This Part contains tax provision about pension schemes and other similar schemes.

This Chapter defines some basic concepts.

As for the rest of this Part—

A pension scheme is a registered pension scheme for the purposes of this Part at any time if it is at that time registered under Chapter 2.

In this Part “sponsoring employer”, in relation to an occupational pension scheme, means the employer, or any of the employers, to or in respect of any or all of whose employees the pension scheme has, or is capable of having, effect so as to provide benefits.

In this Part “recognised overseas pension scheme” means an overseas pension scheme F2which satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Commissioners for Her Majesty's Revenue and Customs.

In this Part “member” in relation to a pension scheme, means any active member, pensioner member, deferred member or pension credit member of the pension scheme.

For the purposes of this Part a person is an active member of a pension scheme if there are presently arrangements made under the pension scheme for the accrual of benefits to or in respect of the person.

For the purposes of this Part a person is a pensioner member of a pension scheme if the person is entitled to the present payment of benefits under the pension scheme and is not an active member.

A person is a deferred member of a pension scheme if the person has accrued rights under the pension scheme and is neither an active member nor a pensioner member.

A person is a pension credit member of a pension scheme if the person has rights under the pension scheme which are attributable (directly or indirectly) to pension creditsF3; and, if a person dies having become entitled to pension credits but without having rights attributable to them, the person is to be treated as having acquired, immediately before death, the rights by virtue of which the liability in respect of the pension credits is subsequently discharged.

In this Part “arrangement”, in relation to a member of a pension scheme, means an arrangement relating to the member under the pension scheme.

For the purposes of this Part an arrangement is a “money purchase arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits or other money purchase benefits.

For the purposes of this Part a money purchase arrangement is a “cash balance arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits.

In this Part “money purchase benefits”, in relation to a member of a pension scheme, means benefits the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made under the pension scheme by the member or any other person in respect of the member or any other factor).

In this Part “cash balance benefits” means benefits the rate or amount of which is calculated by reference to an amount available for the provision of benefits to or in respect of the member calculated otherwise than wholly by reference to payments made under the arrangement by the member or by any other person in respect of the member (or transfers or other credits).

For the purposes of this Part an arrangement is a “defined benefits arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are defined benefits.

In this Part “defined benefits”, in relation to a member of a pension scheme, means benefits which are not money purchase benefits (but which are calculated by reference to earnings or service of the member or any other factor other than an amount available for their provision).

Where not all of the benefits that may be provided under an arrangement to or in respect of the member are of the same one of those varieties of benefits, the arrangement is to be treated for the purposes of this Part as being two or three separate arrangements one of which relates to each of the two or three varieties of benefits that may be so provided.

An application may be made to the Inland Revenue for a pension scheme to be registered.

The declarations which the Inland Revenue may require to accompany an application for the registration of a pension scheme include, in particular, a declaration that the instruments or agreements by which it is constituted do not entitle any person to unauthorised payments (see section 160(5)).

F4Following receipt of an application for a pension scheme to be registered the Inland Revenue must decide whether or not to register the pension scheme.

The documents falling within this subsection are any documents produced to an officer of Revenue and Customs by the scheme administrator (whether under section 153A or otherwise) in connection with the application (including any declaration accompanying it).

The reference in subsection (5)(d) to the scheme administrator having failed to comply with an information notice under section 153A includes a case where the scheme administrator has concealed, destroyed or otherwise disposed of, or has arranged for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 153A(3).

The Inland Revenue must notify the scheme administrator of the decision on the application.

Unless the Inland Revenue’s decision is not to register the pension scheme, the notification must state the day on and after which the pension scheme will be a registered pension scheme.

Where an order has been made under section 19(4) or 21(2)(a) of the Pensions Act 2004 or Article 15(4) or 17(2)(a) of the Pensions (Northern Ireland) Order 2005 (restitution by order of court or Pensions Regulator) that property or money be transferred, or a sum be paid, towards an annuity contract made with an insurance company, the annuity contract is to be treated as having become a registered pension scheme on the day on which it is made.

Schedule 36 contains (in Part 1) provisions treating certain pension schemes in existence immediately before 6th April 2006 as registered pension schemes (and related provisions).

This section applies where an application for a pension scheme to be registered is made.

Paragraphs 6(2), 7, 8, 15, 16, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc) apply in relation to information notices under this section as they apply in relation to information notices under that Schedule.

Where an information notice under this section is given to a person other than the scheme administrator, an officer of Revenue and Customs must give a copy of the notice to the scheme administrator.

A person, other than the scheme administrator, who is given an information notice under this section may appeal against the notice or any requirement in the notice.

Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes of an appeal under subsection (5) as it applies for the purposes of an appeal under Part 5 of that Schedule.

This section applies where an application for a pension scheme to be registered is made.

In subsection (2)(a) “business premises” has the meaning given by paragraph 10(3) of Schedule 36 to the Finance Act 2008 (power to inspect business premises etc).

Paragraphs 10(2), 12, 15 and 16 of Schedule 36 to the Finance Act 2008 apply in relation to the power of inspection conferred by this section as they apply in relation to the power of inspection conferred by paragraph 10 of that Schedule.

