Income and Corporation Taxes Act 1988

Approval of schemes U.K.

590 Conditions for approval of retirement benefit schemes. U.K.

(1) M1 Subject to section 591, the Board shall not approve any retirement benefits scheme for the purposes of this Chapter unless the scheme satisfies all of the conditions set out in subsection (2) below.

(2) M2 The conditions are—

[F1 (a) that the scheme is bona fide established for the sole purpose (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) of providing relevant benefits in respect of service as an employee;]

[F2 (aa) that those benefits do not include any benefits payable to a person other than—

(i) the employee or a scheme member’s ex-spouse,

(ii) a widow, widower, child, or dependant of the employee or of a scheme member’s ex-spouse, or

(iii) the personal representatives of the employee or of a scheme member’s ex-spouse;]

(b) that the scheme is recognised by the employer and employees to whom it relates, and that every employee who is, or has a right to be, a member of the scheme has been given written particulars of all essential features of the scheme which concern him;

(c) that there is a person resident in the United Kingdom who will be responsible for the discharge of all duties imposed on the administrator of the scheme under this Chapter;

(d) that the employer is a contributor to the scheme;

(e) that the scheme is established in connection with some trade or undertaking carried on in the United Kingdom by a person resident in the United Kingdom;

(f) that in no circumstances, whether during the subsistence of the scheme or later, can any amount be paid by way of repayment of an employee’s contributions under the scheme.

(3) M3 Subject to subsection (1) above, the Board shall approve a retirement benefits scheme for the purposes of this Chapter if the scheme satisfies all the conditions of this subsection, that is to say—

(a) that any benefit for an employee is a pension on retirement at a specified age not earlier than 60 [F3 and not later than 75], which does not exceed one-sixtieth of the employee’s final remuneration for each year of service up to a maximum of 40;

(b) that any benefit for any widow [F4 or widower] of an employee is a pension payable on his death after retirement such that the amount payable to the widow [F4 or widower] by way of pension does not exceed two-thirds of any pension or pensions payable to the employee;

[F5 (ba) that any benefit for an ex-spouse, or for the widow or widower of an ex-spouse, is a benefit in relation to which the scheme satisfies the conditions set out in subsection (3A) below;

(bb) that the scheme does not allow any rights debited to a scheme member as a consequence of a pension sharing order or provision to be replaced with any rights which that scheme member would not have been able to acquire (in addition to the debited rights) had the order or provision not been made;

(c) that no benefits are payable under the scheme other than those mentioned in paragraphs (a), (b) and (ba) above;]

(d) that no pension is capable in whole or in part of surrender, commutation or assignment, [F6 except—

(i) for the purpose of giving effect to a pension sharing order or provision, or

(ii) in so far as the commutation of a benefit for an ex-spouse is allowed by virtue of subsection (3A) below, or

(iii)] in so far as the scheme allows an employee on retirement to obtain, by commutation of [F7 a pension provided for him], a lump sum or sums not exceeding in all three-eightieths of his final remuneration (disregarding any excess of that remuneration over the permitted maximum) F8 for each year of service up to a maximum of 40.

[F9 (da) that, in a case in which—

(i) a lump sum may be obtained by the commutation of a part of a pension provided for an employee, and

(ii) the amount of that pension is affected by the making of a pension sharing order or provision,

the lump sum does not exceed the sum produced by multiplying by 2.25 the amount which (after effect has been given to the pension sharing order or provision) is the amount of that pension for the first year in which it is payable;]

[F10 (e) that, in the case of any employee who is a member of the scheme by virtue of two or more relevant associated employments, the amount payable by way of pension in respect of service in any one of them may not, when aggregated with any amount payable by way of pension in respect of service in the other or others, exceed the relevant amount;

(f) that, in the case of any employee who is a member of the scheme by virtue of two or more relevant associated employments, the amount payable by way of commuted pension in respect of service in any one of them may not, when aggregated with any amount payable by way of commuted pension in respect of service in the other or others, exceed the relevant amount;

(g) that, in the case of any employee in relation to whom the scheme is connected with another scheme which is (or other schemes each of which is) an approved scheme, the amount payable by way of pension under the scheme may not, when aggregated with any amount payable by way of pension under the other scheme or schemes, exceed the relevant amount;

(h) that, in the case of any employee in relation to whom the scheme is connected with another scheme which is (or other schemes each of which is) an approved scheme, the amount payable by way of commuted pension may not, when aggregated with any amount payable by way of commuted pension under the other scheme or schemes, exceed the relevant amount.]

