Finance Act 1989

Section 75.

SCHEDULE 6 U.K. Retirement Benefits Schemes

Part I U.K. Amendments of Taxes Act

Preliminary U.K.

1 U.K. The Taxes Act 1988 shall be amended as mentioned in the followingprovisions of this Part of this Schedule.

Amendments U.K.

2 In section 431(4) (pension business of insurance companies) for paragraph(d)(ii) there shall be substituted—

“(ii) a scheme which is a relevant statutory scheme for the purposes of ChapterI of Part XIV;”

3 (1) Section 590 (conditions for approval of schemes) shall be amended asfollows. U.K.

(2) In subsection (3)(d) (condition to be satisfied as to lump sum) the words “(disregarding any excess of that remuneration over the permittedmaximum)” shall be omitted.

(3) In subsection (3) for the words from “In paragraph (d) above” to theend there shall be substituted—

“(e) that, in the case of any employee who is a member of the scheme by virtueof two or more relevant associated employments, the amount payable by way ofpension in respect of service in any one of them may not, when aggregated withany amount payable by way of pension in respect of service in the other orothers, exceed the relevant amount;

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

(g) that, in the case of any employee in relation to whom the scheme isconnected with another scheme which is (or other schemes each of which is) anapproved scheme, the amount payable by way of pension under the scheme maynot, when aggregated with any amount payable by way of pension under the otherscheme or schemes, exceed the relevant amount;

(h) that, in the case of any employee in relation to whom the scheme isconnected with another scheme which is (or other schemes each of which is) anapproved scheme, the amount payable by way of commuted pension may not, whenaggregated with any amount payable by way of commuted pension under the otherscheme or schemes, exceed the relevant amount.”

(4) For subsection (7) there shall be substituted—

“(7) Subsections (8) to (10) below apply where the Board are consideringwhether a retirement benefits scheme satisfies or continues to satisfy theprescribed conditions.

(8) For the purpose of determining whether the scheme, so far as it relatesto a particular class or description of employees, satisfies or continues tosatisfy the prescribed conditions, that scheme shall be considered inconjunction with—

(a) any other retirement benefits scheme (or schemes) which relates (orrelate) 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 (orrelate) to employees of that class or description and which is (or are) at thesame time before the Board in order for them to decide whether to giveapproval for the purposes of this Chapter,

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

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

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

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

4 U.K. The following sections shall be inserted after section 590—

“590A Section 590: supplementary provisions.

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

(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 asa period in respect of which benefits are payable, and

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

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

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

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

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

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

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

(a) where the body corporate is a close company, in accordance with section416, and

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

590B Section 590: further supplementary provisions.

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

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

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

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

(5) For the purposes of this section A is the aggregate number of yearsservice (expressing parts of a year as a fraction), subject to a maximum of40, which, in the case of the employee, count for the purposes of the schemeat the time the benefits in respect of service in the employment becomepayable.

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

(7) For the purposes of this section B is the aggregate number of yearsservice (expressing parts of a year as a fraction), subject to a maximum of40, which, in the case of the employee, count for the purposes of any of thefollowing—

(a) the scheme, and

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

at the time the benefits become payable.

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

(9) For the purposes of this section C is the permitted maximum in relationto 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 forthat year, for the purposes of section 590C, by virtue of section 590C(4) and(5).

590C Earnings cap.

(1) In arriving at an employee’s final remuneration for the purposes ofsection 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 ofassessment in which his participation in the scheme ceases shall bedisregarded.

(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 subsection (5) below.

(5) If the retail prices index for the month of December preceding a year ofassessment falling within subsection (4) above is higher than it was for theprevious December, the figure for that year shall be an amount arrived atby—

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

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

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

5 (1) Section 592 (exempt approved schemes) shall be amended as follows. U.K.

(2) In subsection (8) there shall be inserted at the beginning the words “Subject to subsection (8A) below,”.

(3) After subsection (8) there shall be inserted—

“(8A) Where an employee’s remuneration for a year of assessment includesremuneration in respect of more than one employment, the amount allowed to bededucted by virtue of subsection (7) above in respect of contributions paidby the employee in that year by virtue of any employment (whether under asingle scheme or under two or more schemes) shall not exceed 15 per cent, orsuch higher percentage as the Board may in a particular case prescribe, of hisremuneration for the year in respect of that employment.”