An officer of Revenue and Customs may not inspect a document under this section if or to the extent that, by virtue of a provision of Part 4 of Schedule 36 to the Finance Act 2008 (restrictions on powers) applied by section 153A(3), an information notice under section 153A given at the time of the inspection to the occupier of the premises could not require the occupier to produce the document.

An officer of Revenue and Customs may ask the tribunal to approve an inspection under this section.

Paragraph 13(1A), (2) and (3) of Schedule 36 to the Finance Act 2008 (approval of tribunal for inspections) applies in relation to an application under subsection (6) as it applies in relation to an application under paragraph 13 of that Schedule in relation to an inspection under paragraph 10 of that Schedule.

The reference in subsection (1)(a) to a person who fails to comply with an information notice includes a person who conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 153A(3).

Paragraphs 39(2), 40 and 44 to 49 of Schedule 36 to the Finance Act 2008 (penalties for failure to comply with information notice etc) apply in relation to the failure or obstruction as they apply in relation to a failure or obstruction mentioned in paragraph 39(1) of that Schedule.

Condition A is that the inaccuracy is careless or deliberate.

An inaccuracy is careless if it is due to a failure by the scheme administrator to take reasonable care.

Condition B is that the scheme administrator knows of the inaccuracy at the time the application is made but does not inform an officer of Revenue and Customs at that time.

The scheme administrator is liable to a penalty not exceeding the maximum penalty for which the scheme administrator could have been liable under paragraph 40A of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) had that paragraph applied in relation to the inaccuracy.

Where the information contains more than one material inaccuracy, a penalty is payable for each inaccuracy.

Paragraphs 46 to 49 of Schedule 36 to the Finance Act 2008 (assessment of penalties etc) apply in relation to a penalty under this section as they apply in relation to a penalty under paragraph 40A of that Schedule.

Paragraphs 40A and 46 to 49 of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) apply in relation to the inaccuracy as they apply in relation to an inaccuracy connected with an information notice under that Schedule.

The person who made the declaration is liable to a penalty not exceeding the maximum penalty for which the person could have been liable under paragraph 40A of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) had that paragraph applied in relation to the falsehood.

Where the declaration contains more than one falsehood, a penalty is payable in relation to each falsehood.

Paragraphs 46 to 49 of Schedule 36 to the Finance Act 2008 (assessment of penalties etc) apply in relation to a penalty under this section as they apply in relation to a penalty under paragraph 40A of that Schedule.

But subsection (1) does not apply to a public service pension scheme.

Subsection (1) is to be construed in accordance with section 22 of FISMA 2000, any relevant order under that section and Schedule 2 to that Act.

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The Treasury may by order amend this section F13....

This section applies where, on an application for a pension scheme to be registered, the Inland Revenue’s decision is not to register the pension scheme.

The scheme administrator may appeal against the decision.

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An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the scheme administrator was notified of the decision.

F16On an appeal under this section that is notified to the tribunal, the tribunal must consider whether the pension scheme ought to have been registered by the Inland Revenue.

If F17the tribunal decides that the pension scheme ought not to have been registered by the Inland Revenue, F18the tribunal must dismiss the appeal.

If F19the tribunal decides that the pension scheme ought to have been registered by the Inland Revenue, the pension scheme is to be treated as having been registered on such date as the F20tribunal determines (but subject to any further appeal F21...).

The scheme administrator may appeal to the tribunal as if, at the end of that period of 6 months, the scheme administrator had been notified under section 153(6) of a decision not to register the scheme; and section 156(5) to (8) applies accordingly.

The Inland Revenue may withdraw the registration of a pension scheme.

If the Inland Revenue withdraws the registration of a pension scheme the Inland Revenue must notify the scheme administrator.

The notification must state the date on and after which the pension scheme will not be a registered pension scheme.

The amount of the scheme chargeable payments made by a pension scheme during any period of 12 months exceeds the de-registration threshold if the scheme chargeable payments percentage is 25% or more.

The percentage of the pension fund used up on the occasion of a scheme chargeable payment is—

$\frac{\mathrm{SCP}}{\mathrm{AA}}\times \mathrm{100}$

where—

SCP is the amount of the scheme chargeable payment, and

AA is an amount equal to the aggregate of the amount of the sums and the market value of the assets held for the purposes of the pension scheme at the time when the scheme chargeable payment is made.

Subsections (7) to (10) apply for the purposes of subsection (1)(db).

Condition A is that the inaccuracy is careless or deliberate.

An inaccuracy is careless if it is due to a failure by the scheme administrator to take reasonable care.

Condition B is that the scheme administrator knows of the inaccuracy at the time the document is produced to an officer of Revenue and Customs but does not inform such an officer at that time.

This section applies where the Inland Revenue decides to withdraw the registration of a pension scheme under section 157.

The scheme administrator, or any person notified under that section of the withdrawal of registration, may appeal against the decision.

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An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the appellant was notified of the decision.

F33On an appeal that is notified to the tribunal, the tribunal must consider whether the registration of the pension scheme ought to have been withdrawn.

If F34the tribunal decides that the registration of the pension scheme ought to have been withdrawn, F35the tribunal must dismiss the appeal.

If F36the tribunal decides that the registration of the pension scheme ought not to have been withdrawn, the pension scheme is to be treated as having remained a registered pension scheme (but subject to any further appeal F37...).