[F11 (3A) The conditions mentioned in subsection (3)(ba) above are—

(a) that any benefit for an ex-spouse takes the form of a pension (with or without an entitlement to commute a part of that pension);

(b) that any benefit for an ex-spouse is a pension payable only on the attainment by the ex-spouse of a specified age of not less than 60 and not more than 75;

(c) that any entitlement to commute a part of the pension is exercisable only on its becoming payable;

(d) that any benefit for the widow or widower of an ex-spouse is confined to a non-commutable pension payable on the death of the ex-spouse at a time when the ex-spouse is already entitled to receive a pension under the scheme;

(e) that any pension provided for the widow or widower of an ex-spouse is of an amount not exceeding two-thirds of the pension payable to the ex-spouse;

(f) that, in a case in which a lump sum may be obtained by the commutation of a part of a pension provided for an ex-spouse, the lump sum does not exceed the sum produced by multiplying the amount of the pension for the first year in which it is payable by 2.25.]

(4) The conditions set out in [F12 subsections (2) to (3A)] above are in this Chapter referred to as “the prescribed conditions”.

[F13 (4A) In subsection (3)(c) above “benefits” does not include any benefits for whose payment the scheme makes provision in pursuance of any obligation imposed by legislation relating to social security.]

[F14 (4B) For the purposes of this section a benefit provided under any scheme is provided for an ex-spouse or the widow or widower of an ex-spouse, and shall be treated as not provided for an employee or the widow or widower of an employee, to the extent (and to the extent only) that—

(a) it is provided for a person who is, or is the widow or widower of, either—

(i) an employee who is an ex-spouse; or

(ii) a scheme member’s ex-spouse;

and

(b) it is as an ex-spouse, or as the widow or widower of an ex-spouse, that that person is the person for whom the benefit is provided.

(4C) For the purposes of this section a benefit provided for any person under any scheme is provided for that person as an ex-spouse, or as the widow or widower of an ex-spouse, to the extent (and to the extent only) that—

(a) the benefit is provided in respect of rights of an ex-spouse that are or represent rights conferred on the ex-spouse as a consequence of a pension sharing order or provision; and

(b) the scheme makes provision for the benefit to be treated as provided separately from any benefits which are provided under the scheme for the same person as an employee or as the widow or widower of an employee.

(4D) In this section “scheme member”, in relation to a scheme, means—

(a) an employee; or

(b) a person entitled to any relevant benefits under the scheme as a consequence of a pension sharing order or provision.

(4E) The following rules shall apply in calculating for the purposes of subsection (3)(da) or (3A)(f) above the amount of a person’s pension for the first year in which it is payable—

(a) if the pension payable for the year changes, the initial pension payable shall be taken;

(b) it shall be assumed that that person will survive for the year; and

(c) the effect of commutation shall be ignored.

(4F) A pension provided for an ex-spouse who is an employee, or for the widow or widower of such an ex-spouse, shall be disregarded in any determination of whether the conditions set out in subsection (3)(e) to (h) above are satisfied or continue to be satisfied in the case of that employee.]

F15 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F15 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F16 (7) Subsections (8) to (10) below apply where the Board are considering whether a retirement benefits scheme satisfies or continues to satisfy the prescribed conditions.

(8) For the purpose of determining whether the scheme, so far as it relates to a particular class or description of employees, satisfies or continues to satisfy the prescribed conditions, that scheme shall be considered in conjunction with—

(a) any other retirement benefits scheme (or schemes) which relates (or relate) to employees of that class or description and which is (or are) approved for the purposes of this Chapter,

(b) any other retirement benefits scheme (or schemes) which relates (or relate) to employees of that class or description and which is (or are) at the same time before the Board in order for them to decide whether to give approval for the purposes of this Chapter,

(c) any section 608 scheme or schemes relating to employees of that class or description, and

(d) any relevant statutory scheme or schemes relating to employees of that class or description.

(9) If those conditions are satisfied in the case of both or all of those schemes taken together, they shall be taken to be satisfied in the case of the scheme mentioned in subsection (7) above (as well as the other or others).

