5) | The Treasury may by order increase or decrease the rate for the time |
| 5 |
being specified in subsection (4). |
| |
(6) | Tax under this section is to be charged on the amount of the lump |
| |
sum paid or, if the rules of the pension scheme permit the scheme |
| |
administrator to deduct the tax before payment, on the amount of the |
| |
lump sum before deduction of tax. |
| 10 |
(7) | A serious ill-health lump sum paid to a member who has reached the |
| |
age of 75 is not to be treated as income for any purpose of the Tax |
| |
| |
Special lump sum death benefits charge |
| |
41 (1) | In Part 4 of FA 2004, section 206 (special lump sum death benefits charge) is |
| 15 |
| |
(2) | In subsection (1), for paragraph (c) substitute— |
| |
“(c) | a drawdown pension fund lump sum death benefit,”. |
| |
(3) | After that subsection insert— |
| |
“(1A) | The special lump sum death benefits charge also arises where— |
| 20 |
(a) | a defined benefits lump sum death benefit, or |
| |
(b) | an uncrystallised funds lump sum death benefit, |
| |
| is paid by a registered pension scheme in respect of a member who |
| |
had reached the age of 75 at the date of the member’s death.” |
| |
(4) | In subsection (4), for “35%” substitute “55%”. |
| 25 |
(5) | For subsection (7) substitute— |
| |
“(7) | None of the following is to be treated as income for any purpose of |
| |
| |
(a) | any lump sum death benefit mentioned in subsection (1); |
| |
(b) | a defined benefits lump sum death benefit or uncrystallised |
| 30 |
funds lump sum death benefit paid in respect of a member |
| |
who had reached the age of 75 at the date of the member’s |
| |
| |
Exemption from income tax of certain lump sums and lump sum death benefits |
| |
42 (1) | Section 636A of ITEPA 2003 (exemption for certain lump sums under |
| 35 |
registered pension schemes) is amended as follows. |
| |
| |
(a) | in paragraph (b), after “serious ill-health lump sum” insert “paid to a |
| |
member who has not reached the age of 75”; |
| |
(b) | in paragraph (d), after “defined benefits lump sum death benefit” |
| 40 |
insert “paid in respect of a member who had not reached the age of |
| |
75 at the date of the member’s death”; |
| |
|
| |
|
| |
|
(c) | in paragraph (e), after “uncrystallised funds lump sum death |
| |
benefit” insert “paid in respect of such a member”. |
| |
(3) | After subsection (3) insert— |
| |
“(3A) | A serious ill-health lump sum which is paid under a registered |
| |
pension scheme to a member who has reached the age of 75 is subject |
| 5 |
to income tax in accordance with section 205A of FA 2004 (charge to |
| |
tax on scheme administrator in respect of such a lump sum) but not |
| |
| |
| |
(a) | before paragraph (a) insert— |
| 10 |
“(za) | a defined benefits lump sum death benefit paid in |
| |
respect of a member who had reached the age of 75 at |
| |
the date of the member’s death,”; |
| |
(b) | after paragraph (a) insert— |
| |
“(aa) | an uncrystallised funds lump sum death benefit paid |
| 15 |
in respect of a member who had reached the age of 75 |
| |
at the date of the member’s death,”; |
| |
(c) | for paragraph (c) substitute— |
| |
“(c) | a drawdown pension fund lump sum death benefit,”. |
| |
| 20 |
(a) | after ““defined benefits lump sum death benefit”,” insert— |
| |
““drawdown pension fund lump sum death benefit”,”; |
| |
(b) | after ““pension protection lump sum death benefit”,” insert “and”; |
| |
(c) | omit ““unsecured pension fund lump sum death benefit”,” (and the |
| |
| 25 |
Lifetime allowance charge: benefit crystallisation events |
| |
43 | In section 216 of FA 2004 (benefit crystallisation events and amounts |
| |
crystallised), in the table in subsection (1), after the entry for benefit |
| |
crystallisation event 5A insert— |
| |
| “5B. The individual reaching the |
| The amount of any remaining |
