Finance Act 2024

Paragraphs 125 to 128: interpretation U.K.

129 (1) “Lump sum transitional tax-free amount”, in relation to an individual, means the total of—

(a) each pension commencement lump sum (if any) to which the individual has, before 6 April 2024, become entitled under a registered pension scheme, F1 ...

(b) each uncrystallised funds pension lump sum (if any) to which the individual has, before 6 April 2024, become entitled under a registered pension scheme, so far as no charge to income tax under Part 9 of ITEPA 2003 or Part 4 of FA 2004 arises in respect of it.

[F2 (c) each stand-alone lump sum (if any) to which the individual has, before 6 April 2024, become entitled under a registered pension scheme, so far as no charge to income tax under Part 9 of ITEPA 2003 or Part 4 of FA 2004 arises in respect of it, and

(d) where a benefit crystallisation event within sub-paragraph (2)(a) of paragraph 20 of Schedule 36 to FA 2004 (pre-commencement pensions) was treated as having occurred before 6 April 2024 in relation to the individual, an amount equal to 25% of the amount treated as crystallised by that event under sub-paragraph (2)(b) of that paragraph.]

(2) “Lump sum and death benefit transitional tax-free amount”, in relation to an individual, means the total of—

[F3 (za) the individual’s lump sum transitional tax-free amount,]

(a) each relevant lump sum (if any) [F4 not comprised in the individual’s lump sum transitional tax-free amount] to which the individual has, before 6 April 2024, become entitled under a registered pension scheme, so far as no charge to income tax under Part 9 of ITEPA 2003 or Part 4 of FA 2004 arises in respect of it, [F5 and]

(b) each relevant lump sum death benefit (if any) paid before 6 April 2024 by a registered pension scheme in respect of the individual so far as no charge to income tax under Part 9 of ITEPA 2003 or Part 4 of FA 2004 arises in respect of it, F6 ...

F6 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) For the purposes of sub-paragraph (2)—

(a) a lump sum is “relevant” if the individual becoming entitled to it constituted a benefit crystallisation event within the meaning of Part 4 of FA 2004;

(b) a lump sum death benefit is “relevant” if its payment constituted a benefit crystallisation event within the meaning of Part 4 of FA 2004.

(4) “Complete evidence”, in relation to an individual’s lump sum and death benefit transitional tax-free amount, means evidence of—

(a) each lump sum (if any) to which the individual has become entitled, and

(b) each lump sum death benefit (if any) that has been paid in respect of the individual,

that is comprised, or any part of which is comprised, in the individual’s lump sum and death benefit transitional tax-free amount.

[F7 (4A) “Lifetime allowance previously-used amount”, in relation to an individual, means (subject to sub-paragraphs (4B) and (4C)) the amount that would have been the previously used amount for the purposes of section 219 of FA 2004 (availability of individual’s lifetime allowance) if a benefit crystallisation event (within the meaning of that section) had occurred in relation to the individual immediately before 6 April 2024.

(4B) Sub-paragraph (4C) applies where—

(a) the individual reached the age of 75 before 6 April 2024,

(b) on the individual reaching that age, an amount was, or amounts were, crystallised by one or more of benefit crystallisation events 5, 5A and 5B, and

(c) the individual did not become entitled to a lump sum under a registered pension scheme in the period beginning with the date on which the individual reached the age of 75 and ending with 5th April 2024.

(4C) The amount determined under sub-paragraph (4A) is to be reduced by the amount or (if more than one) the sum of the amounts mentioned in sub-paragraph (4B)(b).]

(5) In paragraphs 125 to 128 and this paragraph—

• [F8 “benefit crystallisation event”, followed by a number, has the same meaning as in Part 4 of FA 2004 (see section 216 of that Act);]

• [F8 “certification administrator”, in relation to an individual, means—

  (a)

  the scheme administrator of a registered pension scheme of which the individual is a member or, if the individual is deceased, of which the individual was a member immediately before death, or

  (b)

  an insurance company to which a registered pension scheme has transferred sums or assets to secure the payment to the individual of a scheme pension or a lifetime annuity;]

• “complete evidence” has the meaning given by sub-paragraph (4);

• [F8 “defined benefits lump sum death benefit” has the same meaning as in Part 4 of FA 2004;]

• [F8 “drawdown pension fund”, in relation to an individual, has the same meaning as in Part 4 of FA 2004 (see Part 1 of Schedule 28 to that Act);]

• [F8 “entitled” (in relation to a lump sum) has the same meaning as in Part 4 of FA 2004;]

• [F8 “insurance company” has the same meaning as in Part 4 of FA 2004;]

• “lifetime allowance” has the same meaning as in Part 4 of FA 2004;

• [F9 “lifetime allowance previously-used amount” has the meaning given by sub-paragraphs (4A) to (4C);]

• “lump sum and death benefit transitional tax-free amount” has the meaning given by sub-paragraphs (2) and (3);

• “lump sum death benefit” has the same meaning as in Part 4 of FA 2004;

• “lump sum transitional tax-free amount” has the meaning given by sub-paragraph (1);

• [F8 “member” has the same meaning as in Part 4 of FA 2004;]

• [F8 “non-qualifying person” has the same meaning as in section 206 of FA 2004;]

• “pension commencement lump sum” has the same meaning as in Part 4 of FA 2004;

• “the Provision of Information Regulations” means the Registered Pension Schemes (Provision of Information) Regulations (S.I. 2006/567);

• “scheme administrator” has the same meaning as in Part 4 of FA 2004;

• “serious ill-health lump sum” has the same meaning as in Part 4 of FA 2004;

• [F10 “stand-alone lump sum” has the meaning given by article 25 of the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572);]

• “standard lifetime allowance”, in relation to an individual, has the same meaning as in Part 4 of FA 2004 as that Part has effect in relation to the individual;

• “transitional tax-free amount certificate” means a certificate under paragraph 127;

• “uncrystallised funds pension lump [F11 sum]” has the same meaning as in Part 4 of FA 2004.

• [F8 “uncrystallised funds pension lump sum death benefit” has the same meaning as in Part 4 of FA 2004;]

(6) A reference in any of paragraphs 125 to 128 or this paragraph to a provision of FA 2004 is to that provision as it had effect immediately before 6 April 2024.

Textual Amendments

F1 Word in Sch. 9 para. 129(1)(a) omitted (with effect in accordance with reg. 1(3) of the amending S.I.) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(15)(a)

F2 Sch. 9 para. 129(1)(c)(d) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(15)(b)

F3 Sch. 9 para. 129(2)(za) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(a)(i)

F4 Words in Sch. 9 para. 129(2)(a) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(a)(ii)

F5 Word in Sch. 9 para. 129(2)(a) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(a)(iii)

F6 Sch. 9 para. 129(2)(c) omitted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(a)(iv)

F7 Sch. 9 para. 129(4A)-(4C) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(b)

F8 Words in Sch. 9 para. 129(5) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(c)(ii)

F9 Words in Sch. 9 para. 129(5) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(c)(i)

F10 Words in Sch. 9 para. 129(5) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(17)(a)

F11 Word in Sch. 9 para. 129(5) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(17)(b)