Finance Bill

Finance Bill - continued	House of Lords
SCHEDULE 10, SHARING OF PENSIONS ETC. ON DIVORCE OR ANNULMENT - continued

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Charge on unauthorised payments

8. - (1) In subsection (1) of section 600 of the Taxes Act 1988 (charge on unauthorised payments to employees), after "an employee" there shall be inserted "or an ex-spouse".

(2) In subsection (2) of that section (person charged), for the words from "the employee" to "shall" there shall be substituted "the employee or, as the case may be, the ex-spouse shall (whether or not he is the recipient of the payment)".

Definition of "retirement benefits scheme"

9. - (1) In subsections (3) and (4)(b) of section 611 of the Taxes Act 1988 (definition of "retirement benefits scheme"), for the words "employees" and "employee", wherever occurring, there shall be substituted, respectively, the words "scheme members" and "scheme member".

(2) After subsection (5) of that section there shall be inserted the following subsection-

	"(6) In this section "scheme member", in relation to a scheme means-
	(a) an employee; or
	(b) a person whose rights under the scheme derive from a pension sharing order or provision."

Interpretation of Chapter I

10. - (1) In subsection (1) of section 612 of the Taxes Act 1988 (interpretation of Chapter I of Part XIV), in the definition of "relevant benefits", after the word "death", in the first place where it occurs, there shall be inserted ", or by virtue of a pension sharing order or provision".

(2) In subsection (2) of that section (references to the provision of relevant benefits to include the provision of benefits under contracts with third parties)-

(a) after "Chapter" there shall be inserted ", in relation to a scheme,";

(b) for "of an employer" there shall be substituted "or ex-spouses"; and

(3) After that subsection there shall be inserted the following subsection-

"(2A) In subsection (2) above the reference to the employer is a reference to the person who is the employer in relation to the scheme."

Overseas pensions

11. In section 615(6)(b) of the Taxes Act 1988 (funds annuities from which are paid without deduction of tax to non-UK residents), after "purpose" there shall be inserted "(subject to any enactment or Northern Ireland legislation requiring or allowing provision for the value of any rights to be transferred between schemes or between members of the same scheme)".

Rules prohibiting surrender or assignment of annuities etc.

12. - (1) In section 634(6) of the Taxes Act 1988 (restriction on assignment or surrender of annuities), for "except that" there shall be substituted "except that-

	(a) an annuity may be assigned or surrendered for the purpose of giving effect to a pension sharing order or provision; and
	(b) ".

(2) In section 634A(6) of that Act (restriction on assignment or surrender of right to income withdrawals), after "surrender" there shall be inserted ", except for the purpose of giving effect to a pension sharing order or provision".

(3) In section 635(5) of that Act (restriction on assignment or surrender of right to payment of lump sum), after "surrender" there shall be inserted ", except for the purpose of giving effect to a pension sharing order or provision".

Annuity payable on the death of a member

13. - (1) In section 636 of the Taxes Act 1988 (annuity payable after death of member to spouse or dependants), after subsection (3) there shall be inserted the following subsection-

	"(3A) The references in subsection (3) above-
	(a) to the annual amount or highest annual amount of an annuity of which the member was in receipt before his death, and
	(b) to the highest annual amount of an annuity that would have been payable if it had been purchased on the day before the member's death,
	shall each be construed in a case where payments of that annuity were or would have been affected by the making of any pension sharing order or provision as if the only payments of that annuity to be taken into account were those that have been or would have been so affected."

(2) In subsection (10) of that section (restriction on assignment or surrender of annuities payable after death of member), for "except that" there shall be substituted "except that-

	(a) an annuity may be assigned or surrendered for the purpose of giving effect to a pension sharing order or provision; and
	(b) ".

Rule in section 636A prohibiting assignment or surrender

14. In section 636A(7) of the Taxes Act 1988 (restriction on assignment or surrender of right to income withdrawals after death of member), after "surrender" there shall be inserted ", except for the purpose of giving effect to a pension sharing order or provision".

Meaning of "relevant earnings"

15. - (1) In section 644 of the Taxes Act 1988 (which for the purposes of references to relevant earnings contains provisions in subsections (6A) to (6F) for excluding the income of controlling directors), after subsection (6E) there shall be inserted the following subsection-

	"(6EA) Where-
	(a) there is a time at which a person would be in receipt of any benefits under a scheme but for any debit to which any of his rights under that scheme became subject by virtue of any pension sharing order or provision, and
	(b) the benefits he would be in receipt of are benefits payable in respect of past service with a company,
	that person shall be deemed for the purposes of subsections (6A) to (6E) above to be in receipt at that time of benefits under that scheme and the benefits which he is deemed to be in receipt of shall be deemed to be benefits in respect of past service with that company."

