The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024

Schedule 9 to FA 2024

17.—(1) Part 6 of Schedule 9 to FA 2024 (pensions: transitional provision)(1) is amended as follows.

(2) In paragraph 126 (availability of individual’s lump sum and death benefit allowance)—

(a) in sub-paragraph (4)(a)(ii) for “before that date a person is paid a lump sum death benefit in respect of the individual” substitute “the conditions in sub-paragraph (4A) are met”;

(b) after sub-paragraph (4) insert—

“(4A) The conditions mentioned in sub-paragraph (4)(a)(ii) are—

(a) that before 6 April 2024 a person is paid a defined benefits lump sum death benefit, or an uncrystallised funds lump sum death benefit, in respect of the individual,

(b) that the lump sum is paid before the end of the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the individual’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it, and

(c) that the person to whom the lump sum is paid is not a non-qualifying person.”;

(c) in sub-paragraph (5)—

(i) for “(4)” substitute “(4A)”;

(ii) for “on the occurrence of the relevant benefit crystallisation event” substitute “at the relevant time”;

(d) after sub-paragraph (6) insert—

“(6A) In sub-paragraph (5) “the relevant time” means—

(a) if the relevant benefit crystallisation event is the individual becoming entitled to a relevant lump sum (within the meaning of section 637S of ITEPA 2003), the time at which the individual becomes so entitled;

(b) if the relevant benefit crystallisation event is a person being paid a relevant lump sum death benefit (within the meaning of section 637S of ITEPA 2003), the 31 October next following the end of the tax year in which the relevant lump sum death benefit is paid.”.

(3) In paragraph 127 (transitional tax-free amount certificates)—

(a) in sub-paragraph (1)—

(i) in paragraph (a), for “registered pension scheme” substitute “certification administrator,”;

(ii) in paragraph (b), for “scheme administrator of the scheme” substitute “certification administrator”;

(b) in sub-paragraph (2)—

(i) for paragraph (b) substitute—

“(b) may be made to any person who is a certification administrator in relation to the individual;”;

(ii) for paragraph (d) substitute—

“(d) may not be made after the individual becomes entitled to a relevant lump sum (within the meaning of section 637S of ITEPA 2003), and

(e) may not be made after the 31 October next following the end of the tax year in which a relevant lump sum death benefit (within the meaning of section 637S of ITEPA 2003) is paid in respect of the individual.”;

(c) in sub-paragraph (3)—

(i) for “scheme administrator of a registered pension scheme to which” substitute “certification administrator to whom”;

(ii) for “scheme receives the application” substitute “the application is received”;

(d) in sub-paragraph (4)—

(i) in paragraph (b), after “standard lifetime allowance” insert “for the tax year 2023/24”;

(ii) in paragraphs (c) and (d), for “scheme administrator” substitute “certification administrator”;

(e) in sub-paragraph (5)—

(i) for “scheme administrator” substitute “certification administrator”;

(ii) for “by the scheme” substitute “by the certification administrator”;

(f) in sub-paragraph (6), for “the scheme administrator of a registered pension scheme” substitute “a person who is a certification administrator in relation to the individual”.

(4) In paragraph 127A (availability of member’s overseas transfer allowance)—

(a) in sub-paragraph (2), after “Where the individual’s” insert “adjusted”;

(b) in sub-paragraph (3)(b), after “the individual’s” insert “adjusted”;

(c) after sub-paragraph (3) insert—

“(4) In this paragraph “adjusted lifetime allowance previously-used amount” means—

where—

• A is the lifetime allowance previously-used amount(2);

• B is the aggregate of any amounts included in A that are attributable to the occurrence, before 6 April 2024, of benefit crystallisation event 1.”.

(5) After paragraph 127A insert—

“Provision of information by individuals to certification administrators

127B.— (1) Sub-paragraph (2) applies where—

(a) a certification administrator issues a transitional tax-free amount certificate, and

(b) there are one or more other certification administrators in relation to the individual to whom the certificate relates.

(2) The relevant person must send a copy of the certificate to each certification administrator within sub-paragraph (1)(b).