(4) After subsection (8A) there shall be inserted—

“(8B) In arriving at an employee’s remuneration for a year of assessment for thepurposes of subsection (8) or (8A) above, any excess of what would be hisremuneration (apart from this subsection) over the permitted maximum for thatyear shall be disregarded.

(8C) In subsection (8B) above “permitted maximum”, in relation to a year of assessment,means the figure found for that year by virtue of subsections (8D) and (8E)below.

(8D) For the year 1989-90 the figure is £60,000.

(8E) For any subsequent year of assessment the figure is the figure found forthat year, for the purposes of section 590C, by virtue of section 590C(4) and(5).”

6 (1) Section 594 (exempt statutory schemes) shall be amended as follows. U.K.

(2) In subsection (1) the word “relevant” shall be inserted before the words “statutoryscheme”.

(3) In subsection (2) there shall be inserted at the beginning the words “Subject to subsection (3) below,”.

(4) After subsection (2) there shall be inserted—

“(3) Where a person’s remuneration for a year of assessment includesremuneration in respect of more than one office or employment, the amountallowed to be deducted by virtue of subsection (1) above in respect ofcontributions paid by the person in that year by virtue of any office oremployment (whether under a single scheme or under two or more schemes) shallnot exceed 15 per cent, or such higher percentage as the Board may in aparticular case prescribe, of his remuneration for the year in respect of thatoffice or employment.”

(5) After subsection (3) there shall be inserted—

“(4) In arriving at a person’s remuneration for a year of assessment for thepurposes of subsection (2) or (3) above, any excess of what would be hisremuneration (apart from this subsection) over the permitted maximum for thatyear shall be disregarded.

(5) In subsection (4) above “permitted maximum”, in relation to a year of assessment,means the figure found for that year by virtue of subsections (6) and (7)below.

(6) For the year 1989-90 the figure is £60,000.

(7) For any subsequent year of assessment the figure is the figure found forthat year, for the purposes of section 590C, by virtue of section 590C(4) and(5).”

7 U.K. Section 595(2) and (3) (charge to tax in certain cases) shall be omitted.

8 (1) Section 596 (exceptions from section 595) shall be amended as follows. U.K.

(2) In subsection (1)—

(a) for the words “Neither subsection (1) nor subsection (2) of section 595shall” there shall be substituted the words “Section 595(1) shallnot”; and

(b) in paragraph (b) the word “relevant” shall be inserted before thewords “statutory scheme”.

(3) In subsection (2) for the words “Neither subsection (1) nor subsection(2) of section 595 shall” there shall be substituted the words “Section595(1) shall not”.

(4) In subsection (3)(a) the words “either” and “or subsection (2)” shall be omitted.

9 U.K. The following section shall be inserted after section 596—

“596A Charge to tax: benefits under non-approved schemes.

(1) Where in any year of assessment a person receives a benefit provided undera retirement benefits scheme which is not of a description mentioned insection 596(1) (a), (b) or (c), tax shall be charged in accordance with theprovisions of this section.

(2) Where the benefit is received by an individual, he shall be charged to taxunder Schedule E for that year.

(3) Where the benefit is received by a person other than an individual, theadministrator of the scheme shall be charged to tax under Case VI of ScheduleD for that year.

(4) The amount to be charged to tax is—

(a) in the case of a cash benefit, the amount received, and

(b) in the case of a benefit in kind, an amount equal to whatever is the cashequivalent of the benefit.

(5) In the case of the charge under Case VI of Schedule D, the rate of tax is40 per cent. or such other rate (whether higher or lower) as may for the timebeing be specified by the Treasury by order.

(6) Tax shall not be charged under this section in the case of a benefit whichis chargeable to tax under Schedule E by virtue of section 19(1)1.

(7) But where the amount chargeable to tax by virtue of section 19(1)1 is lessthan the amount which would be chargeable to tax under this section—

(a) subsection (6) above shall not apply, and

(b) the amount chargeable to tax under this section shall be reduced by theamount chargeable to tax by virtue of section 19(1)1.

(8) Tax shall not be charged under this section to the extent that the benefitreceived is attributable to the payment of a sum—

(a) which is deemed to be the income of a person by virtue of section 595(1),and

(b) in respect of which that person has been assessed to tax.

(9) For the purpose of subsection (8) above the provision of a benefit shallbe presumed not to be attributable to the payment of such a sum as ismentioned in that subsection unless the contrary is shown.

596B Section 596A: supplementary provisions.

