Finance Act 2004

[F1 172B Increase in rights of connected person on death U.K.

(1) This section applies if—

(a) at any time after the death of a relevant member of a registered pension scheme, there is an increase in the pension rights of another member of the pension scheme which is attributable to the death, and

(b) the dead member and other member were connected persons immediately before the death.

(2) A member of a registered pension scheme is a relevant member if, immediately before his death, any of his rights under the pension scheme are—

(a) rights to benefit to which the member (or any dependant [F2 or nominee or successor] of the member) has a prospective entitlement under an arrangement under the pension scheme,

[F3 (aa) rights to payments under a scheme pension or dependants' scheme pension provided by the scheme administrator or as a result of the application of sums or assets held for the purposes of the pension scheme or under a lifetime annuity or dependants' annuity[F4 , or nominees' annuity or successors' annuity,] purchased by the application of sums or assets held for the purposes of the pension scheme,] F5 ...

[F6 (ab) rights representing the nominee's flexi-access drawdown fund or successor's flexi-access drawdown fund in respect of an arrangement under the pension scheme,]

(b) rights representing the [F7 member's drawdown pension fund or dependant's drawdown pension fund] in respect of an arrangement under the pension scheme[F8 , or

(c) rights representing the member's flexi-access drawdown fund or dependant's flexi-access drawdown fund in respect of an arrangement under the pension scheme.]

(3) There is at any time an increase in the pension rights of the other member of the pension scheme which is attributable to the death if—

(a) the consideration which might be expected to be received in respect of an assignment (or assignation) of the benefits to which he [F9 has an actual or prospective entitlement] under the pension scheme at that time, exceeds

(b) the consideration which might be expected to be received in respect of such an assignment (or assignation) immediately before that time,

in consequence of the death (ignoring for the purposes of paragraphs (a) and (b) any power to reduce the entitlement to the benefits).

(4) The pension scheme is to be treated as making an unauthorised payment to the other member (or to the other member's personal representatives) of an amount equal to the excess (but subject to subsection [F10 (5)])).

(5) The amount which would (apart from this subsection) constitute the unauthorised payment is to be reduced by so much of the excess as arises—

F11 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) from the other member becoming entitled to pension death benefits or lump sum death benefits in respect of the dead member, or

(c) in any manner prescribed by regulations made by the Board of Inland Revenue.

(6) Regulations under subsection (5)(c) may include provision having effect in relation to times before they are made.

(7) This section does not apply if—

F12 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the benefits to which each of [F13 at least 20 members of the pension scheme] [F14 has an actual or prospective entitlement] under the pension scheme are increased at the same rate in consequence of the death.

[F15 (7A) This section does not apply if—

(a) the increase mentioned in subsection (1)(a) is an increase in the rate of a dependants' annuity[F16 , nominees' annuity, successors' annuity] or dependants' scheme pension or in rights representing a [F17 nominee's flexi-access drawdown fund, successor's flexi-access drawdown fund,] [F18 dependant's drawdown pension fund] [F19 or dependant's flexi-access drawdown fund], and

(b) the increase is attributable to rights of the dead member to payments under a dependants' annuity[F16 , nominees' annuity, successors' annuity] or dependants' scheme pension or rights representing a [F17 nominee's flexi-access drawdown fund, successor's flexi-access drawdown fund,] [F20 dependant's drawdown pension fund] [F19 or dependant's flexi-access drawdown fund].

(7B) References in this section to a benefit to which the member or a person has an entitlement under the pension scheme includes rights to payments under—

(a) a scheme pension or dependants' scheme pension provided by the scheme administrator or as a result of the application of sums or assets held for the purposes of the pension scheme, or

(b) a lifetime annuity or dependants' annuity[F21 , or nominees' annuity or successors' annuity,] purchased by the application of sums or assets held for the purposes of the pension scheme.]

(8) This section does not apply if the increase in the pension rights of the other member is brought about by an assignment (or agreement to assign) within section 172.

F22 (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F23 (9) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.]]

Textual Amendments

F1 Ss. 172A-172D inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 38, 64(1)

F2 Words in s. 172B(2)(a) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 11(a)

F3 S. 172B(2)(aa) inserted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(2)

F4 Words in s. 172B(2)(aa) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 10(2)

F5 Word in s. 172B(2)(aa) omitted (17.12.2014) by virtue of Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 9(a)

F6 S. 172B(2)(ab) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 11(b)

F7 Words in s. 172B(2)(b) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 67(2)

F8 S. 172B(2)(c) and preceding word inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 9(b)

F9 Words in s. 172B(3)(a) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(3)

F10 Word in s. 172B(4) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 19 para. 12(3)

F11 S. 172B(5)(a) repealed (19.7.2007) (with effect in accordance with Sch. 19 para. 29(3) of the amending Act) by Finance Act 2007 (c. 11), Sch. 19 para. 6, Sch. 27 Pt. 3(1)

F12 S. 172B(7)(a) omitted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 28 para. 4(4)(a)

F13 Words in s. 172B(7)(b) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(4)(b)

F14 Words in s. 172B(7)(b) substituted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(3)

F15 S. 172B(7A)(7B) inserted (21.7.2008) (with effect in accordance with Sch. 28 para. 15(3) of the amending Act) by Finance Act 2008 (c. 9), Sch. 28 para. 4(5)

F16 Words in s. 172B(7A) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 10(3)

F17 Words in s. 172B(7A) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 2 para. 12

F18 Words in s. 172B(7A)(a) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 67(3)(a)

F19 Words in s. 172B(7A) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 10

F20 Words in s. 172B(7A)(b) substituted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 67(3)(b)

F21 Words in s. 172B(7B)(b) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 10(4)

F22 S. 172B(8A) omitted (with effect in accordance with Sch. 16 paras. 85, 103 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 16 para. 67(4)

F23 S. 172B(9) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 470 (with Sch. 2)