Paragraphs 6(2), 7, 8, 15, 16, 18 to 20, 23 to 27, 42 and 43 of Schedule 36 to the Finance Act 2008 (information notices etc) apply in relation to information notices under this section as they apply in relation to information notices under that Schedule.

Where an information notice under this section is given to a person other than the scheme administrator, an officer of Revenue and Customs must give a copy of the notice to the scheme administrator.

A person who is given an information notice under this section may appeal against the notice or any requirement in the notice.

Paragraph 32 of Schedule 36 to the Finance Act 2008 (procedures for appeals against information notices) applies for the purposes of an appeal under subsection (4) as it applies for the purposes of an appeal under Part 5 of that Schedule.

In subsection (1)(a) “business premises” has the meaning given by paragraph 10(3) of Schedule 36 to the Finance Act 2008 (power to inspect business premises etc).

Paragraphs 10(2), 12, 15 and 16 of Schedule 36 to the Finance Act 2008 apply in relation to the power of inspection conferred by this section as they apply in relation to the power of inspection conferred by paragraph 10 of that Schedule.

An officer of Revenue and Customs may not inspect a document under this section if or to the extent that, by virtue of a provision of Part 4 of Schedule 36 to the Finance Act 2008 (restrictions on powers) applied by section 159A(2), an information notice under section 159A given at the time of the inspection to the occupier of the premises could not require the occupier to produce the document.

An officer of Revenue and Customs may ask the tribunal to approve an inspection under this section.

Paragraph 13(1A), (2) and (3) of Schedule 36 to the Finance Act 2008 (approval of tribunal for inspections) applies in relation to an application under subsection (5) as it applies in relation to an application under paragraph 13 of that Schedule in relation to an inspection under paragraph 10 of that Schedule.

The reference in subsection (1)(a) to a person who fails to comply with an information notice includes a person who conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document in breach of paragraph 42 or 43 of Schedule 36 to the Finance Act 2008 as applied by section 159A(2).

Paragraphs 39(2), 40 and 44 to 49 of Schedule 36 to the Finance Act 2008 (penalties for failure to comply with information notice etc) apply in relation to the failure or obstruction as they apply in relation to a failure or obstruction mentioned in paragraph 39(1) of that Schedule.

Paragraphs 40A and 46 to 49 of Schedule 36 to the Finance Act 2008 (penalties for inaccurate information and documents) apply in relation to the inaccuracy as they apply in relation to an inaccuracy connected with an information notice under that Schedule.

The only payments which a registered pension scheme is authorised to make to or in respect of a F39person who is or has been a member of the pension scheme are those specified in section 164.

The only payments which a registered pension scheme that is an occupational pension scheme is authorised to make to or in respect of a F43person who is or has been a sponsoring employer are those specified in section 175.

If an unauthorised member payment or unauthorised employer payment made to or in respect of a person would have been greater but for a reduction made in respect of the whole, or any proportion, of the amount which the scheme administrator considers may be the amount of the liability to the scheme sanction charge in respect of it, it is to be regarded for the purposes of this Part as increased by the amount of the reduction.

Sections 182 to 185 contain provision about amounts that a registered pension scheme is not authorised to borrow.

Sections 185A to 185I contain provision about the receipt of income and gains from taxable property.

As well as section 157, sections 239 and 242 specify consequences of unauthorised borrowing F48and the receipt of income and gains from taxable property.

Schedule 36 contains (in Parts 3 and 4) transitional provision about unauthorised payments.

This section applies for the interpretation of this Chapter.

“Payment” includes a transfer of assets and any other transfer of money’s worth.

Subsection (4) applies to a payment made or benefit provided under or in connection with an investment (including an insurance contract or annuity) acquired using sums or assets held for the purposes of a registered pension scheme.

The payment or benefit is to be treated as made or provided from sums or assets held for the purposes of the pension scheme, even if the pension scheme has been wound up since the investment was acquired.

Any asset held by a person connected with a F52person who is or has been a member or sponsoring employer (or who was connected with F53such a person at the date of the person's death) is to be treated as held for the benefit of the F52person who is or has been a member or sponsoring employer.

Any increase in the value of an asset held by, or reduction in the liability of, a person connected with a F54person who is or has been a member or sponsoring employer (or who was connected with F55such a person at the date of the person's death) is to be treated as an increase or reduction for the benefit of the F54person who is or has been a member or sponsoring employer.

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

This section applies for the interpretation of this Chapter.

A guarantee of a loan made to or in respect of a F58person who is or has been a member or sponsoring employer of a registered pension scheme F59, or to or in respect of a person who is connected with a F58person who is or has been a member or sponsoring employer of a registered pension scheme but is not F60such a person, is to be treated as a loan to or in respect of the F58person who is or has been a member or sponsoring employer of an amount equal to the amount guaranteed.

The relevant date is the date by which a person at arm’s length from the pension scheme might be expected to be required to pay the debt.

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

This section applies for the interpretation of this Chapter.

Borrowing is borrowing by a registered pension scheme if the amount borrowed is to be repaid from sums or assets held for the purposes of the pension scheme.

A liability is a liability of a registered pension scheme if the liability is to be met from sums or assets held for the purposes of the pension scheme.

Borrowing by a registered pension scheme is in respect of an arrangement if it is properly attributable to the arrangement in accordance with the provisions of the pension scheme and any just and reasonable apportionment.