(1) For the purposes of section 596A the cash equivalent of a benefit in kindis—

(a) in the case of a benefit other than living accommodation, the amount whichwould be the cash equivalent of the benefit under Chapter II of Part V if itwere chargeable under the appropriate provision of that Chapter (treating anysum made good by the recipient as made good by the employee), and

(b) in the case of living accommodation, an amount equal to the value of theaccommodation to the recipient determined in accordance with the followingprovisions of this section less so much of any sum made good by him to thoseat whose cost the accommodation is provided as is properly attributable to theprovision of the accommodation.

(2) Where the cost of providing the accommodation does not exceed£75,000, the value of the accommodation to the recipient in any periodis the rent which would have been payable for the period if the premises hadbeen let to him at an annual rent equal to their annual value as ascertainedunder section 837.

(3) But for a period in which those at whose cost the accommodation isprovided pay rent at an annual rate greater than the annual value as soascertained, the value of the accommodation to the recipient is an amountequal to the rent payable by them for the period.

(4) Where the cost of providing the accommodation does exceed £75,000,the value of the accommodation to the recipient shall be taken to be theaggregate of the value of the accommodation to him determined in accordancewith subsections (2) and (3) above and the additional value of theaccommodation to him determined in accordance with subsections (5) and (6)below.

(5) The additional value of the accommodation to the recipient in any periodis the rent which would have been payable for that period if the premises hadbeen let to him at an annual rent equal to the appropriate percentage of theamount by which the cost of providing the accommodation exceeds £75,000.

(6) Where throughout the period of six years ending with the date when therecipient first occupied the property any estate or interest in the propertywas held by a relevant person (whether or not it was the same estate, interestor person throughout), the additional value shall be calculated as if insubsection (7) below—

(a) the amount referred to in paragraph (a) were the market value of thatproperty as at that date, and

(b) the amount referred to in paragraph (b) did not include expenditure onimprovements made before that date.

(7) For the purposes of this section, the cost of providing any livingaccommodation shall be taken to be the aggregate of—

(a) the amount of any expenditure incurred in acquiring the estate or interestin the property held by a relevant person, and

(b) the amount of any expenditure incurred by a relevant person before theyear of assessment in question on improvements to the property.

(8) The aggregate amount mentioned in subsection (7) above shall be reducedby the amount of any payment made by the recipient to a relevant person, sofar as that amount represents a reimbursement of any such expenditure as ismentioned in paragraph (a) or (b) of that subsection or representsconsideration for the grant to the recipient of a tenancy of the property.

(9) For the purposes of this section, any of the following persons is arelevant person—

(a) the person providing the accommodation;

(b) any person, other than the recipient, who is connected with a personfalling within paragraph (a) above.

(10) In this section—

• “the appropriate percentage” means the rate applicable forthe purposes of section 160 as at the beginning of the year of assessment inquestion;

• “market value”, in relation to any property, means the pricewhich that property might reasonably be expected to fetch on a sale in theopen market with vacant possession, no reduction being made, in estimating themarket value, on account of any option in respect of the property held by therecipient, or a person connected with him, or by any of the persons mentionedin subsection (9) above;

• “property”, in relation to any living accommodation, meansthe property consisting of that living accommodation;

• “tenancy” includes a sub-tenancy;

and section 839 shall apply for the purposes of this section.”

10 U.K. In section 598(1)(b) (charge to tax: repayment of employee’scontributions) the word “relevant” shall be inserted before the words “statutoryscheme”.

11 (1) Section 599 (charge to tax: commutation of entire pension in specialcircumstances) shall be amended as follows. U.K.

(2) In subsection (2)(b) the word “relevant” shall be inserted before thewords “statutory scheme”.

(3) After subsection (9) there shall be inserted—

“(10) In subsection (1)(a) above “the permitted maximum” means, as regards a charge to taxarising under this section in a particular year of assessment, the figurefound for that year by virtue of subsections (11) and (12) below.

(11) For the years 1988-89 and l989-90 the figure is £60,000.

(12) For any subsequent year of assessment the figure is the figure found forthat year, for the purposes of section 590C, by virtue of section 590C(4) and(5).”

12 (1) The following section shall be inserted after section 599— U.K.

“599A Charge to tax: payments out of surplus funds.

(1) This subsection applies to any payment which is made to or for the benefitof an employee or to his personal representatives out of funds which are orhave been held for the purposes of—

(a) a scheme which is or has at any time been an exempt approved scheme, or

(b) a relevant statutory scheme established under a public general Act,

and which is made in pursuance of a duty to return surplus funds.