(10) If those conditions are not satisfied in the case of both or all of those schemes taken together, they shall not be taken to be satisfied in the case of the scheme mentioned in subsection (7) above.

(11) The reference in subsection (8)(c) above to a section 608 scheme is a reference to a fund to which section 608 applies.]

Textual Amendments

F1 S. 590(2)(a) substituted (with application in accordance with Sch. 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 2(1); S.I. 2000/1093, art. 2

F2 S. 590(2)(aa) inserted (with application in accordance with Sch. 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 2(2); S.I. 2000/1093, art. 2

F3 Words in s. 590(3)(a) substituted by Finance Act 1991 (c. 31, SIF 63:1), 34(2)(4)

F4 1988(F) s.35and Sch.3 para.18on and after 6April 1990.

F5 S. 590(3)(ba)(bb)(c) substituted for s. 590(3)(c) (with application in accordance with Sch. 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para, 2(3) (with Sch. 10 para. 18(4)); S.I. 2000/1093, art. 2

F6 Words in s. 590(3)(d) substituted (with application in accordance with Sch. 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 2(4)(a); S.I. 2000/1093, art. 2

F7 Words in s. 590(3)(d) substituted (with application in accordance with Sch. 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 2(4)(b); S.I. 2000/1093, art. 2

F8 S. 590(3)(e)-(h) substituted for words in s. 590(3) by Finance Act 1989 (c. 26), s. 75, Sch. 6 paras. 3(3), 18(2) in respect of schemes not approved before 27 July 1989 (not applicable to certain employees of pre 14 March 1989 schemes). Previously: “ In paragraph (d) above “ the permitted maximum” means £100,000 or such other sum as may for the time being be specified in an order made by the Treasury.”; and those words in s. 590(3) (as originally enacted) amended (6.4.2005) by The Retirement Benefits Schemes (Increase in Permitted Maximum in Transitional Cases) Order 2005 (S.I. 2005/723), art. 2

F9 S. 590(3)(da) inserted (with application in accordance with Sch. 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 2(5) (with Sch. 10 para. 18(5)); S.I. 2000/1093, art. 2

F10 S. 590(3)(e)-(h) substituted for words in s. 590(3) by Finance Act 1989 (c. 26), s. 75, Sch. 6 paras. 3(3), 18(2) in respect of schemes not approved before 27 July 1989 (not applicable to certain employees of pre 14 March 1989 schemes). Previously: "In paragraph (d) above "the permitted maximum" means £100,000 or such other sum as may for the time being be specified in an order made by the Treasury."; and those words in s. 590(3) (as originally enacted) amended (6.4.2005) by The Retirement Benefits Schemes (Increase in Permitted Maximum in Transitional Cases) Order 2005 (S.I. 2005/723), art. 2

F11 S. 590(3A) inserted (with application in accordance with Sch. 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 2(6); S.I. 2000/1093, art. 2

F12 Words in s. 590(4) substituted (with application in accordance with Sch 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 2(7); S.I. 2000/1093, art. 2

F13 S. 590(4A) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 34(3)(4)

F14 S. 590(4B)-(4F) inserted (with application in accordance with Sch. 10 para. 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 2(8); S.I. 2000/1093, art. 2

F15 S. 590(5)(6) repealed (retrospectively) by Finance Act 1991 (c. 31, SIF 63:1), ss. 36(2)(3), 123, Sch. 19, Pt. V, Note 8

F16 1989 s.75and Sch.6 paras.3(4)and 18(3)—to have effect where a determination is made on or after 27July 1989.Previously

“(7) For the purpose of determining whether a retirement benefits scheme, so far as it relates to a particular class or description of employees, satisfies or continues to satisfy the prescribed conditions—(a) that scheme shall be considered in conjunction with any other retirement benefits scheme or schemes relating to employees of that class or description, and (b) if those conditions are satisfied in the case of both or all of those schemes taken together, they shall be taken to be satisfied in the case of each of them, but otherwise those conditions shall be taken to be satisfied in the case of none of them.”.

Marginal Citations

M1 Source-1970(F) s.19(1); 1971 s.21(2)

M2 Source-1970(F) s.19(2)

M3 Source-1970(F) s.19(2A), (2B); 1971 s.21(3); 1987 (No.2) Sch.3 1

[F17 590A Section 590: supplementary provisions. U.K.