These are the rules relating to the payment of pensions by a registered pension scheme to a member of the pension scheme (“the pension rules”).

• Pension rule 1

  No payment of pension may be made before the day on which the member reaches normal minimum pension age, unless the ill-health condition was met immediately before the member became entitled to a pension under the pension scheme.

• Pension rule 2

  If the member dies before the end of the period of ten years beginning with the day on which the member became entitled to a scheme pension F73or an annuity, F74and if in the case of an annuity that day was before 6 April 2015, payment of the scheme pension F75or annuity may continue to be made (to any person) until the end of that period.

  F76If the member becomes entitled to an annuity on or after 6 April 2015 and the annuity is payable until the later of the member's death and the end of a term certain, payment of the annuity may continue to be made (to any person) until the end of that term.

  F77Except as provided by the preceding provisions of this rule, no payment of the member’s pension may be made after the member’s death.

• Pension rule 3

  No payment of pension other than a scheme pension may be made in respect of a defined benefits arrangement.

• Pension rule 4

  F78No payment of pension other than—

  1. (a)

     a scheme pension,

  2. (b)

     a lifetime annuity, or

  3. (c)

     F79drawdown pension

  may be made in respect of a money purchase arrangement; but a scheme pension may only be paid if the member had an opportunity to select a lifetime annuity instead.

• F80Pension rule 5

  The total amount of drawdown pension paid in each drawdown pension year F81from, or under a short-term annuity purchased using sums or assets out of, the member's drawdown pension fund in respect of a money purchase arrangement must not exceed F82150% of the basis amount for the drawdown pension .

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• F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Part 1 of Schedule 28 gives the meaning of expressions used in the pension rules.

Part 1 of Schedule 29 gives the meaning of expressions used in the lump sum rule.

Schedule 36 contains (in Part 3) transitional provisions about lump sums.

The Commissioners for Her Majesty's Revenue and Customs may by regulations amend Part 1 of Schedule 29, or Part 3 of Schedule 36, in connection with cases involving a lump sum within subsection (6).

The provision that may be made under subsection (5) includes provision altering the effect of amendments made by the Finance Act 2014.

These are the rules relating to the payment of pension death benefits by a registered pension scheme in respect of a member of the pension scheme (“the pension death benefit rules”).

• Pension death benefit rule 1

  No payment of pension death benefit may be made otherwise than to a dependantF95, or nominee or successor, of the member.

• Pension death benefit rule 2

  No payment of pension death benefit other than a dependants' scheme pension may be made in respect of a defined benefits arrangement.

• Pension death benefit rule 3

  F96No payment of pension death benefit other than—

  1. (a)

     a dependants' scheme pension,

  2. (b)

     a dependants' annuity, or

  3. (c)

     F97dependants’ drawdown pension,

  may be made to F98a dependant in respect of a money purchase arrangement; but a dependants' scheme pension may only be paid if the member or dependant had an opportunity to select a dependants' annuity instead.

• F99Pension death benefit rule 3A

  No payment of pension death benefit, other than F100a nominees' annuity in respect of a money purchase arrangement or nominees' drawdown pension in respect of a money purchase arrangement, may be made to a nominee of the member.

• F99Pension death benefit rule 3B

  No payment of pension death benefit, other than F101a successors' annuity in respect of a money purchase arrangement or successors' drawdown pension in respect of a money purchase arrangement, may be made to a successor of the member.

• F102Pension death benefit rule 4

  The total amount of dependants’ drawdown pension paid to a dependant in each drawdown pension year F103from, or under a dependants' short-term annuity purchased using sums or assets out of, the dependant's drawdown pension fund in respect of a money purchase arrangement must not exceed F104150% of the basis amount for the drawdown pension year.

  F105...

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For the purposes of this Part, a person becomes entitled to dependants' income withdrawal, nominees' income withdrawal or successors' income withdrawal under a registered pension scheme whenever sums or assets held for the purposes of an arrangement under the pension scheme are designated as available for the payment of (as the case may be) dependants' drawdown pension, nominees' drawdown pension or successors' drawdown pension.

F108In this part “pension death benefit” means a pension payable on the death of the member (other than a member’s pension payable after the member’s death under pension rule 2: see section 165)F109, or a pension payable in respect of the member on the subsequent death of a dependant, nominee or successor of the member.

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Part 2 of Schedule 28 gives the meaning of expressions used in the pension death benefit rules.

In this Part “lump sum death benefit” means a lump sum payable on the death of the member F114, or a lump sum payable in respect of the member on the subsequent death of a dependant, nominee or successor of the member.

Part 2 of Schedule 29 gives the meaning of expressions used in the lump sum death benefit rule.

Schedule 36 contains (in Part 3) transitional provision about lump sum death benefits.

A transfer of sums or assets held for the purposes of, or representing accrued rights under, a registered pension scheme to an insurance company is to be treated as a recognised transfer if the sums or assets had been applied by the pension scheme towards the provision of a scheme pension or a dependants' scheme pension (but subject to regulations under subsections (1B) and (1C)).

In this Part “scheme manager”, in relation to a pension scheme, means the person or persons administering, or responsible for the management of, the pension scheme.

Regulations may require a member, or former member, of a QROPS or former QROPS to give information of a prescribed description to the scheme manager of a QROPS or former QROPS.

