Finance Act 2004

[F2 7 (1) This paragraph applies in the case of an individual where— U.K.

(a) the amount of the relevant pre-commencement pension rights of the individual exceeds £1,500,000, and

(b) notice of intention to rely on this paragraph is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs.

(2) [F3 Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if—

(a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were £375,000, and

(b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were the individual’s enhanced lump sum and death benefit allowance (as determined under paragraph 20H of this Schedule).

(3) For the purposes of paragraph 20H—

(a) the individual’s “protected lump sum and death benefit allowance” is £1,800,000;

(b) a lump sum and death benefit allowance enhancement factor, determined in accordance with sub-paragraphs (4) to (7) of this paragraph, operates in relation to the individual.]

(4) The lump sum and death benefit allowance enhancement factor is the primary protection factor.

(5) The primary protection factor is—

where RR is the amount of the relevant pre-commencement pension rights of the individual (see sub-paragraph (6)).

(6) The amount of the relevant pre-commencement [F4 pension] rights of the individual is the aggregate of—

(a) the value of the individual’s relevant uncrystallised pension rights on 5th April 2006 (calculated in accordance with paragraphs 8 and 9), and

(b) the value of the individual’s relevant crystallised pension rights on that date (calculated in accordance with paragraph 10).

(7) Sub-paragraph (5) is subject to paragraph 11 (pension debit on or after 6th April 2006) and paragraph 11A (pension debit on or after 6th April 2006: lump sum death benefits).

(8) Where this paragraph applies in the case of an individual, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if—

(a) the lump sum condition (see paragraphs 24(2) and (3), 25 and 26 of this Schedule) is met in relation to the individual, or

(b) F5 ... the amount given by the formula in sub-paragraph (9) is less than 25% of the lump sum.

(9) The formula is—

where A is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.]

Textual Amendments

F2 Sch. 36 para. 7 substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 68, 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4; and by S.I. 2024/1012, regs. 1(2)(3), 17)

F3 Sch. 36 para. 7(2)(3) 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), 8(3)(a)

F4 Word in Sch. 36 para. 7(6) 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), 8(3)(b)

F5 Words in Sch. 36 para. 7(8)(b) 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), 8(3)(c)

Modifications etc. (not altering text)

C4 Sch. 36 para. 7 applied (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 29(1)

C5 Sch. 36 para. 7 construed as one with reg. 29 (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 29(3)

C6 Sch. 36 Pt. 2 amendment to earlier transitional provisions 2024 c. 3, Sch. 9 paras. 125-132A (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