PART XIV PENSION SCHEMES, SOCIAL SECURITY BENEFITS, LIFE ANNUITIES ETC.
C1CHAPTER I RETIREMENT BENEFIT SCHEMES
Approval of schemes
590 Conditions for approval of retirement benefit schemes.
F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2590A Section 590: supplementary provisions.
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F4590B Section 590: further supplementary provisions.
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F6590C Earnings cap.
F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
591 Discretionary approval.
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F9591A Effect on approved schemes of regulations under section 591.
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11591B Cessation of approval: general provisions.
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
591CF15 Cessation of approval: tax on certain schemes.
F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
591D Section 591C: supplementary.
F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax reliefs
592 Exempt approved schemes.
F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
593 Relief by way of deductions from contributions.
F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
594 Exempt statutory schemes.
F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge to tax in certain cases
595 Charge to tax in respect of certain sums paid by employer etc.
F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
596 Exceptions from section 595.
F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F21596A Charge to tax: benefits under non-approved schemes.
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F23596B Section 596A: supplementary provisions.
F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
596CF35 Notional interest treated as paid if amount charged in respect of beneficial loan.
F25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
597 Charge to tax: pensions.
F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
598 Charge to tax: repayment of employee’s contributions.
F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
599 Charge to tax: commutation of entire pension in special circumstances.
F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F29599A Charge to tax: payments out of surplus funds.
F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
600 Charge to tax: unauthorised payments to or for employees.
F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
601 Charge to tax: payments to employers.
F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
602 Regulations relating to pension fund surpluses.
F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
603 Reduction of surpluses.
F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplementary provisions
604 Application for approval of a scheme.
F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
605 Information.
F37. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
605AF50 False statements etc.
F38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
606 Default of administrator etc.
F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
606AF51 Recourse to scheme members.
F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
607 Pilots’ benefit fund.
F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
608 Superannuation funds approved before 6th April 1980.
F42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
609 Schemes approved before 23rd July 1987.
F43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
610 Amendments of schemes.
F44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
611 Definition of “retirement benefits scheme”.
F45. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F47611A Definition of relevant statutory scheme.
F48. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
611AAF52 Definition of the administrator.
F46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
611A Definition of relevant statutory scheme.
F48. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
612 Other interpretative provisions, and regulations for purposes of this Chapter.
F49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER II OTHER PENSION FUNDS AND SOCIAL SECURITY BENEFITS AND CONTRIBUTIONS
613 Parliamentary pension funds.
F1601
M1The salary of a Member of the House of Commons shall, for all the purposes of the Income Tax Acts, be treated as reduced by the amounts deducted in pursuance of section 1 of the M17House of Commons Members’ Fund Act 1939; but a Member shall not by reason of any such deduction be entitled to relief under any other provision of the Income Tax Acts.
2
In subsection (1) above the reference to salary shall be construed as mentioned in subsection (3) of section 1 of the House of Commons Members’ Fund Act 1939, the reference to amounts deducted includes a reference to amounts required to be set aside under that subsection, and “deduction” shall be construed accordingly.
3
F53. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
a
the House of Commons Members’ Fund established under section 1 of that Act of 1939;
b
F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c
F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d
F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A claim under this subsection shall be made to the Board.
614 Exemptions and reliefs in respect of income from investments etc. of certain pension schemes.
1
F58. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
M3Any interest or dividends received by the person in whom is vested any of the Family Pension Funds mentioned in section 273 of the M4Government of India Act 1935, and having effect as a scheme made under section 2 of the M5Overseas Pensions Act 1973, on sums forming part of that fund shall be exempt from income tax.
F592A
The reference in subsection (2) above to interest on sums forming part of a fund include references to any amount which is treated as income by virtue of F60Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) and derives from any investment forming part of that fund.
3
4
M7In respect of income derived from investments or deposits of the Overseas Service Pensions Fund established pursuant to section 7(1) of the M8Overseas Aid Act 1966, the Board shall give by way of repayment such relief from income tax as is necessary to secure that the income is exempt to the like extent (if any) as if it were income of a person not domiciled, ordinarily resident or resident in the United Kingdom.
5
M9In respect of dividends and other income derived from investments, deposits or other property of a superannuation fund to which section 615(3) applies the Board shall give by way of repayment such relief from income tax as is necessary to secure that the income is exempt to the like extent (if any) as if it were income of a person not domiciled, ordinarily resident or resident in the United Kingdom.
6
M10A claim under this section shall be made to the Board.
615 Exemption from tax in respect of certain pensions.
1
F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
M11Where an annuity is paid from a superannuation fund to which this subsection applies to a person who is not resident in the United Kingdom, income tax shall not be deducted from any payment of the annuity or accounted for under F63Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments and patent royalties) by the trustees or other persons having the control of the fund.