The regulations may apply any provision of Part 7 of Schedule 36 to FA 2008 (penalties), with or without modifications, in relation to requirements imposed under the regulations on a former QROPS.

Provision under subsection (2A)(b) or (4A)(a) may, in particular, provide for use of a way or form specified by the Commissioners.

This section applies where a recognised overseas pension scheme is excluded from being a qualifying recognised overseas pension scheme by a decision of the Inland Revenue under section 169(5).

The scheme manager may appeal against the decision.

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An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the notification of the decision was given.

F138On an appeal that is notified to the tribunal, the tribunal must consider whether the recognised overseas pension scheme ought to have been excluded from being a qualifying recognised overseas pension scheme.

If F139the tribunal decides that the recognised overseas pension scheme ought to have been excluded from being a qualifying recognised overseas pension scheme, F140the tribunal must dismiss the appeal.

If F141the tribunal decides that the recognised overseas pension scheme ought not to have been excluded from being a qualifying recognised overseas pension scheme, the recognised overseas pension scheme is to be treated as having remained a qualifying recognised overseas pension scheme (but subject to any further appeal F142...).

A “scheme administration member payment” is a payment by a registered pension scheme to or in respect of a F143person who is or has been a member of the pension scheme which is made for the purposes of the administration or management of the pension scheme.

But if a payment falling within subsection (1) exceeds the amount which might be expected to be paid to a person who was at arm’s length, the excess is not a scheme administration member payment.

A loan to or in respect of a F144person who is or has been a member of the pension scheme is not a scheme administration member payment.

Regulations made by the Board of Inland Revenue may provide that payments of a description specified in the regulations are, or are not, scheme administration member payments.

Unless the assignment or agreement is pursuant to a pension sharing order or provision, the pension scheme is to be treated as making an unauthorised payment to the member (or to the member’s personal representatives in respect of the member).

Unless the assignment or agreement is pursuant to a pension sharing order or provision, the pension scheme is to be treated as making an unauthorised payment to the person (or the person’s personal representatives) in respect of the member.

Where a pension scheme is treated by this section as having made an unauthorised payment in relation to an assignment (or an agreement to assign), payments by the pension scheme of the benefit F151or right assigned (or agreed to be assigned) are not unauthorised payments.

An excluded pension is so much of any pension which under pension rule 2 may continue to be paid after the member's death as may be so paid.

“Assignment” includes assignation and related expressions are to be read accordingly.

The pension scheme is to be treated as making an unauthorised payment to the member.

The pension scheme is to be treated as making an unauthorised payment to the person in respect of the member.

Subsection (5)(b) applies only if the entitlement is held (or is to be held) by the dependantF169, or nominee, under an arrangement under the pension scheme relating to the member or dependant F170or nominee.

Subsection (5)(ba) applies only if the entitlement is held (or is to be held) by the successor under an arrangement under the pension scheme relating to the beneficiary or successor.

Regulations under subsection (5)(f) may include provision having effect in relation to times before they are made.

The amount of the unauthorised payment is the consideration that might be expected to be received if what is surrendered were assigned by a transaction between parties at arm's length and any power to reduce the entitlement to the benefit or right did not exist.

In this section “surrender”, in relation to any benefit or right of a member (or dependant of a member) of a pension scheme or other person, includes any schemes, arrangements or understandings of any kind (whether or not legally enforceable) the main purpose, or one of the main purposes, of which is to reduce the member's (or dependant's), or person's, entitlement to the benefit or right.

F176For the purposes of this section an excluded pension is so much of any pension which under pension rule 2 may continue to be paid after the member's death as may be so paid.

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

The pension scheme is to be treated as making an unauthorised payment to the other member (or to the other member's personal representatives) of an amount equal to the excess (but subject to subsection F187(5))).

Regulations under subsection (5)(c) may include provision having effect in relation to times before they are made.

This section does not apply if the increase in the pension rights of the other member is brought about by an assignment (or agreement to assign) within section 172.

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For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

But if the member is a also a member of one or more other registered pension schemes, the permitted maximum in relation to each of the registered pension schemes of which he is a member is—

The pension scheme is to be treated as making an unauthorised payment to the member (or to the member's personal representatives).

The amount of the unauthorised payment is the amount by which the amount of the allocated contributions exceeds the permitted maximum.

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

If the benefit is received by reason of an employment which is not F208lower-paid employment as a minister of religion, subsection (1) does not apply.

A registered pension scheme is to be treated as having made an unauthorised payment in respect of a F213person who is or has been a member of the pension scheme if, after the F214person's death, an asset held for the purposes of the pension scheme is used to provide a benefit (other than a payment) to a person who, at the date of the F214person's death, was a member of the F214person's family or household.

The person who receives the benefit is to be treated as having received the unauthorised payment.

If the benefit is received by reason of an employment which is not F215lower-paid employment as a minister of religion, subsections (4) and (5) do not apply.

In this section—

Section 721 of ITEPA 2003 applies for the purposes of determining the members of a person’s family or household.

The amount of the unauthorised payment is the amount by which the reduction in value of the asset held for the purposes of the pension scheme, or the increase in the liability of the pension scheme, exceeds that which might be expected if the parties to the transaction were at arm’s length.