(2) On the making of a payment to which subsection (1) above applies, theadministrator of the scheme shall be charged to income tax under Case VI ofSchedule D at the relevant rate on such amount as, after deduction of tax atthat rate, would equal the amount of the payment.

(3) Subject to subsection (4) below, the relevant rate shall be 35 per cent.

(4) The Treasury may by order from time to time increase or decrease therelevant rate.

(5) Where a payment made to or for the benefit of an employee is one to whichsubsection (1) above applies, it shall be treated in computing the totalincome of the employee for the year in which it is made as income for thatyear which is—

(a) received by him after deduction of income tax at the basic rate from acorresponding gross amount, and

(b) chargeable to income tax under Case VI of Schedule D.

(6) But, subject to subsection (7) below, no assessment to income tax shallbe made on, and no repayment of income tax shall be made to, the employee.

(7) Subsection (6) above shall not prevent an assessment in respect of incometax at a rate other than the basic rate.

(8) Subsection (5) above applies whether or not the employee is the recipientof the payment.

(9) Any payment chargeable to tax under this section shall not be chargeableto tax under section 598, 599 or 600 or under the Regulations mentioned inparagraph 8 of Schedule 3 to the Finance Act 1971.

(10) In this section—

• “employee”, in relation to a relevant statutory scheme,includes any officer;

• references to any payment include references to any transfer of assets orother transfer of money’s worth.”

13 (1) Section 600 (charge to tax: unauthorised payments to or for employees)shall be amended as follows. U.K.

(2) In subsection (1) the words “or have been” and “or has at any time been” shall be omitted.

(3) In subsection (2) for paragraphs (a) and (b) there shall be substitutedthe words “is not expressly authorised by the rules of the scheme or byvirtue of paragraph 33 of Schedule 6 to the Finance Act 1989.”

14 U.K. In section 605 (information) the word “relevant” shall be inserted before the words “statutory scheme” in subsections (2), (3)(a) and (b)(i) and(4).

15 U.K. The following section shall be inserted after section 611—

“611A Definition of relevant statutory scheme.

(1) In this Chapter any reference to a relevant statutory scheme is areference to a statutory scheme—

(a) established before 14th March 1989, or

(b) established on or after that date and entered in the register maintainedby the Board for the purposes of this section.

(2) The Board shall maintain a register for the purposes of this section andshall enter in it the relevant particulars of any statutory scheme establishedon or after 14th March 1989 which is reported to the Board by the authorityresponsible for establishing it as a scheme the provisions of which correspondwith those of an approved scheme.

(3) The reference in subsection (2) above to the relevant particulars, inrelation to a scheme, is a reference to—

(a) the identity of the scheme,

(b) the date on which it was established,

(c) the authority responsible for establishing it, and

(d) the date on which that authority reported the scheme to the Board.

(4) Where the Board enter the relevant particulars of a scheme in the registermaintained by them for the purposes of this section, they shall inform theauthority responsible for establishing the scheme of the date of the entry.”

16 U.K. In section 828(4) (orders) after “377(8)” there shall be inserted “590C(6)”.

17 U.K. Paragraph 8 of Schedule 23 (benefits under scheme for additional voluntarycontributions causing benefits under main scheme to abate if aggregatebenefits exceed limits) shall be omitted.

Effect of amendments U.K.

18 (1) Paragraphs 2, 6(2), 8(2)(b), 10, 11(2), 14 and 15 above shall be deemedto have come into force on 14th March 1989. U.K.

(2) Paragraphs 3(2) and (3) and 4 above shall have effect in relation to ascheme not approved by the Board before the day on which this Act is passed;but if the scheme came into existence before 14th March 1989 those provisionsshall not have effect as regards an employee who became a member of the schemebefore 1st June 1989.

(3) Paragraph 3(4) above shall have effect where a determination is made onor after the day on which this Act is passed.

(4) Paragraphs 5 and 6(3), (4) and (5) above shall have effect for the year1989-90 and subsequent years of assessment, but paragraphs 5(4) and 6(5) aboveshall not have effect as regards a person’s remuneration in respect of anoffice or employment in such circumstances as the Board may by regulationsprescribe for the purposes of this sub-paragraph.

(5) Paragraphs 7 and 8(2)(a) and (3) above shall have effect for the year1988-89 and subsequent years of assessment.

(6) Paragraph 8(4) above shall not have effect where a sum has been deemed tobe income of a person by virtue of section 595(2) before 6th April 1988.