(2) In subsection (6F) of that section (construction of subsections (6A) to (6E))-

(a) in the words before paragraph (a), for "(6E)" there shall be substituted "(6EA)";

(b) in paragraph (c) (benefits in respect of past service), after "the company" there shall be inserted "but do not include references to benefits which (within the meaning of section 590) are provided for him as an ex-spouse"; and

(c) in paragraph (d) (transfer payment in respect of past service), at the end there shall be inserted "but do not include references to any transfer payment made for the purpose of giving effect to a pension sharing order or provision."

Purchased life annuities

16. In section 657(2) of the Taxes Act 1988 (annuities not treated as purchased life annuities within section 656), after paragraph (e) there shall be inserted "; or

	(f) to any annuity purchased, for purposes connected with giving effect to any pension sharing order or provision, for consideration which derives from-
	(i) a retirement benefits scheme (within the meaning of Chapter I of this Part) of a description mentioned in section 596(1);
	(ii) sums satisfying the conditions for relief under section 619;
	(iii) any such scheme or arrangements as are mentioned in paragraph (d) or (e) above; or
	(iv) the surrender, in whole or in part, of an annuity falling within paragraph (da) above or this paragraph, or of a contract for such an annuity."

Interpretation of Part XIV

17. In Chapter VI of Part XIV of the Taxes Act 1988 (interpretation of Part XIV), the following section shall be inserted after section 659C-

"Interpretation of provisions about pension sharing.	659D. - (1) In this Part "ex-spouse" means a party to a marriage that has been dissolved or annulled and, in relation to any person, means the other party to a marriage with that person that has been dissolved or annulled.
	(2) References in this Part to a pension sharing order or provision are references to any such order or provision as is mentioned in section 24(1) of the Welfare Reform and Pensions Act 1999 (rights under pension sharing arrangements)."

Commencement etc.

18. - (1) In this paragraph-

"the first appointed day" means such day as the Treasury may by order appoint as the first appointed day for the purposes of this paragraph;

"the second appointed day" means such day falling after the first appointed day as the Treasury may by order appoint as the second appointed day for the purposes of this paragraph.

(2) The power of the Treasury to appoint a day as the second appointed day for the purposes of this paragraph shall include power so to appoint different days for different purposes.

(3) Subject to sub-paragraph (4) below, paragraphs 2 and 3(b) above apply for the purposes of the grant or withdrawal at any time on or after the first appointed day of any approval of a retirement benefits scheme (whenever made or approved).

(4) Section 590(3)(bb) and (da) of the Taxes Act 1988 shall be disregarded for the purposes of determining whether any retirement benefits scheme approved before the first appointed day satisfies the prescribed conditions at any time before the second appointed day.

(5) Every retirement benefits scheme which-

(a) has, before the first appointed day, been approved by the Board for the purposes of Chapter I of Part XIV of the Taxes Act 1988, and

(b) by virtue of having been approved before that day continues to be so approved on or after the second appointed day,

shall have effect, so long as it continues to be approved on and after the second appointed day and notwithstanding anything in the rules of the scheme, as if (so far as it does not already do so) it contained provision satisfying the conditions set out in section 590(3)(bb) and (da) of the Taxes Act 1988.

(6) Paragraph 6 above applies to any lump sum provided on or after the second appointed day.

(7) Paragraph 8 above applies to any payment on or after the second appointed day.

(8) Subject to sub-paragraph (9) below, paragraphs 12 to 14 above apply for the purposes of-

(a) the grant at any time on or after the first appointed day of any approval of a personal pension scheme (whenever made);

(b) the withdrawal at any time on or after that day of approval of any personal pension scheme or personal pension arrangements (whenever approved).

(9) Section 636(3A) of the Taxes Act 1988 shall be disregarded for the purposes of determining whether any personal pension scheme approved before the first appointed day, or any of the arrangements made by an individual in accordance with such a scheme, satisfies the prescribed conditions at any time before the second appointed day.

(10) The Board may by regulations provide that, in such circumstances as may be prescribed by the regulations, this Schedule shall apply in the case of retirement benefits schemes approved before the first appointed day with such exceptions, exclusions and modifications as may be so prescribed.

(11) Regulations under sub-paragraph (10) above may include such incidental, supplemental, consequential and transitional provision as the Board think appropriate.

Prepared 8 July 1999