(1) For the purposes of section 590(3)(e) and (f) two or more employments are relevant associated employments if they are employments in the case of which—

(a) there is a period during which the employee has held both or all of them,

(b) the period counts under the scheme in the case of both or all of them as a period in respect of which benefits are payable, and

(c) the period is one during which both or all of the employers in question are associated.

(2) For the purposes of section 590(3)(g) and (h) the scheme is connected with another scheme in relation to an employee if—

(a) there is a period during which he has been the employee of two persons who are associated employers,

(b) the period counts under both schemes as a period in respect of which benefits are payable, and

(c) the period counts under one scheme by virtue of service with one employer and under the other scheme by virtue of service with the other employer.

(3) For the purposes of subsections (1) and (2) above, employers are associated if (directly or indirectly) one is controlled by the other or if both are controlled by a third person.

(4) In subsection (3) above the reference to control, in relation to a body corporate, shall be construed—

(a) where the body corporate is a close company, in accordance with section 416, and

(b) where it is not, in accordance with section 840.]

Textual Amendments

F17 Ss. 590A-590C inserted by Finance Act 1989 (c. 26), s. 75, Sch. 6 paras. 4, 18(4)

590B Section 590: further supplementary provisions. U.K.

(1) For the purposes of section 590(3)(e) the relevant amount, in relation to an employee, shall be found by applying the following formula—

(2) For the purposes of section 590(3)(f) the relevant amount, in relation to an employee, shall be found by applying the following formula—

(3) For the purposes of section 590(3)(g) the relevant amount, in relation to an employee, shall be found by applying the following formula—

(4) For the purposes of section 590(3)(h) the relevant amount, in relation to an employee, shall be found by applying the following formula—

(5) For the purposes of this section A is the aggregate number of years service (expressing parts of a year as a fraction), subject to a maximum of 40, which, in the case of the employee, count for the purposes of the scheme at the time the benefits in respect of service in the employment become payable.

(6) But where the same year (or part of a year) counts for the purposes of the scheme by virtue of more than one of the relevant associated employments it shall be counted only once in calculating the aggregate number of years service for the purposes of subsection (5) above.

(7) For the purposes of this section B is the aggregate number of years service (expressing parts of a year as a fraction), subject to a maximum of 40, which, in the case of the employee, count for the purposes of any of the following—

(a) the scheme, and

(b) the other scheme or schemes with which the scheme is connected in relation to him,

at the time the benefits become payable.

(8) But where the same year (or part of a year) counts for the purposes of more than one scheme it shall be counted only once in calculating the aggregate number of years service for the purpose of subsection (7) above.

(9) For the purposes of this section C is the permitted maximum in relation to the year of assessment in which the benefits in question become payable, that is, the figure found for that year by virtue of subsections (10) and (11) below.

(10) For the years 1988-89 and 1989-90 the figure is £60,000.

(11) For any subsequent year of assessment the figure is the figure found for that year, for the purposes of section 590C, by virtue of section 590C(4) [F18 to (5A)].

Textual Amendments

F18 Words in s. 590B(11) substituted (27.7.1993 with effect for the year 1994-95 and subsequent years of assessment) by 1993 c. 34, s. 107(6)(8)

590C Earnings cap. U.K.

(1) In arriving at an employee’s final remuneration for the purposes of section 590(3)(a) or (d), any excess of what would be his final remuneration (apart from this section) over the permitted maximum for the year of assessment in which his participation in the scheme ceases shall be disregarded.

(2) In subsection (1) above “the permitted maximum”, in relation to a year of assessment, means the figure found for that year by virtue of subsections (3) and (4) below.

(3) For the years 1988-89 and 1989-90 the figure is £60,000.

(4) For any subsequent year of assessment the figure is also £60,000, subject to [F19 subsections (5) and (5A)] below.

(5) If the retail prices index for the month of [F20 September] preceding a year of assessment falling within subsection (4) above is higher than it was for the previous [F20 September], the figure for that year shall be an amount arrived at by—

(a) increasing the figure for the previous year of assessment by the same percentage as the percentage increase in the retail prices index, and

(b) if the result is not a multiple of £600, rounding it up to the nearest amount which is such a multiple.