(7) Paragraph 9 above shall have effect in relation to payments made andbenefits provided on or after the day on which this Act is passed.

(8) Paragraph 11(3) above shall have effect where the charge to tax undersection 599 arises on or after 14th March 1989, but not where the scheme cameinto existence before that date and the employee became a member of it before1st June 1989.

(9) Paragraphs 12 and 13 above shall have effect in relation to payments madeon or after the day on which this Act is passed.

(10) Paragraph 17 above shall have effect in relation to benefits provided onor after the day on which this Act is passed.

Modifications etc. (not altering text)

C1 For regulations see Part III Vol. 5 (under “Retirement benefit schemes: tax relief on contributions”)

Part II U.K. Approved Schemes: General

Preliminary U.K.

19 (1) This Part of this Schedule shall be deemed to have come into force on 14thMarch 1989 and, subject to sub-paragraphs (2) to (4) below, applies inrelation to any retirement benefits scheme (within the meaning of Chapter Iof Part XIV of the Taxes Act 1988) approved by the Board before the day onwhich this Act is passed. U.K.

(2) The Board may by regulations provide that, in circumstances prescribed inthe regulations, this Part of this Schedule or any provision of it shall notapply or shall apply with such modifications as may be so prescribed.

(3) Regulations under sub-paragraph (2) above—

(a) may include provision authorising the Board to direct that this Part ofthis Schedule or any provision of it shall not apply in any particular casewhere in the opinion of the Board the facts are such that its applicationwould not be appropriate;

(b) may take effect (and may authorise any direction given under them to takeeffect) as from 14th March 1989 or any later date;

(c) may make such supplementary provision as appears to the Board to benecessary or expedient.

(4) This Part of this Schedule shall not apply to a scheme if, before the endof 1989, the administrator of the scheme gives written notice to the Boardthat it is not to apply.

(5) Where a notice is given to the Board under sub-paragraph (4) above, thescheme shall cease to be approved—

(a) if it came into existence before 14th March 1989, with effect from 1stJune 1989 or (if later) the date with effect from which it was approved;

(b) if it came into existence on or after 14th March 1989, with effect fromthe date with effect from which it was approved.

Modifications etc. (not altering text)

C2 For regulations see Part III Vol. 5 (under “Retirement benefit schemes: tax relief on contributions”)

Remuneration U.K.

20 (1) This paragraph applies— U.K.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary and notwithstanding the effect of anything in Schedule23 to the Taxes Act 1988) as if, in arriving at the employee’s relevant annualremuneration for the purposes of calculating benefits, any excess of whatwould be his relevant annual remuneration (apart from this paragraph) over thepermitted maximum for the year of assessment in which his participation in thescheme ceases shall be disregarded.

(3) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary) as if, in arriving at the employee’s remuneration forthe year 1988-89 or any subsequent year of assessment for the purposes of anyrestriction on the aggregate amount of contributions payable under the schemeby the employee and the employer, there were disregarded any excess of whatwould be his remuneration for the year (apart from this paragraph) over thepermitted maximum for the year.

(4) In this paragraph “the permitted maximum”, in relation to a year of assessment,means the figure found for that year by virtue of sub-paragraphs (5) and (6)below.

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

(6) For any subsequent year of assessment the figure is the figure found forthat year, for the purposes of section 590C of the Taxes Act 1988, by virtueof section 590C(4) and (5).

Modifications etc. (not altering text)

C3 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 20disapplied or modified; when para. 21modified; or when para. 22disapplied

21 (1) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary) as if the amount of contributions payable under thescheme by an employee in the year 1989-90 or any subsequent year of assessmentwere limited to 15 per cent. of his remuneration for the year in respect ofthe employment. U.K.

(2) Where in relation to any year of assessment a percentage higher than 15per cent. applies for the purposes of section 592(8) or (8A) of the Taxes Act1988 (relief in respect of contributions) as regards any employee,sub-paragraph (1) above, as regards him, shall have effect in relation to thatyear with the substitution for 15 per cent. of that higher percentage.

Modifications etc. (not altering text)

C4 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 20disapplied or modified; when para. 21modified; or when para. 22disapplied

22 (1) This paragraph applies— U.K.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) For the purposes of paragraph 21(1) above, in arriving at the employee’sremuneration for the year any excess of what would be his remuneration for theyear (apart from this sub-paragraph) over the permitted maximum for the yearshall be disregarded.

