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

The Financial Assistance Scheme (Tax) Regulations 2010

27.—(1) The Financial Assistance Scheme (Tax) Regulations 2010(1) are amended as follows.

(2) In regulation 1 (citation, commencement and interpretation), in paragraph (3)—

(a) after the entry for “non-lump sum assistance” insert—

““permitted maximum”—

(a)

in relation to a lump sum paid under regulation 17D(2), has the same meaning as in section 637GA(2) of ITEPA 2003 (Financial Assistance Scheme: regulation 17D lump sums) as that section has effect in accordance with regulation 4(2) of these Regulations;

(b)

in relation to a payment made under regulation 18A(3) in the form of a lump sum, has the same meaning as in section 637GB(2) of ITEPA 2003 (Financial Assistance Scheme: regulation 18A lump sums) as that section has effect in accordance with regulation 4(2) of these Regulations;”;

(b) omit the “and” at the end of the entry for “qualifying member”;

(c) at the end insert “;

““relevant benefit crystallisation event”—

(a)

in relation to an individual’s lump sum allowance, has the same meaning as in section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance);

(b)

in relation to an individual’s lump sum and death benefit allowance, has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance); and

“relevant reference number”, in relation to an individual, means a reference number given by or on behalf of the Commissioners for His Majesty’s Revenue and Customs in respect of the individual under—

(a)

the Registered Pension Schemes (Enhanced Allowances) Regulations 2006(4) (where the member relies on any provision of Schedule 36 to FA 2004);

(b)

the Registered Pension Schemes (Enhanced Allowances Transitional Protection) Regulations 2011(5) (where the member relies on fixed protection under Schedule 18 to FA 2011);

(c)

the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Enhanced Allowances Transitional Protection) (Notification) Regulations 2013(6) (where the member relies on fixed protection 2014 under Schedule 22 to FA 2013);

(d)

the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Enhanced Allowances Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014(7) (where the member relies on individual protection 2014 under Schedule 6 to FA 2014);

(e)

paragraph 14 of Schedule 4 to FA 2016(8) (where the member relies on fixed or individual protection 2016 under that Schedule).”.

(3) For regulation 4 (lump sum payments by the Financial Assistance Scheme) substitute—

“Lump sum payments by the Financial Assistance Scheme

4.— (1) This regulation modifies Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) in relation to certain lump sums paid by the FAS.

(2) That Chapter has effect as if, after section 637G (trivial commutation lump sums and winding-up lump sums) there were inserted—

“637GA.    Financial Assistance Scheme: regulation 17D lump sums

(1) Subject to subsection (2), no liability to income tax arises on a lump sum paid to an individual under regulation 17D of the Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) (“a regulation 17D lump sum”).

(2) If the amount of the regulation 17D lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3) In subsection (2) “the permitted maximum”, in relation to a regulation 17D lump sum, means the lower of—

(a) so much of the individual’s lump sum allowance as is available on the individual becoming entitled to the lump sum (see section 637Q), and

(b) so much of the individual’s lump sum and death benefit allowance as is available on the individual becoming entitled to the lump sum (see section 637S).

637GB.    Financial Assistance Scheme: regulation 18A lump sums

(1) Subject to subsection (2), no liability to income tax arises on a payment made in respect of an individual under regulation 18A of the Financial Assistance Scheme Regulations 2005 in the form of a lump sum (“a regulation 18A lump sum”).

(2) If the amount of the regulation 18A lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme.

(3) In subsection (2) “the permitted maximum”, in relation to a regulation 18A lump sum, means so much of the individual’s lump sum and death benefit allowance as is available on the individual becoming entitled to the lump sum (see section 637S).”.

(3) Section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) has effect as if, in the definition of “relevant lump sum” in subsection (2)(b) of that section, there were included a reference to a lump sum paid to the individual under regulation 17D.

(4) Section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) has effect as if, in the definition of “relevant lump sum” in subsection (2)(b) of that section, there were included—

(a) a reference to a lump sum paid to the individual under regulation 17D; and

(b) a reference to a payment made in respect of the individual under regulation 18A in the form of a lump sum.”.

(4) In Part 3, for the heading substitute “Lump sum allowance and lump sum and death benefit allowance”.

(5) Regulation 5 (application of relevant lifetime allowance provisions) is amended in accordance with paragraphs (6) to (9).

(6) In the heading omit “lifetime”.

(7) In paragraph (1) omit “lifetime”.

(8) In paragraph (2), in the words before sub-paragraph (a) omit “lifetime”.