[F21 (5A) If the retail prices index for the month of September preceding a year of assessment falling within subsection (4) above is not higher than it was for the previous September, the figure for that year shall be the same as the figure for the previous year of assessment.]

(6) The Treasury shall in the year of assessment 1989-90, and in each subsequent year of assessment, make an order specifying the figure which is by virtue of this section the figure for the following year of assessment.

Textual Amendments

F19 Words in s. 590C(4) substituted (27.7.1993 with effect for the year 1994-95 and subsequent years of assessment) by 1993 c. 34, s. 107(5)(8)

F20 Word in s. 590C(5) substituted (27.7.1993 with effect for the year 1994-95 and subsequent years of assessment) by 1993 c. 34, s. 107(4)(8)

F21 S. 590C(5A) inserted (27.7.1993 with effect for the year 1994-95 and subsequent years of assessment) by 1993 c. 34, s. 107(5)(8)

Modifications etc. (not altering text)

C2 S. 590C amended (1990-91) by S.I. 1990/679, art. 2

S. 590C amended (1991-92) by S.I. 1991/734, art. 2

S. 590C amended (1992-93) by S.I. 1992/624, art. 2

S. 590C amended (1993-94) by 1993 c. 34, s.106 (in place of S.I. 1993/757, art. 2)

S. 590C amended (1994-95) by S.I. 1993/2950, art. 2

S. 590C amended (1995-96) by S.I. 1994/3009, art. 2

S. 590C amended (1996-97) by S.I. 1995/3034, art. 2

S. 590C amended (1997-98) by S.I. 1996/2951, art. 2

S. 590C amended (1998-99) by S.I. 1998/758, art. 2

S. 590C amended (1999-2000) by S.I. 1999/592, art. 2

S. 590C amended (2000-01) by S.I. 2000/807, art. 2

S. 590C amended (2001-02) by S.I. 2001/637, art. 2

S. 590C amended (2002-03) by S.I. 2002/700, art. 2

S. 590C amended (2003-04) by S.I. 2003/843, art. 2

S. 590C amended (2004-05) by S.I. 2004/773, art. 2

S. 590C amended (2005-06) by S.I. 2005/720, art. 2

C3 S. 590C(1) applied (31.3.1995) by Judicial Pensions and Retirement Act 1993 (c. 8), ss. 3(3)(a)(b), 31(2); S.I. 1995/631, art. 2

591 Discretionary approval. U.K.

(1) M4 The Board may, if they think fit having regard to the facts of a particular case, and subject to such conditions, if any, as they think proper to attach to the approval, approve a retirement benefits scheme for the purposes of this Chapter notwithstanding that it does not satisfy one or more of the prescribed conditions; but this subsection has effect subject to subsection (5) below.

(2) M5 The Board may in particular approve by virtue of this section a scheme—

(a) which exceeds the limits imposed by the prescribed conditions as respects benefits for less than 40 years; or

(b) which provides pensions for the widows [F22 and widowers] of employees on death in service, or for the children or dependants of employees; or

[F23 (ba) which provides pensions for the widows and widowers of ex-spouses dying before the age at which their pensions become payable and for the children or dependants of ex-spouses; or]

(c) which provides on death in service a lump sum of up to four times the employee’s final remuneration (exclusive of any refunds of contributions); or

(d) which allows benefits to be payable on retirement within ten years of the specified age, or on earlier incapacity; or

(e) which provides for the return in certain contingencies of employees’ contributions; or

(f) which relates to a trade or undertaking carried on only partly in the United Kingdom and by a person not resident in the United Kingdom; or

(g) which provides in certain contingencies for securing relevant benefits [F24 falling within subsection (2A) below] (but no other benefits) by means of an annuity contract F25 . . . made with an insurance company of the employee’s choice; or

(h) to which the employer is not a contributor and which provides benefits additional to those provided by a scheme to which he is a contributor.

[F26 (2A) Relevant benefits fall within this subsection if they correspond with benefits that could be provided by an approved scheme, and for this purpose—

(a) a hypothetical scheme (rather than any particular scheme) is to be taken, and

(b) benefits provided by a scheme directly (rather than by means of an annuity contract) are to be taken.]

[F27 (3) In subsection (2)(g) above “insurance company” has the meaning given by section 659B.]