4
F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
M12Subsection (3) above applies to any superannuation fund which—
a
is bona fide established under irrevocable trusts in connection with some trade or undertaking carried on wholly or partly outside the United Kingdom;
b
has for its sole purpose F64(subject to any enactment or Northern Ireland legislation requiring or allowing provision for the value of any rights to be transferred between schemes or between members of the same scheme) the provision of superannuation benefits in respect of persons’ employment in the trade or undertaking wholly outside the United Kingdom; and
c
is recognised by the employer and employed persons in the trade or undertaking;
and for the purposes of this subsection duties performed in the United Kingdom the performance of which is merely incidental to the performance of other duties outside the United Kingdom shall be treated as performed outside the United Kingdom.
7
M13In this section—
“pension” includes a gratuity or any sum payable on or in respect of death or, in the case of a pension falling within subsection (2)(g) above, ill-health, and a return of contributions with or without interest thereon or any other addition thereto;
“overseas territory” means any territory or country outside the United Kingdom;
“the Pensions (Increase) Acts” means the M14Pensions (Increase) Act 1971 and any Act passed after that Act for purposes corresponding to the purposes of that Act;
“United Kingdom trust territory” means a territory administered by the government of the United Kingdom under the trusteeship system of the United Nations.
8
F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F659
For the purposes of this section, a person shall be taken to be employed in the public service of an overseas territory at any time when—
a
he is employed in any capacity under the government of that territory, or under any municipal or other local authority in it,
b
he is employed, in circumstances not falling within paragraph (a) above, by a body corporate established for any public purpose in that territory by an enactment of a legislature empowered to make laws for that territory, or
c
he is the holder of a public office in that territory in circumstances not falling within either paragraph (a) or (b).
10
For the purposes of subsection (9), references to the government of an overseas territory include references to a government constituted for two or more overseas territories, and to any authority established for the purpose of providing or administering services which are common to, or relate to matters of common interest to, two or more such territories.
616 Other overseas pensions.
F66. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
617 Social security benefits and contributions.
F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
617AF69 Tax credits under Part 1 of Tax Credits Act 2002
F68. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER III RETIREMENT ANNUITIES
618 Termination of relief under this Chapter, and transitional provisions.
F70. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
619 Exemption from tax in respect of qualifying premiums.
F71. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
620 Qualifying premiums.
F72. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
621 Other approved contracts.
F73. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
622 Substituted retirement annuity contracts.
F74. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
623 Relevant earnings.
F75. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
624 Sponsored superannuation schemes and controlling directors.
F76. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
625 Carry-forward of unused relief under section 619.
F77. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
626 Modification of section 619 in relation to persons over 50.
F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F79627 Lloyd’s underwriters.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
628 Partnership retirement annuities.
F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C2629 Annuity premiums of Ministers and other officers.
M151
For the purposes of this Chapter so much of any salary which—
a
is payable to the holder of a qualifying office who is also a Member of the House of Commons, and
b
is payable for a period in respect of which the holder is not a participant in relation to that office in arrangements contained in the Parliamentary pension scheme but is a participant in relation to his membership of the House of Commons in any such arrangements, or for any part of such a period,
as is equal to the difference between a Member’s pensionable salary and the salary which (in accordance with any such resolution as is mentioned in subsection (3)(a) below) is payable to him as a Member holding that qualifying office shall be treated as remuneration from the office of Member and not from the qualifying office.
2
In this section—
“Member’s pensionable salary” means a Member’s ordinary salary under any resolution of the House of Commons which, being framed otherwise than as an expression of opinion, is for the time being in force relating to the remuneration of Members or, if the resolution provides for a Member’s ordinary salary thereunder to be treated for pension purposes as being at a higher rate, a notional yearly salary at that higher rate;
“qualifying office” means an office mentioned in section 2(2)(b), (c) or (d) of the Parliamentary and other M16Pensions Act 1987;
“the Parliamentary pension scheme” has the same meaning as in that Act;
and without prejudice to the power conferred by virtue of paragraph 13 of Schedule 1 to that Act, regulations under section 2 of that Act may make provision specifying the circumstances in which a person is to be regarded for the purposes of this section as being or not being a participant in relation to his Membership of the House of Commons, or in relation to any office, in arrangements contained in the Parliamentary pension scheme.
3
In subsection (2) above “a Member’s ordinary salary”, in relation to any resolution of the House of Commons, means—
a
if the resolution provides for salary to be paid to Members at different rates according to whether or not they are holders of particular offices, or are in receipt of salaries or pensions as the holders or former holders of particular offices, a Member’s yearly salary at the higher or highest rate; and
b
in any other case, a Member’s yearly salary at the rate specified in or determined under the resolution.