(3) In sub-paragraph (2) above “the permitted maximum”, in relation to a year of assessment,means the figure found for that year by virtue of sub-paragraphs (4) and (5)below.

(4) For the year 1989-90 the figure is £60,000.

(5) For any subsequent year of assessment the figure is the figure found forthat year, for the purposes of section 590C of the Taxes Act 1988, by virtueof section 590C(4) and (5).

Modifications etc. (not altering text)

C5 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 20disapplied or modified; when para. 21modified; or when para. 22disapplied

Accelerated accrual U.K.

23 (1) This paragraph applies where the scheme allows a member to commute hispension or part of it for a lump sum or sums and— U.K.

(a) where the scheme came into existence before 14th March 1989, applies asregards an employee who became a member of the scheme on or after 1st June1989, and

(b) where the scheme came into existence on or after 14th March 1989, appliesas regards any employee who is a member of the scheme (whenever he became amember).

(2) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary and notwithstanding the effect of paragraph 3 of Schedule23 to the Taxes Act 1988) as if they did not allow the employee to obtain byway of commutation a lump sum or sums exceeding in all the greater of thefollowing sums—

(a) a sum of three-eightieths of his relevant annual remuneration for eachyear of service up to a maximum of 40;

(b) a sum of the pension payable under the scheme to the employee for thefirst year in which it is payable multiplied by 2.25.

(3) The following rules shall apply in calculating, for the purposes ofsub-paragraph (2) above, the pension payable under the scheme to the employeefor the first year in which it is payable—

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

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

(c) the effect of commutation, and of any allocation of pension to providebenefits for survivors, shall be ignored.

Modifications etc. (not altering text)

C6 See The Retirement Benefits Schemes (Contiuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 23disapplied or modified

24 (1) This paragraph applies where the scheme provides a lump sum or sums fora member otherwise than by commutation of his pension or part of itand— U.K.

(a) where the scheme came into existence before 14th March 1989, applies asregards an employee who became a member of the scheme on or after 1st June1989, and

(b) where the scheme came into existence on or after 14th March 1989, appliesas regards any employee who is a member of the scheme (whenever he became amember).

(2) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary and notwithstanding the effect of paragraph 4 of Schedule23 to the Taxes Act 1988) as if they did not allow the payment to theemployee, otherwise than by way of commutation, of a lump sum or sumsexceeding in all the greater of the following sums—

(a) a sum of three-eightieths of his relevant annual remuneration for eachyear of service up to a maximum of 40;

(b) a sum of the relevant number of eightieths of his relevant annualremuneration.

(3) For the purposes of sub-paragraph (2) above the relevant number shall befound by taking the number of eightieths (of relevant annual remuneration) byreference to which the pension payable under the scheme to the employee iscalculated, multiplying that number by three, and treating the resultingnumber as 120 if it would otherwise exceed 120.

Modifications etc. (not altering text)

C7 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen para. 24disapplied

Associated employments U.K.

25 (1) This paragraph applies— U.K.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) Where the employee is a member of the scheme by virtue of two or morerelevant associated employments, the rules of the scheme shall have effect asmentioned in sub-paragraph (3) below.

(3) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary) as if they prohibited the amount payable by way ofpension in respect of service in any of the relevant associated employments,when aggregated with any amount payable by way of pension in respect ofservice in the other such employment or employments, from exceeding therelevant amount.

(4) For the purposes of sub-paragraph (3) above the relevant amount, inrelation to the employee, shall be found by applying the followingformula—

(5) For the purposes of this paragraph—

(a) section 590B(5) and (6) of the Taxes Act 1988 shall apply for the purposeof defining A, and

(b) section 590B(9) to (11) of that Act shall apply for the purpose ofdefining C,

as they apply for the purposes of section 590B of that Act, except thatfor the purposes of this paragraph A shall not exceed 20.

(6) The reference to two or more relevant associated employments shall beconstrued in accordance with section 590A of the Taxes Act 1988.

Modifications etc. (not altering text)

C8 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen paras. 25or 26disapplied

Connected schemes U.K.

26 (1) This paragraph applies— U.K.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) Where in relation to the employee the scheme is connected with anotherscheme which is (or other schemes each of which is) an approved scheme, therules of the scheme shall have effect as mentioned in sub-paragraph (3) below.

(3) The rules of the scheme shall have effect (notwithstanding anything inthem to the contrary) as if they prohibited the amount payable by way ofpension under the scheme, when aggregated with any amount payable by way ofpension under the other scheme or schemes, from exceeding the relevant amount.