(9) In paragraph (3)—

(a) in the words before sub-paragraph (a)—

(i) for “6” substitute “7”;

(ii) omit “lifetime”;

(b) before sub-paragraph (a) insert—

“(za) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes);”;

(c) in sub-paragraph (a)—

(i) for “sections 214 to 226 and” substitute “section”;

(ii) omit “lifetime allowance charge and”;

(d) in sub-paragraph (b), for “(lifetime allowance charge transitional provisions);” substitute “(transitional provision and saving: pre-commencement rights: enhancement of allowances etc); and”;

(e) omit sub-paragraph (c) and the “and” at the end;

(f) in sub-paragraph (d) omit “lifetime”;

(g) in paragraph (4) omit “lifetime” in both places.

(10) Omit regulation 6 (amount of charge).

(11) In regulation 7 (benefit crystallisation events and amounts crystallised)—

(a) for the heading substitute “Entitlement to assistance from the FAS”;

(b) omit paragraph (1) (including the table);

(c) omit paragraphs (3) to (7).

(12) Omit regulation 8 (persons liable to charge) and regulation 9 (availability of individual’s lifetime allowance).

(13) In regulation 11 (information and penalties)—

(a) in paragraph (1) omit “Subject to regulation 12(2) of these Regulations,”;

(b) in paragraph (2) omit “lifetime” in both places;

(c) in paragraph (3), for “14” substitute “13A”.

(14) For regulation 12 (percentage of standard lifetime allowance expended on the happening of a benefit crystallisation event) substitute—

“Relevant benefit crystallisation events: amount of qualifying member’s allowances expended

12.— (1) The amount of a qualifying member’s(9) lump sum allowance or lump sum and death benefit allowance expended on the happening of a relevant benefit crystallisation event for the purposes of these Regulations is the non-taxable amount in relation to the lump sum to which the member becomes entitled, or (as the case may be) the lump sum death benefit which a person is paid in respect of the member.

(2) In this regulation “non-taxable amount”—

(a) in relation to a qualifying member’s lump sum allowance, has the meaning given by section 637Q(6) of ITEPA 2003;

(b) in relation to a qualifying member’s lump sum death benefit allowance, has the meaning given by section 637S(6) of ITEPA 2003.”.

(15) In regulation 13 (information provided by qualifying members to the FAS scheme manager about enhanced lifetime allowance)—

(a) in the heading, for “lifetime allowance” substitute “allowances”;

(b) in the text omit “lifetime”; and for “Lifetime Allowance” substitute “Allowances”.

(16) After regulation 13 insert—

“Information provided by or in relation to qualifying members to the FAS scheme manager in relation to transitional tax-free amount certificates

13A.— (1) Paragraph (2) applies where the scheme administrator of a registered pension scheme issues a transitional tax-free amount certificate (see paragraph 127(1) of Schedule 9 to FA 2024) in relation to an individual who is a qualifying member at the time at which the certificate is issued.

(2) The relevant person must, before the end of the period of 90 days beginning with the day on which they receive the certificate, send a copy of the certificate to the FAS scheme manager(10).

(3) Paragraph (4) applies where the scheme administrator of a registered pension scheme issues a transitional tax-free amount certificate in relation to an individual who—

(a) is not a qualifying member at the time at which the certificate is issued; and

(b) becomes a qualifying member after that time.

(4) The relevant person must, before the end of the period of 90 days beginning with the day on which the individual becomes a qualifying member, send a copy of the certificate to the FAS scheme manager.

(5) Paragraph (6) applies where the scheme administrator of a registered pension scheme cancels a transitional tax-free amount certificate in relation to an individual who is a qualifying member.

(6) The relevant person must, before the end of the period of 90 days beginning with the day on which they receive the notice of cancellation, send a copy of the notice to the FAS scheme manager.

(7) In this regulation “relevant person”, in relation to a transitional tax-free amount certificate, means—

(a) the qualifying member to whom the certificate relates; or

(b) if the qualifying member is deceased, the member’s personal representatives.”.

(17) Omit regulation 14 (information provided by the FAS scheme manager to qualifying members about liability for lifetime allowance charge).

(18) In regulation 15 (information provided by the FAS scheme manager to qualifying members about benefit crystallisation events)—

(a) in the heading after “qualifying members about” insert “relevant”;

(b) in paragraph (1)(b), after “in respect of whom a” insert “relevant”;

(c) in paragraph (2)—

(i) for “percentage of standard lifetime allowance” substitute “amount of the member’s lump sum allowance and lump sum and death benefit allowance”;

(ii) in sub-paragraph (a), at the beginning insert “relevant”;

(iii) in sub-paragraph (b), for “benefit crystallisation events under section 216 of the FA 2004” substitute “relevant benefit crystallisation events”; and for “benefit crystallisation event” substitute “relevant benefit crystallisation event”.