(3) Sub-paragraph (2) must be complied with—

(a) before the end of the period of 90 days beginning with the day on which the relevant person receives the certificate, and

(b) before the first day following that on which the relevant person receives the certificate on which a relevant benefit crystallisation event occurs in relation to the individual.

(4) In the case of an obligation under sub-paragraph (2) relating to a pension scheme of which the individual is a member as a result of a block transfer, references in sub-paragraph (3) to the day on which the relevant person receives the certificate are to the later of that day and the day on which the relevant person receives notice of the block transfer.

(5) Sub-paragraph (6) applies where—

(a) a certification administrator cancels a transitional tax-free amount certificate, and

(b) there are one or more other certification administrators in relation to the individual to whom the certificate relates.

(6) The relevant person must send a copy of the notice to each certification administrator within sub-paragraph (5)(b).

(7) Sub-paragraph (6) must be complied with—

(a) before the end of the period of 90 days beginning with the day on which the relevant person receives notice of the cancellation, and

(b) before the first day following that on which the relevant person receives notice of the cancellation on which a relevant benefit crystallisation event occurs in relation to the individual.

(8) In the case of an obligation under sub-paragraph (6) relating to a pension scheme of which the individual is a member as a result of a block transfer, references in sub-paragraph (7) to the day on which the relevant person receives notice of the cancellation are to the later of that day and the day on which the relevant person receives notice of the block transfer.

(9) In this paragraph—

“block transfer”: a transfer is “a block transfer” in relation to a member of a pension scheme if it involves the transfer, in a single transaction, of all the sums and assets held for the purposes of, or representing accrued rights under, the arrangements under the scheme which relate to the member and at least one other member of the scheme;

“relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance);

“relevant person”, in relation to a transitional tax-free amount certificate, means—

(a)

the individual to whom the certificate relates, or

(b)

if the individual is deceased, the individual’s personal representatives.”.

(6) In paragraph 128 (provision of information by scheme administrators to members)—

(a) in subsection (2), after “it is necessary” insert “for a certification administrator”;

(b) in sub-paragraphs (3)(a) and (5)(a), for “a transitional tax-free amount certificate is in force in relation to the member” substitute “the certification conditions are met in relation to the determination”;

(c) in sub-paragraph (6)(a)(ii), for “before that date a person is paid a lump sum death benefit under the scheme in respect of the individual” substitute “the conditions in sub-paragraph (6A) are met,”;

(d) after sub-paragraph (6) insert—

“(6A) The conditions mentioned in sub-paragraph (6)(a)(ii) are—

(a) that before 6 April 2024 a person is paid a defined benefits lump sum death benefit, or an uncrystallised funds lump sum death benefit, under the scheme in respect of the member,

(b) that the lump sum is paid before the end of the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the individual’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it, and

(c) that the person to whom the lump sum is paid is not a non-qualifying person.”;

(e) after sub-paragraph (6A) insert—

“(6B) In this paragraph “the certification conditions”, in relation to a determination mentioned in sub-paragraph (2)(b) or (4)(b), means the following conditions—

(a) that either—

(i) the certification administrator making the determination has issued a transitional tax-free amount certificate to the member, or

(ii) the member has provided that certification administrator with a copy of a transitional tax-free amount certificate issued to the member by another certification administrator, and

(b) that the certification administrator making the determination—

(i) has not cancelled the certificate, and

(ii) has not been notified that the certificate has been cancelled by another certification administrator.”.

(7) In paragraph 129 (paragraphs 125 to 128: interpretation)—

(a) in sub-paragraph (2)—

(i) before paragraph (a) insert—

“(za) the individual’s lump sum transitional tax-free amount,”;

(ii) in paragraph (a), after “(if any)” insert “not comprised in the individual’s lump sum transitional tax-free amount”;

(iii) at the end of paragraph (a) insert “and”;

(iv) omit paragraph (c) and the “and” before it;

(b) after sub-paragraph (4) insert—

“(4A) “Lifetime allowance previously-used amount”, in relation to an individual, means (subject to sub-paragraphs (4B) and (4C)) the amount that would have been the previously used amount for the purposes of section 219 of FA 2004 (availability of individual’s lifetime allowance) if a benefit crystallisation event (within the meaning of that section) had occurred in relation to the individual immediately before 6 April 2024.