(4) For the purposes of sub-paragraph (3) above the relevant amount, inrelation to the employee, shall be found by applying the followingformula—

(5) For the purposes of this paragraph—

(a) section 590B(7) and (8) of the Taxes Act 1988 shall apply for the purposeof defining B, and

(b) section 590B(9) to (11) of that Act shall apply for the purpose ofdefining C,

as they apply for the purposes of section 590B of that Act, except thatfor the purposes of this paragraph B shall not exceed 20.

(6) References in this paragraph to the scheme being connected with anotherscheme in relation to the employee shall be construed in accordance withsection 590A of the Taxes Act 1988.

Modifications etc. (not altering text)

C9 See The Retirement Benefits Schemes (Continuationof Rights of Members of Approved Schemes) Regs. 1990 (S.I.1990/2101–in Part III Vol. 5)for circumstanceswhen paras. 25or 26disapplied

Augmentation U.K.

27 (1) This paragraph applies— U.K.

(a) where the scheme came into existence before 14th March 1989, as regardsan employee who became a member of the scheme on or after 1st June 1989;

(b) where the scheme came into existence on or after 14th March 1989, asregards any employee who is a member of the scheme (whenever he became amember).

(2) Where in addition to being a member of the scheme (the main scheme) theemployee is also a member of an approved scheme (the voluntary scheme) whichprovides additional benefits to supplement those provided by the main schemeand to which no contributions are made by any employer of his, sub-paragraph(3) below shall apply in relation to any augmentation of the benefits providedfor him by the main scheme after he has ceased to participate in it.

(3) Any rules of the main scheme imposing a limit on the amount of a benefitprovided for the employee shall have effect (notwithstanding anything in themto the contrary) as if they provided for the limit to be reduced by the amountof any like benefit provided for the employee by the voluntary scheme.

Centralised schemes U.K.

28 (1) Where the scheme is a centralised scheme, sub-paragraph (1)(a) and (b) ofeach of paragraphs 20 and 22 to 27 above shall have effect with thesubstitution for the reference to the coming into existence of the scheme ofa reference to the commencement of the employer’s participation in the scheme. U.K.

(2) For the purposes of this paragraph a centralised scheme is a retirementbenefits scheme (within the meaning of Chapter I of Part XIV of the Taxes Act1988) established for the purpose of enabling any employer, other than anemployer associated with the person by whom the scheme is established, toparticipate in it as regards his employees.

(3) For the purposes of sub-paragraph (2) above one person is associated withanother if (directly or indirectly) one is controlled by the other or if bothare controlled by a third person.

(4) In sub-paragraph (3) above the reference to control, in relation to a bodycorporate, shall be construed—

(a) where the body corporate is a close company, in accordance with section416 of the Taxes Act 1988, and

(b) where it is not, in accordance with section 840 of that Act.

Election U.K.

29 (1) In a case where— U.K.

(a) an employee became a member of the scheme on or after 17th March 1987 andbefore 1st June 1989, and

(b) he gives written notice to the administrator of the scheme that this Partof this Schedule is to apply in his case,

he shall be deemed for the purposes of this Part of this Schedule to havebecome a member of the scheme on 1st June 1989.

(2) A notice under this paragraph shall be given in such form as the Board mayprescribe.

Supplementary U.K.

30 U.K. In this Part of this Schedule “relevant annual remuneration” means final remuneration or,if the scheme provides for benefits to be calculated by reference to someother annual remuneration, that other annual remuneration.

Part III U.K. Approved Schemes: Additional Voluntary Contributions

Preliminary U.K.

31 (1) Subject to sub-paragraphs (2) to (4) below, this Part of this Scheduleapplies in relation to any retirement benefits scheme which was approved bythe Board before the day on which this Act is passed and which makes provisionfor the payment by an employee of voluntary contributions. U.K.

(2) Paragraph 32 below only applies where—

(a) the provision for the payment of voluntary contributions is freestanding,and

(b) the scheme is not one to which contributions are made by any employer ofthe employee.

(3) The Board may by regulations provide that, in circumstances prescribed inthe regulations, this Part of this Schedule or any provision of it shall notapply or shall apply with such modifications as may be so prescribed.

(4) Regulations under sub-paragraph (3) above—

(a) may include provision authorising the Board to direct that this Part ofthis Schedule or any provision of it shall not apply in any particular casewhere in the opinion of the Board the facts are such that its applicationwould not be appropriate;

(b) may make such supplementary provision as appears to the Board to benecessary or expedient.