(19) In regulation 16 (information provided by the FAS scheme manager to personal representatives), in paragraph (1)—

(a) in sub-paragraph (a), for “percentage of standard lifetime allowance” substitute “amount of the member’s lump sum and death benefit allowance”;

(b) in sub-paragraph (b)—

(i) in the words before paragraph (i), for “percentage of standard lifetime allowance” substitute “amount of the member’s lump sum allowance and lump sum and death benefit allowance”;

(ii) in paragraph (i), at the beginning insert “relevant”;

(iii) in paragraph (ii), for “benefit crystallisation events under section 216 of the FA 2004” substitute “relevant benefit crystallisation events”; and for “benefit crystallisation event” substitute “relevant benefit crystallisation event”;

(iv) in the words after paragraph (ii), for “percentage” substitute “amount”.

(20) In regulation 17 (information provided by the FAS scheme manager to HM Revenue and Customs)—

(a) in paragraph (1)—

(i) in the words before sub-paragraph (a), for the words from “If assistance” to “benefit crystallisation event” substitute “If the amount of a lump sum paid to a qualifying member under regulation 17D or a payment made in respect of a qualifying member under regulation 18A in the form of a lump sum exceeds the permitted maximum in relation to the lump sum, within three months of the payment”;

(ii) in sub-paragraph (b), for “relevant benefit crystallisation event” substitute “payment”;

(iii) in sub-paragraph (c), for “crystallised by the event” substitute “of the lump sum”;

(iv) in sub-paragraph (d) omit “lifetime”; and for “Lifetime Allowance” substitute “Allowances”;

(v) for sub-paragraph (e) substitute—

“(e) the amount by which the amount of the lump sum exceeds the permitted maximum in relation to the lump sum.”;

(b) omit paragraph (2).

(21) In regulation 18 (information provided by personal representatives to HM Revenue and Customs)—

(a) in paragraph (1), for sub-paragraph (b) substitute—

“(b) the amount of the lump sum exceeds the permitted maximum in relation to the lump sum,”;

(b) in paragraph (2)—

(i) after sub-paragraph (b) insert—

“(ba) the name of each other pension scheme (if any) of which the deceased member was a member, and the name and address of the scheme administrator of each such scheme;”;

(ii) in sub-paragraph (c), after “name” insert “, date of birth, date of death and national insurance number”;

(iii) after sub-paragraph (c) insert—

“(ca) each relevant reference number (if any) in relation to the deceased member;

(cb) the name, address, date of birth and national insurance number of the individual to whom the lump sum is paid;”;

(iv) for sub-paragraph (f) substitute—

“(f) the amount by which the amount of the lump sum exceeds the permitted maximum in relation to the lump sum.”.

(22) In regulation 19 (transitional provisions: lump sums), in the words after paragraph (b), for ““APCLS”” substitute “B”.

(23) After regulation 19 insert—

“Transitional tax-free amount certificates

20.   Paragraph 127 of Schedule 9 to FA 2024 (transitional tax-free amount certificates) applies in relation to a qualifying member as if—

(a) a reference to a registered pension scheme included a reference to the FAS(11); and

(b) a reference to the scheme administrator of a registered pension scheme included a reference to the FAS scheme manager.

Provision of information by FAS scheme manager to qualifying members

21.   In paragraph 128 of Schedule 9 to FA 2024 (provision of information by scheme administrators to members)—

(a) a reference to the Provision of Information Regulations(12) includes a reference to these Regulations;

(b) a reference to a registered pension scheme includes a reference to the FAS; and

(c) a reference to the scheme administrator of a registered pension scheme includes a reference to the FAS scheme manager.”.

(1)

S.I. 2010/1187.

(2)

This is a reference to regulation 17D in the Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986). Regulation 17D was inserted by S.I. 2010/1149.

(3)

This is a reference to regulation 18A in S.I. 2005/1986. Regulation 18A was inserted by S.I. 2010/1149.

(4)

S.I. 2006/131.

(5)

S.I. 2011/1752.

(6)

S.I. 2013/1741.

(7)

S.I. 2014/1842.

(8)

2016 c. 24. Paragraph 14 of Schedule 4 was amended by paragraph 93 of Schedule 9 to FA 2024.

(9)

“Qualifying member” is defined in regulation 1 of S.I. 2010/1187.

(10)

“FAS scheme manager” is defined in regulation 1 of S.I. 2010/1187.

(11)

“FAS” is defined in regulation 1 of S.I. 2010/1187.

(12)

The “Provision of Information Regulations” is defined in paragraph 128(7) of Schedule 9 to FA 2024.