(4) M6 In applying this section to a scheme which was in existence on 6th April 1980, the Board shall exercise their discretion, in such cases as appear to them to be appropriate, so as to preserve—

(a) benefits earned or rights arising out of service before 6th April 1980; and

(b) any rights to death-in-service benefits conferred by rules of the scheme in force on 26th February 1970.

(5) M7 The Board shall not approve a scheme by virtue of this section if to do so would be inconsistent with regulations made [F28 by the Board] for the purposes of this section.

(6) Regulations made [F28 by the Board] for the purposes of this section may restrict the Board’s discretion to approve a scheme by reference to the benefits provided by the scheme, the investments held for the purposes of the scheme, the manner in which the scheme is administered or any other circumstances whatever.

Textual Amendments

F22 Words in s. 591(2)(b) inserted (27.7.1999) by Finance Act 1999 (c. 16), Sch. 10 para. 3(a)

F23 S. 591(2)(ba) inserted (with application in accordance with Sch. 10 para 18(3)(4) of the amending Act) by Finance Act 1999 (c. 16), Sch. 10 para. 3(b); S.I. 2000/1093, art. 2

F24 Words in s. 591(2)(g) inserted (with application in accordance with s. 107(4) of the amending Act) by Finance Act 1994 (c. 9), s. 107(2)(a)

F25 Words in s. 591(2)(g) repealed (with application in accordance with s. 107(4) of the repealing Act) by Finance Act 1994 (c. 9), s. 107(2)(b), Sch. 26 Pt. 5(12), Note 2

F26 S. 591A(2A) inserted (with application in accordance with s. 107(4) of the amending Act) by Finance Act 1994 (c. 9), s. 107(3)

F27 S. 591(3) substituted (with application in accordance with s. 60(1) of the amending Act) by Finance Act 1995 (c. 4), s. 59(2)

F28 1988(F) s.146and Sch.13 para.6 (deemed always to have had effect).And see S.I. 1987 No.412 (in Part III Vol.5)regn.2— “The Pension Scheme Surpluses (Valuation)Regulations 1989”.

Modifications etc. (not altering text)

C4 S. 591 restricted (5.8.1991) by S.I. 1991/1614, reg. 3

Marginal Citations

M4 Source-1970(F) s.20(1); 1987 (No.2) Sch.3 3(2)

M5 Source-1970(F) s.20(2); 1971 s.21(4); 1981 s.32; 1987 (No.2) Sch.3 3(3), (4)

M6 Source-1970(F) s.20(3); 1987 Sch.15 3

M7 Source-1970(F) s.20(4), (5); 1987 (No.2) Sch.3 3(5)

[591A F29 Effect on approved schemes of regulations under section 591. U.K.

(1) Subsection (2) below applies where on or after 17th April 1991 regulations are made for the purposes of section 591 (“section 591 regulations”) which contain provisions restricting the Board’s discretion to approve a retirement benefits scheme by reference to any circumstances other than the benefits provided by the scheme (“relevant provisions”).

(2) Any retirement benefits scheme approved by the Board by virtue of section 591 before the day on which the section 591 regulations come into force shall cease to be approved by virtue of that section at the end of the period of 36 months beginning with that day if at the end of that period the scheme—

(a) contains a provision of a prohibited description, or

(b) does not contain a provision of a required description,

unless the description of provision is specified in regulations made by the Board for the purposes of this subsection.

(3) For the purposes of this section, a provision contained in a scheme shall not be treated as being of a prohibited description by reason only of the fact that it authorises the retention of an investment held immediately before the day on which the section 591 regulations are made.

(4) In determining for the purposes of this section whether any provision contained in a scheme is of a required description, the fact that it is framed so as not to require the disposal of an investment held immediately before the day on which the section 591 regulations are made shall be disregarded.

(5) In this section—

(a) references to a provision of a prohibited description are to a provision of a description specified in the relevant provisions of the section 591 regulations as a description of provision which, if contained in a retirement benefits scheme, would prevent the Board from approving the scheme by virtue of section 591;

(b) references to a provision of a required description are to a provision of a description specified in the relevant provisions of the section 591 regulations as a description of provision which must be contained in a retirement benefits scheme before the Board may approve the scheme by virtue of section 591.]