Abatement of benefits U.K.

32 (1) The scheme shall have effect (notwithstanding anything in it to thecontrary) as if its rules included a rule imposing, in the case of eachbenefit provided for the employee, such a limit on the amount of the benefitas is mentioned in sub-paragraph (2) below. U.K.

(2) The limit referred to above is a limit of such an amount as is foundby—

(a) taking the amount of the limit imposed by the main scheme on the provisionof any like benefit for the employee by that scheme, and

(b) subtracting from that amount an amount equal to the relevant amount.

(3) For the purposes of sub-paragraph (2) above the relevant amount is—

(a) where the employee is not a member of any other relevant scheme, theamount of any like benefit provided for the employee by the main scheme, and

(b) where the employee is a member of another relevant scheme or schemes, anamount equal to the aggregate of the amount mentioned in paragraph (a) aboveand the amount of any like benefit provided for the employee by the otherrelevant scheme or schemes.

(4) In sub-paragraph (3) above, references to the employee being a member ofanother relevant scheme are references to his being a member of any approvedscheme, other than the scheme, which provides additional benefits for him tosupplement those provided by the main scheme.

(5) This paragraph shall have effect in relation to benefits provided on orafter the day on which this Act is passed.

Return of surplus funds U.K.

33 (1) The scheme shall have effect (notwithstanding anything in it to thecontrary) as if its rules included a rule requiring the administrator, in thecircumstances mentioned in sub-paragraph (2) or (3) below, as the case may be,to make to the employee or his personal representatives a payment of an amountequal to the prescribed amount out of funds which are or have been held forthe purposes of the scheme. U.K.

(2) Where the provision for the payment of voluntary contributions isfreestanding, the circumstances referred to above are that the amount of anybenefit provided for the employee by the scheme would have been greater hadthe amount of any like benefit provided for him by the main scheme, or anyother relevant scheme of which he is a member, been less.

(3) Where the provision for the payment of voluntary contributions is notfreestanding, the circumstances referred to above are that the amount of anybenefit provided for the employee by virtue of the voluntary contributionswould have been greater had the amount of any like benefit provided for himby the principal provisions of the scheme, or any other relevant scheme ofwhich he is a member, been less.

(4) In sub-paragraph (1) above, the reference to the prescribed amount is toan amount calculated in accordance with the method for the time beingspecified in regulations made for the purposes of section 591 of the Taxes Act1988 as the method to be used for calculating the amount of any surplus funds.

(5) In sub-paragraph (2) above, the reference to the employee being a memberof another relevant scheme is a reference to his being a member of anyapproved scheme, other than the scheme, which provides additional benefits forhim to supplement those provided by the main scheme.

(6) In sub-paragraph (3) above, the reference to the employee being a memberof another relevant scheme is a reference to his being a member of anyapproved scheme, other than the scheme, which provides additional benefits forhim to supplement those provided by the principal provisions of the scheme.

34 U.K. The scheme shall have effect (notwithstanding anything in it to thecontrary) as if its rules included a rule enabling the administrator, beforemaking any payment by virtue of paragraph 33 above, to deduct the amount ofany tax to which he is charged by section 599A of the Taxes Act 1988 by virtueof making the payment.

Supplementary U.K.

35 U.K. In this Part of this Schedule—

(a) “administrator”, “approved scheme”, “employee” and “retirement benefits scheme”have the same meanings as in Chapter I of Part XIV of the Taxes Act 1988,

(b) “freestanding”, in relation to provision for the payment ofvoluntary contributions, means provision which is contained in a retirementbenefits scheme other than the one which provides the benefits which thevoluntary contributions are intended to supplement,

(c) “the main scheme”, in relation to provision for the paymentof voluntary contributions which is freestanding, means the retirementbenefits scheme which provides the benefits which the voluntary contributionsare intended to supplement,

(d) “principal provisions”, in relation to a retirement benefitsscheme which makes provision for the payment of voluntary contributions whichis not freestanding, means the provisions of the scheme concerning theprovision of the benefits which the voluntary contributions are intended tosupplement,

(e) references to the provision of a benefit for an employee shall, inrelation to a deceased employee, be construed as references to the provisionof a benefit in respect of him, and

(f) references to an employee being (or not being) a member of a scheme shall,in relation to a deceased employee, be construed as references to his havingbeen (or not having been) a member of a scheme immediately before the time ofhis death.