| | 30 | | age of 75 when there is a money |
| | | | | purchase arrangement relating to |
| | | | | the individual under any of the |
| | | | | | | | |
|
44 (1) | Schedule 32 to FA 2004 (benefit crystallisation events: supplementary) is |
| 35 |
| |
(2) | After paragraph 14 insert— |
| |
“Benefit crystallisation event 5B: meaning of “remaining unused funds” |
| |
14A | For the purposes of benefit crystallisation event 5B “remaining |
| |
| 40 |
(a) | in relation to a cash balance arrangement, a sum equal to |
| |
what would, on the valuation assumption in section 277(a), |
| |
|
| |
|
| |
|
be available for the provision of benefits to or in respect of |
| |
the member if the member became entitled to them on |
| |
reaching the age of 75, and |
| |
(b) | in relation to any other arrangement, such of the sums and |
| |
assets held for the purposes of the arrangement as are not |
| 5 |
member-designated funds and have not been applied |
| |
towards the provision of a scheme pension or a |
| |
dependants’ scheme pension.” |
| |
(3) | After paragraph 15 insert— |
| |
“Benefit crystallisation event 6: prevention of overlap with other events |
| 10 |
15A | Benefit crystallisation event 6 does not apply in relation to a |
| |
pension commencement lump sum paid in respect of a money |
| |
| |
(a) | the individual becomes entitled to it before reaching the |
| |
| 15 |
(b) | it is not paid to the individual until after the individual has |
| |
| |
Annual allowance charge: persons meeting flexible drawdown conditions |
| |
45 (1) | In section 227 of FA 2004 (annual allowance charge), at the end of subsection |
| |
| 20 |
| “But see section 227A (individuals who meet flexible drawdown |
| |
| |
(2) | After section 227 insert— |
| |
“227A | Individuals who meet flexible drawdown conditions |
| |
(1) | This section applies in the case of an individual in relation to whom |
| 25 |
there is or has been a flexible drawdown arrangement under a |
| |
| |
| In this section “flexible drawdown arrangement” means an |
| |
arrangement to which section 165(3A) or 167(2A) applies. |
| |
(2) | For each tax year following the first tax year in which there was a |
| 30 |
flexible drawdown arrangement in relation to the individual, section |
| |
227 applies to the individual as if the reference in subsection (4) of |
| |
that section to the amount by which the total pension input amount |
| |
exceeds the amount of the annual allowance were a reference to the |
| |
amount in subsection (3) of this section. |
| 35 |
(3) | The amount referred to in subsection (2) is—![equation: plus[times[char[T],char[P],char[I],char[A]],minus[times[char[R],char[P],char[I],
char[A]]]]](missing.gif) |
| |
| |
TPIA is the total pension input amount for the tax year, and |
| |
RPIA is so much of the aggregate of the pension input amounts |
| |
in respect of each defined benefits or cash balance |
| 40 |
arrangement relating to the individual under any registered |
| |
pension scheme of which the individual is not an active |
| |
member as does not exceed the annual allowance. |
| |
|
| |
|
| |
|
(4) | For the tax year following the first tax year in which there was a |
| |
flexible drawdown arrangement in relation to the individual, the |
| |
reference in subsection (3) to a registered pension scheme of which |
| |
the individual is not an active member includes, in a case where the |
| |
individual was an active member of a registered pension scheme at |
| 5 |
any time during that first tax year but has not been such a member |
| |
since the relevant time, a reference to that registered pension scheme. |
| |
(5) | In subsection (4) the “relevant time” is the time at which there first |
| |
began to be a flexible drawdown arrangement in relation to the |
| |
| 10 |
Removal of certain charges to inheritance tax in respect of pension schemes |