Textual Amendments

F29 S. 591A inserted by Finance Act 1991 (c. 31, SIF 63:1), s.35

Modifications etc. (not altering text)

C5 S. 591A(2) disapplied (30.7.1999) by The Retirement Benefits Schemes (Restriction on Discretion to Approve) (Additional Voluntary Contributions) (Amendment) Regulations 1999 (S.I. 1999/1964), regs. 1, 6

[591B F30 Cessation of approval: general provisions. U.K.

(1) If in the opinion of the Board the facts concerning any approved scheme or its administration cease to warrant the continuance of their approval of the scheme, they may at any time by notice to the administrator, withdraw their approval on such grounds, and from such date (which shall not be earlier than the date when those facts first ceased to warrant the continuance of their approval or 17th March 1987, whichever is the later), as may be specified in the notice.

(2) Where an alteration has been made in a retirement benefits scheme, no approval given by the Board as regards the scheme before the alteration shall apply after the date of the alteration unless—

(a) the alteration has been approved by the Board, or

(b) the scheme is of a class specified in regulations made by the Board for the purposes of this paragraph and the alteration is of a description so specified in relation to schemes of that class.]

Textual Amendments

F30 S. 591B inserted (retrospectively) by Finance Act 1991 (c. 31), s. 36(1)(3)

Modifications etc. (not altering text)

C6 S. 591B modified (6.4.1996 for specified purposes and 6.4.1997 otherwise) by Pensions Act 1995 (c. 26), ss. 68(5), s. 180(1); S.I. 1996/778, art. 2(5)(a), Sch. Pt. 5; S.I. 1997/664, art. 2(3), Sch. Pt. 2

[F31 591C Cessation of approval: tax on certain schemes. U.K.

(1) Where an approval of a scheme to which this section applies ceases to have effect [F32 otherwise than by virtue of paragraph 3(2)(a) of Schedule 23ZA], [F33 income tax shall be charged under and] in accordance with this section.

(2) The tax shall be charged F34 . . . at the rate of 40 per cent. on an amount equal to the value of the assets which immediately before the date of the cessation of the approval of the scheme are held for the purposes of the scheme (taking that value as it stands immediately before that date).

(3) Subject to section 591D(4), the person liable for the tax shall be the administrator of the scheme F35 . . . .

(4) This section applies to a retirement benefits scheme in respect of which [F36 one or more] of the conditions set out below is satisfied.

(5) The first condition is satisfied in respect of a scheme if, immediately before the date of the cessation of the approval of the scheme, the number of individuals who are members of the scheme is less than twelve.

(6) The second condition is satisfied in respect of a scheme if at any time within the period of one year ending with the date of the cessation of the approval of the scheme, a person who is or has been a controlling director of a company which has contributed to the scheme is a member of the scheme.

[F37 (6A) The third condition is satisfied in respect of a scheme if—

(a) at any time within the period of three years ending with the date of the cessation of the approval of the scheme, the scheme has received a transfer value in respect of any person;

(b) contributions made by or in respect of that person to any approved pension arrangements (whether or not those from which the transfer value was received) were represented in the transfer value; and

(c) the contributions so represented were made by or in respect of that person by reference to—

(i) any service by him with a company of which he is or has at any time been a controlling director;

(ii) any remuneration in respect of any such service; or

(iii) any income chargeable to tax under [F38 Part 2 of ITTOIA 2005] and immediately derived by him from the carrying on or exercise by him (whether as an individual or in partnership with others) of a trade, profession or vocation.]

(7) For the purposes of [F39 this section] a person is a controlling director of a company if he is a director of it and within section 417(5)(b) in relation to it.

[F40 (8) In subsection (6A) above—

(a) the references to the receipt of a transfer value by a scheme are references to the transfer, so as to become held for the purposes of the scheme, of any sum or asset held for the purposes of any other approved pension arrangements; and

(b) the references to contributions to approved pension arrangements include references to—

(i) any contributions made in accordance with, or for the purposes of, the arrangements; and

(ii) anything paid by way of premium or other consideration under an annuity contract for which the arrangements provide.

