Finance Act 2004

[F2 Non-residence: [F3 determination of lump sum and death benefit allowance enhancement factor (other arrangements)] U.K.

Textual Amendments

F2 Sch. 36 paras. 20A-20G and cross-headings inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 78, 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 Words in Sch. 36 para. 20D heading 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(12)(a)

20D [F4 (1) This paragraph contains provision for determining the lump sum and death benefit allowance enhancement factor mentioned in paragraph 20B(2A) in the case of an arrangement that is not a money purchase arrangement.] U.K.

(2) The lump sum and death benefit allowance enhancement factor is—

(a) if the arrangement is a defined benefits arrangement, the defined benefits arrangement non-residence factor (see sub-paragraphs (3) and (4)), and

(b) if the arrangement is a hybrid arrangement, the hybrid arrangement non-residence factor (see sub-paragraphs (5) to (7)).

(3) The defined benefits arrangement non-residence factor is—

(a) the factor arrived at by the application of sub-paragraph (4) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or

(b) if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of sub-paragraph (4) in relation to each of those parts of that period.

(4) F5 The factor arrived at by the application of this sub-paragraph in relation to any part of the active membership period is—

where—

• A is the relevant valuation factor (see section 276);

• B is the amount of the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the arrangement if the individual became entitled to payment of it at the end of that part of that period;

• C is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement t (otherwise than by commutation of pension) if the individual became entitled to payment of it at the end of that part of that period;

• D is the amount of the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of that part of that period;

• E is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the beginning of that part of that period.

• [F6 SLA is the standard lifetime allowance for the tax year in which that part of that period ended.]

(5) The hybrid arrangement non-residence factor is the greater or greatest of such of—

(a) what would be the cash balance arrangement non-residence factor (under section 222) if the arrangement were a cash balance arrangement,

(b) what would be the other money purchase arrangement non-residence factor (under that section) if the arrangement were a collective money purchase arrangement,

(c) what would be the other money purchase arrangement non-residence factor (under that section) if the arrangement were a money purchase arrangement other than a cash balance arrangement or a collective money purchase arrangement, and

(d) what would be the defined benefits arrangement non-residence factor (under sub-paragraphs (3) and (4)) if the arrangement were a defined benefits arrangement,

as are relevant factors in relation to the arrangement.

(6) A factor is a relevant factor in relation to a hybrid arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under the arrangement may be benefits linked to that factor.

(7) For the purposes of sub-paragraph (6)—

(a) cash balance benefits are linked to the cash balance arrangement non-residence factor;

(b) other money purchase benefits are linked to the other money purchase arrangement non-residence factor;

(c) defined benefits are linked to the defined benefits arrangement non-residence factor.

[F7 (8) A reference in this paragraph to the standard lifetime allowance for a tax year is to the standard lifetime allowance as determined under section 218, as it had effect for that tax year.]]

Textual Amendments

F4 Sch. 36 para. 20D(1) 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(12)(b)

F5 Sch. 36 para. 20D(4): word “SLA” in formula substituted for sum “£1,000,000” (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 3) Regulations 2024 (S.I. 2024/1167), regs. 1(2)(3), 3(5)(a)(i) (with reg. 6)

F6 Words in Sch. 36 para. 20D(4) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 3) Regulations 2024 (S.I. 2024/1167), regs. 1(2)(3), 3(5)(a)(ii) (with reg. 6)

F7 Sch. 36 para. 20D(8) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 3) Regulations 2024 (S.I. 2024/1167), regs. 1(2)(3), 3(5)(b) (with reg. 6)

Modifications etc. (not altering text)

C4 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

C5 Sch. 36 para. 20D modified (18.11.2024 for the tax year 2024-25 and subsequent tax years) by S.I. 2006/572, arts. 12, 14 (as amended by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 25(8))