(4B) Sub-paragraph (4C) applies where—

(a) the individual reached the age of 75 before 6 April 2024,

(b) on the individual reaching that age, an amount was, or amounts were, crystallised by one or more of benefit crystallisation events 5, 5A and 5B, and

(c) the individual did not become entitled to a lump sum under a registered pension scheme in the period beginning with the date on which the individual reached the age of 75 and ending with 5th April 2024.

(4C) The amount determined under sub-paragraph (4A) is to be reduced by the amount or (if more than one) the sum of the amounts mentioned in sub-paragraph (4B)(b).”;

(c) in sub-paragraph (5)—

(i) for the definition of “lifetime allowance previously-used amount” substitute—

““lifetime allowance previously-used amount” has the meaning given by sub-paragraphs (4A) to (4C);”;

(ii) at the appropriate places insert—

““benefit crystallisation event”, followed by a number, has the same meaning as in Part 4 of FA 2004 (see section 216 of that Act);

“certification administrator”, in relation to an individual, means—

(a)

the scheme administrator of a registered pension scheme of which the individual is a member or, if the individual is deceased, of which the individual was a member immediately before death, or

(b)

an insurance company to which a registered pension scheme has transferred sums or assets to secure the payment to the individual of a scheme pension or a lifetime annuity;

“defined benefits lump sum death benefit” has the same meaning as in Part 4 of FA 2004;

“drawdown pension fund”, in relation to an individual, has the same meaning as in Part 4 of FA 2004 (see Part 1 of Schedule 28 to that Act);

“entitled” (in relation to a lump sum) has the same meaning as in Part 4 of FA 2004;

“insurance company” has the same meaning as in Part 4 of FA 2004;

“member” has the same meaning as in Part 4 of FA 2004;

“non-qualifying person” has the same meaning as in section 206 of FA 2004;

“uncrystallised funds pension lump sum death benefit” has the same meaning as in Part 4 of FA 2004;”.

(8) In paragraph 130 (statements for certain members who would not otherwise receive one in the tax year 2024-25), in sub-paragraph (4), after the definition of “benefit crystallisation event” insert—

““member” has the same meaning as in Part 4 of FA 2004;”.

(9) For paragraph 130A (lump sums paid on or after 6 April 2024 where entitlement arose before that date) substitute—

“130A.— (1) The amendments made by or under this Schedule, and the amendments made by section 14, are to be disregarded for the purposes of determining—

(a) the extent (if any) to which a transitional lump sum is a lump sum of a description permitted to be paid by the lump sum rule in section 166(1) of FA 2004, and

(b) the tax treatment under Part 9 of ITEPA 2003 of a transitional lump sum.

(2) In this paragraph “transitional lump sum” means a lump sum to which a member of a registered pension scheme becomes entitled before 6 April 2024 and which is paid on or after that date.

(3) In sub-paragraph (2) “member” has the same meaning as in Part 4 of FA 2004.”

(10) For paragraph 131 (lump sum death benefits paid on or after 6 April 2024 that crystallised before that date) substitute—

“131.— (1) The amendments made by or under this Schedule, and the amendments made by section 14, are to be disregarded for the purposes of determining the tax treatment under Part 9 of ITEPA 2003 of a transitional lump sum death benefit.

(2) In section 637S (availability of individual’s lump sum and death benefit allowance), “relevant lump sum death benefit” does not include a transitional lump sum death benefit.

(3) In this paragraph “transitional lump sum death benefit” means a lump sum death benefit paid on or after 6 April 2024 so far as relating to rights that, before that date, crystallised under section 216 of FA 2004.”

(11) In paragraph 132 (modifications of scheme rules)—

(a) in sub-paragraph (2)—

(i) omit “of Part 4 of FA 2004”;

(ii) after “by or under this Schedule” insert “, and the amendments made by section 14,”;

(b) in sub-paragraph (4), after “In this paragraph” insert ““member”,”.

(1)

2024 c. 3. Paragraphs 126, 128, 129, 130 and 132 of Schedule 9 were amended by S.I. 2024/356 and paragraphs 127A and 130A were inserted by that instrument.

(2)

Paragraph 129(5) of Schedule 9 defines “lifetime allowance previously-used amount” for these purposes.