C3CHAPTER IV PERSONAL PENSION SCHEMES
Pt. 14 Ch. 5 excluded (1.5.1995) by Finance Act 1995 (c. 4), s. 60(5)
Preliminary
630 Interpretation.
F81. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
631 Approval of schemes.
F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
631AF84 Conversion of certain approved retirement benefits schemes.
F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restrictions on approval
632 Establishment of schemes.
F85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
632AF99 Eligibility to make contributions.
F86. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
632B Eligibility to make contributions: concurrent membership.
F87. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
633 Scope of benefits.
F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
634 Annuity to member.
F89. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
634AF100 Income withdrawals by member.
F90. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
635 Lump sum to member.
F91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
636 Annuity after death of member.
F92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
636AF101 Income withdrawals after death of member.
F93. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
637 Death benefit.
F94. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
637AF102 Return of contributions on or after death of member.
F95. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
638 Other restrictions on approval.
F96. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
638ZAF103 Personal pension arrangements with more than one pension date etc.
F97. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
638AF104 Power to prescribe restrictions on approval.
F98. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax reliefs
639 Member’s contributions.
F105. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
640 Maximum amount of deductions.
F106. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F107640A Earnings cap.
F108. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
641 Carry-back of contributions.
F109. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
641AF121 Election for contributions to be treated as paid in previous year.
F110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
642 Carry-forward of relief.
F111. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
643 Employer’s contributions and personal pension income etc.
F112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
644 Meaning of “relevant earnings”.
F113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
645 Earnings from pensionable employment.
F114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
646 Meaning of “net relevant earnings”.
F115. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F116646A Earnings from associated employments.
F117. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
646BF122 Presumption of same level of relevant earnings etc for 5 years.
F118. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
646C Provisions supplementary to section 646B.
F119. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
646DF123 Higher level contributions after cessation of actual relevant earnings: modification of section 646B.
F120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge to tax
647 Unauthorised payments.
F124. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
648 Contributions under unapproved arrangements.
F125. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S. 648A and preceding cross-heading inserted (with application in accordance with s. 109(2) of the amending Act) by Finance Act 1994 (c. 9), s. 109(1)
Cross-heading preceding s. 648A omitted (1.5.1995) by virtue of Finance Act 1995 (c. 4), Sch. 11 para. 12
648A Annuities: charge under Schedule E.
F126. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
648BF129 Return of contributions after pension date.
F127. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous
649 Minimum contributions under Social Security Act 1986.
F130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
650 Withdrawal of approval.
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
650AF140 Charge on withdrawal of approval from arrangements.
F132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
651 Appeals.
F133. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
651AF141 Information powers.
F134. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
652 Information about payments.
F135. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
653 Information: penalties.
F136. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
653AF142 Notices to be given to scheme administrator.
F137. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
654 Remuneration of Ministers and other officers.
F138. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
655 Transitional provisions.
F139. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER V PURCHASED LIFE ANNUITIES
656 Purchased life annuities other than retirement annuities.
F144. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
657 Purchased life annuities to which section 656 applies.
F145. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
658 Supplementary.
F146. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER VI MISCELLANEOUS
658AF156 Charges and assessments on administrators.
F147. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F148659 Financial futures and traded options.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F149659A Futures and options.
1
a
“investments” (or “investment”) includes futures contracts and options contracts, and
b
income derived from transactions relating to such contracts shall be regarded as income derived from (or income from) such contracts.
F150. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
For the purposes of subsection (1) above a contract is not prevented from being a futures contract or an options contract by the fact that any party is or may be entitled to receive or liable to make, or entitled to receive and liable to make, only a payment of a sum (as opposed to a transfer of assets other than money) in full settlement of all obligations.
659BF157 Definition of insurance company.
F151. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
659C Effect of appointment or arrangements under section 659B.
F152. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
659DF158 Interpretation of provisions about pension sharing.
F153. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
659EF159 Treatment of income from property investment LLPs
1
The exemptions specified below do not apply to income derived from investments, deposits or other property held as a member of a property investment LLP F154(see section 1004 of ITA 2007).
2
The exemptions are those provided by—
F155. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F155. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
section 613(4) (Parliamentary pension funds),
section 614(3) (certain colonial, &c. pension funds),
section 614(4) (the Overseas Service Pension Fund),
section 614(5) (other pension funds for overseas employees),
F155. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F155. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
The income to which subsection (1) above applies includes relevant stock lending fees, in relation to any investments, to which any of the provisions listed in subsection (2) above would apply by virtue of section 129B.
4
Section 659A (treatment of futures and options) applies for the purposes of subsection (1) above.
Pt. 14 Ch. 1 (ss. 590-612) modified (31.3.1995) by Judicial Pensions and Retirement Act 1993 (c. 8), ss. 18, 19(4), 31(2); S.I. 1995/631, art. 2