(1)The Taxes Act 1988 shall be amended as follows.
(2)In section 431(4) (insurance companies: premiums to be referred to pension business) in paragraph (d) (annuity contracts)—
(a)the words “approved by the Board and” shall be omitted;
(b)after “as defined by section 612(1)” there shall be inserted “ and falling within section 431AA ”.
(3)In section 431(4) in paragraph (e) (annuity contracts entered into in substitution)—
(a)the words “approved by the Board” shall be omitted;
(b)after “paragraph (d) above” there shall be inserted “ and by means of which relevant benefits as defined by section 612(1) and falling within section 431AA (but no other benefits) are secured ”.
(4)The following section shall be inserted after section 431—
(1)Subsection (2) below applies where—
(a)section 431(4)(d)(i) applies, or
(b)section 431(4)(e) applies and the contract within section 431(4)(d) was entered into for the purposes of a scheme falling within section 431(4)(d)(i).
(2)In such a case, relevant benefits fall within this section if they correspond with benefits that could be provided by a scheme approved under Chapter I of Part XIV, and for this purpose—
(a)a hypothetical scheme (rather than any particular scheme) is to be taken, and
(b)benefits provided by a scheme directly (rather than by means of an annuity contract) are to be taken.
(3)Subsection (4) below applies where—
(a)subsection 431(4)(d)(ii) applies, or
(b)section 431(4)(e) applies and the contract within section 431(4)(d) was entered into for the purposes of a scheme falling within section 431(4)(d)(ii).
(4)In such a case, relevant benefits fall within this section if they correspond with benefits that could be provided by a scheme which is a relevant statutory scheme for the purposes of Chapter I of Part XIV, and for this purpose—
(a)a hypothetical scheme (rather than any particular scheme) is to be taken, and
(b)benefits provided by a scheme directly (rather than by means of an annuity contract) are to be taken.
(5)Subsection (6) below applies where—
(a)section 431(4)(d)(iii) applies, or
(b)section 431(4)(e) applies and the contract within section 431(4)(d) was entered into for the purposes of a fund falling within section 431(4)(d)(iii).
(6)In such a case, relevant benefits fall within this section if they correspond with benefits that could be provided by a fund to which section 608 applies, and for this purpose—
(a)a hypothetical fund (rather than any particular fund) is to be taken, and
(b)benefits provided by a fund directly (rather than by means of an annuity contract) are to be taken.”
(5)This section shall apply in relation to an annuity contract entered into on or after 1st July 1994; and in the case of an annuity contract entered into in substitution for another it is immaterial when that other was entered into.