Regulations made by the Board of Inland Revenue may make provision as to how the excess is to be calculated in relation to events of a description specified in the regulations (including provision as to the times at which the asset or liability is to be valued).

If on a standard loan repayment date any amount (including interest) is owing, the loan repayment date may be postponed to a date before the end of the period of five years beginning with the standard loan repayment date.

The loan repayment date may be postponed under subsection (3) only once.

If the amount of a loan to or in respect of a F229person who is or has been a sponsoring employer is increased, the amount of the increase is to be treated as a loan made on the date of the increase.

Schedule 30 gives the meaning of expressions used in this section and explains how to calculate the amount of the unauthorised payment when a loan to or in respect of a F230person who is or has been a sponsoring employer does not comply with subsection (1).

In this section and that Schedule “charge” includes a right in security or an agreement to create a right in security; and any reference to assets subject to a charge or assets charged includes a reference to the property over which such a right is granted.

Schedule 36 contains (in Part 4) transitional provision about loans to sponsoring employers.

But if a payment falling within subsection (1) exceeds the amount which might be expected to be paid to a person who was at arm’s length, the excess is not a scheme administration employer payment.

A loan to or in respect of a F232person who is or has been a sponsoring employer is not a scheme administration employer payment.

Regulations made by the Board of Inland Revenue may provide that payments of a description specified in the regulations are, or are not, scheme administration employer payments.

The amount of the unauthorised payment is the amount by which the reduction in value of the asset held for the purposes of the pension scheme, or the increase in the liability of the pension scheme, exceeds that which might be expected if the parties to the transaction were at arm’s length.

Regulations made by the Board of Inland Revenue may make provision as to how the excess is to be calculated in relation to events of a description specified in the regulations (including provision as to the times at which the asset or liability is to be valued).

A registered pension scheme is not authorised to borrow an amount in respect of a money purchase arrangement unless the arrangement borrowing condition is met.

The arrangement borrowing condition is met if—

$\left(\mathrm{APB}+\mathrm{PB}\right)<\frac{\mathrm{VA}}{2}$

where—

APB is the aggregate of the amounts previously borrowed in respect of the arrangement (excluding any amounts which have been repaid),

PB is the amount proposed to be borrowed in respect of the arrangement, and

VA is the value of the arrangement.

The value of a scheme pension or dependants' scheme pension payable in respect of the arrangement is—

$\mathrm{RVF}\times \mathrm{ARP}$

where—

RVF is the relevant valuation factor (see section 276), and

ARP is the annual rate at which the pension is payable.

Rights are uncrystallised if no-one has become entitled to the present payment of benefits in respect of the rights; and a person is to be treated as entitled to the present payment of benefits in respect of the sums and assets representing the person’s F242drawdown pension fund F243or the person's flexi-access drawdown fund.

If the arrangement is a cash balance arrangement, the value of the uncrystallised rights under the arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits in respect of those rights if a person became entitled to benefits in respect of those rights.

If the arrangement is a money purchase arrangement other than a cash balance arrangement, the value of the uncrystallised rights under the arrangement is the aggregate of the amount of such of the sums, and the market value of such of the assets, held for the purposes of the arrangement as represent those rights.

Subsection (2) applies if a registered pension scheme borrows in respect of a money purchase arrangement an amount which it is not authorised to borrow under section 182.

This subsection applies if, immediately before the amount is borrowed—

$\mathrm{APB}<\frac{\mathrm{VA}}{2}$

If subsection (3) applies, the amount of the scheme chargeable payment is—

$\mathrm{APB}+\mathrm{AB}-\frac{\mathrm{VA}}{2}$

In subsections (3) and (4)—

A registered pension scheme is not authorised to borrow an amount in respect of any arrangement which is not a money purchase arrangement unless the scheme borrowing condition is met.

The scheme borrowing condition is met if—

$\left(\mathrm{APB}+\mathrm{PB}\right)<\frac{\mathrm{AARA}}{2}$

where—

APB is the aggregate of the amounts previously borrowed by the pension scheme in respect of arrangements which are not money purchase arrangements (excluding any amounts which have been repaid),

PB is the amount proposed to be borrowed by the pension scheme, and

AARA is the aggregate amount of the relevant sums and assets.

Subsection (2) applies if a registered pension scheme borrows, in respect of an arrangement which is not a money purchase arrangement, an amount which it is not authorised to borrow under section 184.

This subsection applies if, immediately before the amount is borrowed—

$\mathrm{APB}<\frac{\mathrm{AARA}}{2}$

If subsection (3) applies, the amount of the scheme chargeable payment is—

$\mathrm{APB}+\mathrm{AB}-\frac{\mathrm{AARA}}{2}$

In subsections (3) and (4)—

An investment-regulated pension scheme is to be treated as having made a scheme chargeable payment if the pension scheme holds an interest in taxable property in a tax year.

The amount of the scheme chargeable payment depends on whether a person who holds the interest in the property directly receives profits arising from the interest in the tax year.

If no person who holds the interest in the property directly receives such profits in the tax year, the amount of the scheme chargeable payment is the amount of the deemed profits from the interest in the property for the year (see sections 185B(2) and 185C).

But where section 185D applies, the amount of the scheme chargeable payment is the amount found under subsection (3) or (4) as apportioned to the pension scheme in accordance with that section.

