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

Chapter 15A of Part 9 of ITEPA 2003

3.—(1) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes)(1) is amended as follows.

(2) In the following provisions, for “immediately before the member becomes” substitute “on the member becoming”—

• section 637C(3);

• section 637D(3)(a) and (b).

(3) In the definitions of “the permitted maximum” in the following provisions, for “immediately before the lump sum is” substitute “on the lump sum being”—

• section 637H(7);

• section 637I(5);

• section 637J(7);

• section 637K(5);

• section 637L(8);

• section 637M(8).

(4) In section 637L (drawdown pension fund lump sum death benefits), in the following provisions, after “drawdown pension” insert “fund”—

• subsection (1);

• subsection (2)(a);

• subsection (3)(a);

• subsection (4)(a);

• subsection (5);

• subsection (6);

• subsection (7);

• the definition of “the permitted maximum” in subsection (8).

(5) In section 637Q(6) (availability of individual’s lump sum allowance), for “is exempt from the charge to income tax by virtue of any provision of this Chapter” substitute “is not, by virtue of any provision of this Chapter, taxable pension income”.

(6) In section 637S (availability of individual’s lump sum and death benefit allowance)—

(a) in subsection (6), for “is exempt from the charge to income tax by virtue of any provision of this Chapter” substitute “is not, by virtue of any provision of this Chapter, taxable pension income”;

(b) omit subsection (8).

(7) After section 637S insert—

“637T.    Section 637S: multiple lump sum death benefits paid

(1) This section applies where two or more relevant benefit crystallisation events within section 637S(2)(a)(ii) occur in relation to an individual.

(2) The relevant benefit crystallisation events are to be treated for the purposes of section 637S as occurring simultaneously—

(a) immediately before the individual’s death, and

(b) immediately after any pension commencement lump sum to which the individual becomes entitled immediately before death by virtue of section 166(2) of FA 2004 (lump sum rule).

(3) In the application of section 637S for the purpose of determining how much of the individual’s lump sum and death benefit allowance is available on the occurrence of any of the relevant benefit crystallisation events mentioned in subsection (1)—

(a) the reference in subsection (3) of that section to the whole of the individual’s lump sum and death benefit allowance is to the relevant proportion of that allowance, and

(b) the reference in subsection (4) of that section to so much of the individual’s lump sum and death benefit allowance as is left after deducting the previously-used amount is to the relevant proportion of so much of that allowance as is left after deducting that amount.

(4) In subsection (3), “the relevant proportion” means—

where—

• A is the amount of the lump sum death benefit the payment of which constitutes the relevant benefit crystallisation event in question;

• B is the aggregate of the amounts of each lump sum death benefit the payment of which constitutes a relevant benefit crystallisation event mentioned in subsection (1).”.

(1)

2003 c. 1. Chapter 15A was inserted by paragraph 11 of Schedule 31 to FA 2004 (c. 12) and was substituted for a new Chapter 15A consisting of sections 367 to 367S by paragraph 41 of Schedule 9 to FA 2024. “ITEPA 2003” is defined in section 38 of FA 2024.