(9) In this section “approved pension arrangements” means—

(a) any scheme or arrangements approved for the purposes of this Chapter or Chapter IV of this Part or, in relation to a time before 6th April 1988, the corresponding provisions then in force;

(b) any scheme being considered for approval under this Chapter;

(c) any annuity contract entered into for the purposes of any scheme or arrangements falling within paragraph (a) or (b) above; or

(d) any contract or scheme approved for the purposes of Chapter III of this Part or, in relation to a time before 6th April 1988, the corresponding provisions then in force.]]

Textual Amendments

F31 Ss. 591C, 591D inserted (with effect in accordance with s. 61(3) of the amending Act) by Finance Act 1995 (c. 4), s. 61(1)

F32 Words in s. 591C(1) inserted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 13 para. 3(2) (with Sch. 13 Pt. 2)

F33 Words in s. 591C(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 252(2) (with Sch. 2)

F34 Words in s. 591C(2) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 252(3), Sch. 3 (with Sch. 2)

F35 Words in s. 591C(3) repealed (31.7.1998) by Finance Act 1998 (c. 36), Sch. 27 Pt. 3(20)

F36 Words in s. 591C(4) substituted (with effect in accordance with Sch. 15 para. 1(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para 1(2)

F37 S. 591C(6A) inserted (with effect in accordance with Sch. 15 para. 1(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para. 1(3)

F38 Words in s. 591C(6A)(c)(iii) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 252(4) (with Sch. 2)

F39 Words in s. 591C(7) substituted (with effect in accordance with Sch. 15 para. 1(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para. 1(4)

F40 S. 591C(8)(9) inserted (with effect in accordance with Sch. 15 para. 1(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para. 1(5)

Modifications etc. (not altering text)

C7 S. 591C applied by Taxation of Chargeable Gains Act 1992 (c. 12), s. 239A (as inserted (with effect in accordance with s. 61(3) of the amending Act) by Finance Act 1995 (c. 4), s. 61(2))

[F31 591D Section 591C: supplementary. U.K.

(1) For the purposes of section 591C(2) the value of an asset is, subject to subsection (2) below, its market value, construing “market value” in accordance with section 272 of the 1992 Act.

(2) Where an asset held for the purposes of a scheme is a right or interest in respect of any money lent (directly or indirectly) to any person mentioned in subsection (3) below, the value of the asset shall be treated as being the amount owing (including any unpaid interest) on the money lent.

(3) The persons are—

(a) any employer who has at any time contributed to the scheme;

(b) any company connected with such an employer;

[F41 (c) any person who has at any time (whether or not before the making of the loan) been a member of the scheme;

(d) any person connected, at the time of the making of the loan or subsequently, with a person falling within paragraph (c) above.]

(4) Where the administrator of the scheme is constituted by persons who include a person who is an approved independent trustee in relation to a scheme, that person shall not be liable for tax chargeable by virtue of section 591C.

(5) A person is an approved independent trustee in relation to a scheme only if he is—

(a) approved by the Board to act as a trustee of the scheme; and

(b) not connected with—

(i) a member of the scheme;

(ii) any other trustee of the scheme; or

(iii) an employer who has contributed to the scheme.

(6) F42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) The reference in section 591C(1) to an approval of a scheme ceasing to have effect is a reference to—

(a) the scheme ceasing to be an approved scheme by virtue of section 591A(2);

(b) the approval of the scheme being withdrawn under section 591B(1); or

(c) the approval of the scheme no longer applying by virtue of section 591B(2);

and any reference in section 591C to the date of the cessation of the approval of the scheme shall be construed accordingly.

(8) For the purposes of section 591C and this section a person is a member of a scheme at a particular time if at that time a benefit—

(a) is being provided under the scheme, or

(b) may be so provided,

in respect of any past or present employment of his.

(9) Section 839 shall apply for the purposes of this section.]

Textual Amendments

F31 Ss. 591C, 591D inserted (with effect in accordance with s. 61(3) of the amending Act) by Finance Act 1995 (c. 4), s. 61(1)

F41 S. 591D(3)(c)(d) substituted (with effect in accordance with Sch. 15 para. 2(2) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para. 2(1)

F42 S. 591D(6) repealed (6.4.2003 with effect in accordance with s. 723(1) of the repealing Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 6 para. 71, Sch. 8 Pt. 1 (with Sch. 7)

Modifications etc. (not altering text)

C8 S. 591D(5) applied (31.7.1998) by Finance Act 1998 (c. 36), Sch. 15 para. 7(5)