Section 185E makes provision for credits against income tax charged under section 239 (scheme sanction charge) in respect of a scheme chargeable payment treated as made by virtue of this section.

For the purposes of section 185A(3) and (4) the amount of the deemed profits from the interest in the property for the tax year is—

For the purposes of section 185B(2), where no person who holds the interest in the property directly during the tax year does so by virtue of a lease of residential property, the deemed market value of the interest for the year is—

This section applies where the pension scheme holds the interest in the property indirectly for the whole of the period in the tax year for which the property is scheme-held taxable property.

The amount determined under subsection (3) is to be allowed as a credit against any income tax charged under section 239 in respect of the scheme chargeable payment treated as made by virtue of the pension scheme holding the interest in the property in the tax year.

That amount is a proportion of the tax payable and paid determined by reference to the proportion of the amount that would otherwise be the amount of the scheme chargeable payment that is apportioned to the pension scheme under section 185D.

For the purposes of this section the person (“the transferor”) who holds the taxable interest directly is to be treated as holding an asset (a “taxable asset”) consisting of the interest.

Subsections (6) to (8) apply where the pension scheme holds the taxable asset indirectly.

Subsection (6) is subject to section 42 of TCGA 1992 (part disposals); but in the application of that section in relation to the taxable asset the amount of the consideration for the disposal is to be taken to be that amount apart from subsection (7).

This section applies for the purposes of section 185F where the pension scheme or another vehicle ceases to hold all or part of an interest in a vehicle through which the pension scheme holds the taxable interest indirectly.

The pension scheme is to be treated as disposing of the interest in the vehicle through which the pension scheme holds the taxable interest indirectly.

In a case within paragraph (a) of subsection (1), that amount is a proportion of the amount of tax paid and payable determined by reference to the proportion of the amount of consideration for the disposal that is apportioned under section 185G(7).

For the purposes of subsection (2), if the circumstances are as described in subsection (2)(e)(ii), the member is treated as not having become entitled to the expected pension as a result of the cancelled contract having been entered into.

The exemption provided by subsection (1) does not apply to income derived from investments or deposits held as a member of a property investment LLP; and for this purpose “income” includes relevant stock lending fees, in relation to any investments, to which subsection (1) would apply by virtue of section 129B of ICTA (inclusion of relevant stock lending fees in income).

The exemption provided by subsection (1) does not prevent the income from being charged to tax by virtue of section 185A.

In this Part “investments”, in relation to a registered pension scheme, includes futures contracts and options contracts; and income derived from transactions relating to futures contracts or options contracts is to be treated as derived from the contracts.

For that purpose a contract is not prevented from being a futures contract or an options contract by the fact that a 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) in full settlement of all obligations.

Section 271 of TCGA 1992 (exemptions) is amended as follows.

In paragraph (b) of subsection (1), for the words after “part of” substitute “ the Fund mentioned in section 613(4) of the Taxes Act (House of Commons Members' Fund); ”.

Omit subsection (2) (superannuation funds approved before 6th April 1980).

In subsection (12), for “Subsection (1)(b), (c), (d), (g) and (h) and subsection (2)” substitute “ Subsections (1)(b) and (c) and (1A) ”.

An individual who is an active member of a registered pension scheme is entitled to relief under this section in respect of relievable pension contributions paid during a tax year if the individual is a relevant UK individual for that year.

In this Part “relievable pension contributions”, in relation to an individual and a pension scheme, means contributions by or on behalf of the individual under the pension scheme other than contributions to which subsection (3) F250or (3A) applies.

In the case of a contribution which is greater than UMP (see section 266A(5)), subsection (3A) does not apply to the contribution so far as it is greater than UMP.

For the purposes of this Part a pension credit which increases the rights of the individual under the pension scheme is only to be treated as a contribution on behalf of the individual if it derives from a pension scheme that is not a registered pension scheme.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References in the Income Tax Acts to relief in respect of life assurance premiums do not include relief under this section.

The following sections make further provision about relief under this section—

For the purposes of this section and section 190 relevant UK earnings are to be treated as not being chargeable to income tax if, in accordance with arrangements having effect by F265under section 2(1) of the Taxation (International and Other Provisions) Act 2010 (double taxation agreements), they are not taxable in the United Kingdom.

“General earnings from overseas Crown employment subject to UK tax” has the meaning given by section 28 of ITEPA 2003.

“UK furnished holiday lettings business” means a UK property business so far as consisting of the commercial letting of furnished holiday accommodation (within the meaning of Chapter 6 of Part 3 of ITTOIA 2005).

If there is a letting of accommodation only part of which is holiday accommodation, just and reasonable apportionments are to be made for the purpose of determining what is comprised in a UK furnished holiday lettings business.

EEA furnished holiday lettings business” means an overseas property business so far as consisting of the commercial letting of furnished holiday accommodation (within the meaning of Chapter 6 of Part 3 of ITTOIA 2005) in one or more EEA states.

If there is a letting of accommodation only part of which is holiday accommodation, just and reasonable apportionments are to be made for the purpose of determining what is comprised in an EEA furnished holiday lettings business.

The maximum amount of relief to which an individual is entitled under section 188 (relief for contributions) for a tax year is (subject as follows) the amount of the individual’s relevant UK earnings which are chargeable to income tax for the tax year.

