Finance Act 2007

20 (1) Section 151A (person dying with alternatively secured pension fund) is amended as follows. U.K.

(2) For subsection (2) substitute—

“(2) Tax shall be charged on the relevant amount as if it were part of the value transferred by the transfer of value made on the member's death at the rate or rates at which it would be charged if it formed the highest part of that value.”

(3) In subsection (3)(a), after “death” insert “ but reduced by the amount of any previously charged income tax ”.

(4) After subsection (4) insert—

“(4A) In subsection (3)(a) above “the amount of any previously charged income tax” means the amount of any liability to income tax which (after the member's death but before the time when tax is charged on the transfer of value treated as made by the member on death) has arisen by virtue of the making of an unauthorised member payment under Part 4 of the Finance Act 2004 relating to the member's alternatively secured pension fund.

(4B) Subsection (4C) below applies where the maximum that could be transferred by the chargeable transfer made (under section 4 above) on the member's death if it were to be wholly chargeable to tax at the rate of nil per cent. exceeds—

(a) the value actually transferred by that chargeable transfer (or nil if there is no such chargeable transfer), less

(b) any previously untaxed alternatively secured pension fund amount.

(4C) Where this subsection applies, tax is to be charged on the previously untaxed alternatively secured pension fund amount as if the nil rate band maximum were—

where—

UNRB is the unused nil-rate band, that is the excess mentioned in subsection (4B) above, and

MUPR is the maximum unauthorised payment rate, that is the maximum aggregate rate at which tax is chargeable under Part 4 of the Finance Act 2004 in respect of an unauthorised member payment.”

(5) In subsection (5), at the end of the definition of “dependants' unsecured pension” (but before “and”) insert—

““previously untaxed alternatively secured pension fund amount” means so much of the aggregate mentioned in subsection (3)(a) above as has not given rise to any liability to tax by virtue of Part 4 of the Finance Act 2004 before tax is charged on the transfer treated as made by the member on death.”

(6) After that subsection insert—

“(6) This section applies in relation to a member who would have an alternatively secured pension fund immediately before death but for sub-paragraphs (6) and (7) of paragraph 11 of Schedule 28 to the Finance Act 2004 as if those sub-paragraphs were omitted (but subject as follows).

(7) In the case of such a member the references in subsection (3)(a) and (b) to the member's death are to the date on which the scheme administrator becomes aware of the member's death.”