| |
46 | IHTA 1984 is amended as follows. |
| |
47 (1) | Section 12 (dispositions allowable for income tax or conferring benefits |
| |
under pension scheme) is amended as follows. |
| |
(2) | After subsection (2) insert— |
| 15 |
“(2ZA) | Where a person who is a member of a registered pension scheme, a |
| |
qualifying non-UK pension scheme or a section 615(3) scheme omits |
| |
to exercise pension rights under the pension scheme, section 3(3) |
| |
above does not apply in relation to the omission.” |
| |
(3) | Omit subsections (2A) to (2E). |
| 20 |
48 | Omit the following provisions— |
| |
(a) | section 151A (person dying with alternatively secured pension |
| |
| |
(b) | section 151B (relevant dependant with pension fund inherited from |
| |
| 25 |
(c) | section 151BA (rate or rates of charge under section 151B); |
| |
(d) | section 151C (dependant dying with other pension fund); |
| |
(e) | section 151D (unauthorised payment where person dies over 75 with |
| |
| |
(f) | section 151E (rate or rates of charge under section 151D). |
| 30 |
| |
| |
| |
49 | IHTA 1984 is amended as follows. |
| |
50 (1) | Section 12 (dispositions allowable for income tax or conferring benefits |
| 35 |
under pension scheme) is amended as follows. |
| |
(2) | In subsection (2F), omit paragraph (b) (and the “and” before it). |
| |
| |
(a) | omit the definitions of “lump sum death benefit”, “pension death |
| |
benefit” and “relevant dependant”; |
| 40 |
(b) | in the definition of “pension”, for “that Part” substitute “Part 4”. |
| |
|
| |
|
| |
|
51 | In section 151 (treatment of pension rights, etc), in subsection (2), for “Subject |
| |
to sections 151A and 151C below, an interest” substitute “An interest”. |
| |
52 | In section 200 (transfer on death)— |
| |
(a) | in subsection (1), omit “(subject to subsection (1A) below)”; |
| |
(b) | omit subsection (1A). |
| 5 |
53 | In section 210 (pension rights, etc), omit subsections (2) and (3). |
| |
54 (1) | Section 216 (delivery of accounts) is amended as follows. |
| |
(2) | In subsection (1), omit paragraph (bca). |
| |
(3) | In subsection (3)(a), omit “(or would do apart from section 151A(3)(b) or |
| |
| 10 |
(4) | In subsection (4), omit “(or would be apart from section 151A(3)(b), |
| |
151C(3)(b) or 151B(4) above)”. |
| |
(5) | In subsection (6), omit paragraph (ac). |
| |
(6) | In subsection (7), for “, 126 or 151D” substitute “or 126”. |
| |
55 | In section 226 (payment: general rules), in subsection (4)— |
| 15 |
(a) | for “, 126, 151B or 151D” substitute “or 126”; |
| |
(b) | omit from “, or under section 151A” to “that section,”. |
| |
56 | In section 233 (interest on unpaid tax), in subsection (1)(c)— |
| |
(a) | for “, 126, 151B or 151D” substitute “or 126”; |
| |
(b) | omit from “, or under section 151A” to “that section,”. |
| 20 |
57 | In section 272 (general interpretation), omit the definition of “scheme |
| |
| |
| |
58 | Until such time as the repeal of section 28A of the Pension Schemes Act 1993 |
| |
(requirements for interim arrangements) by paragraph 11 of Schedule 4 to |
| 25 |
the Pensions Act 2007 has effect for all purposes, subsection (3) of that |
| |
section has effect with the following amendments— |
| |
| |
(i) | for “unsecured pension year” substitute “drawdown pension |
| |
| 30 |
(ii) | after “twelve months” insert “(disregarding the second |
| |
sentence of pension rule 5)”, and |
| |
(iii) | for “where the member has not reached the age of 75,” |
| |
| |
| 35 |
(i) | for “unsecured pension year” substitute “drawdown pension |
| |
| |
(ii) | after “twelve months” insert “(disregarding the second |
| |
sentence of pension death benefit rule 4)”, and |
| |
(iii) | omit “and the member’s widow, widower or surviving civil |
| 40 |
partner has not reached the age of 75, or”; |
| |
(c) | omit paragraphs (b) and (d). |
| |
|
| |
|