Subsection (2) is subject to section 191(7) (limit on methods of giving relief to which individual is entitled by virtue of subsection (2)).

“The basic amount” is £3,600 or such greater amount as the Treasury may by order specify.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief to which an individual is entitled under section 188 (relief for contributions) in respect of contributions is to be given as provided by this section.

Subject as follows, the relief is to be given in accordance with section 192 (relief at source).

In this Part “net pay pension scheme” means a pension scheme in the case of which some or all of the members of the pension scheme are entitled to be given relief in accordance with section 193 in respect of the payment of contributions by them under the pension scheme.

Schedule 36 contains (in Part 4) transitional provision about relief in respect of contributions to pre-commencement retirement annuity contracts.

Where an individual is entitled to be given relief in accordance with this section in respect of the payment of a contribution under a pension scheme, the individual or other person by whom the contribution is paid is entitled, on making the payment, to deduct and retain out of it a sum equal to income tax on the contribution F269at the relevant rate .

If (apart from this section) income tax at the higher rate F272F273or the additional rate F274... is chargeable in respect of any part of the individual's total income for the tax year, on the making of a claim the basic rate limit and the higher rate limit for the tax year in the individual's case are increased by the amount of the contribution.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Subsections (1) and (2) have effect subject to such conditions as the Board of Inland Revenue may prescribe by regulations.

Where, after relief is given to an individual in accordance with this section for a tax year, an assessment, alteration of an assessment or other adjustment of the individual’s liability to tax is made, any appropriate consequential adjustments are to be made in relief given to the individual in accordance with this section.

Subsection (10) does not apply to prevent the giving of relief in respect of the contribution in accordance with subsection 192A.

An individual to whom relief is given in accordance with section 192 in respect of a contribution is entitled to a tax reduction for the tax year in which the payment of the contribution is made if the conditions in subsection (2) or (4) are met.

If the conditions in subsection (2) are met, the amount of the tax reduction is an amount equal to the difference between the amount of relief which would have been given if the relevant rate were the Scottish basic rate for the tax year in which the payment is made and the amount of relief given under section 192.

If the conditions in subsection (4) are met, the amount of the tax reduction is an amount equal to the difference between the amount of relief which would have been given if the relevant rate were the basic rate for the tax year in which the payment is made and the amount of relief given under section 192.

A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.

If relief is given to an individual in accordance with section 192 in respect of a contribution and the conditions in subsection (2) or (4) apply, an amount of excessive relief given is treated as an amount of tax for which the individual is liable for the tax year in which the payment of the contribution is made.

If the conditions in subsection (2) apply, the amount of excessive relief given is an amount equal to the difference between the amount of relief given and the amount of relief which would have been given if the relevant rate were the Scottish basic rate for the tax year in which the payment is made.

If the conditions in subsection (4) apply, the amount of excessive relief given is an amount equal to the difference between the amount of relief given and the amount of relief which would have been given if the relevant rate were the basic rate for the tax year in which the payment is made.

An amount of excessive relief treated as an amount of tax under this section is added at Step 7 of the calculation in section 23 of ITA 2007.

This section applies where an individual is entitled to be given relief in accordance with this section in respect of the payment of a contribution under a pension scheme.

The amount of the contribution is to be allowed to be deducted by the sponsoring employer from the employment income from the individual’s employment with the employer for the tax year in which the payment is made.

A deduction may be made only once in respect of the same contribution.

A net pay pension scheme is a relevant net pay pension scheme if the members of the pension scheme entitled to be given relief in accordance with this section in respect of the payment of contributions by them under the pension scheme include the individual.

On the making of the claim for excess relief the amount of the excess may be deducted F279in calculating the net income of the individual for the tax year F280(see Step 2 of the calculation in section 23 of ITA 2007).

Where, after relief is given to an individual in accordance with this section for a tax year, an assessment, alteration of an assessment or other adjustment of the individual’s liability to tax is made, any appropriate consequential adjustments are to be made in relief given to the individual in accordance with this section.

Where relief is given to an individual in accordance with this section for a tax year in respect of a contribution, relief is not to be given in respect of it under any other provision of the Income Tax Acts.

Where an individual is entitled to be given relief in accordance with this section in respect of the payment of a contribution, on the making of a claim the amount of the contribution may be deducted F281in calculating the net income of the individual for the tax year in which the payment is made F282(see Step 2 of the calculation in section 23 of ITA 2007).

Where, after relief is given to an individual in accordance with this section for a tax year, an assessment, alteration of an assessment or other adjustment of the individual’s liability to tax is made, any appropriate consequential adjustments are to be made in relief given to the individual in accordance with this section.

For the purposes of sections 188 to 194 (relief for contributions) references to contributions paid by an individual include contributions made in the form of the transfer by the individual of eligible shares in a company within the permitted period.

For the purposes of those sections the amount of a contribution made by way of a transfer of shares is the market value of the shares at the date of the transfer.

In this section—

Where the amount of the premiums under the policy in a tax year exceeds the amount of any contributions treated as paid in respect of the premiums by subsection (3), other contributions paid by or on behalf of the individual under the pension scheme in the tax year are treated as paid in respect of premiums under the policy to the extent that their amount does not exceed the difference between the amount of the premiums and the amount of any contributions treated as paid in respect of the premiums by subsection (3).