Finance Act 2004

Lifetime annuity U.K.

3 (1) For the purposes of this Part an annuity payable to the member is a lifetime annuity if— U.K.

(a) it is payable by an insurance company,

(b) the member had an opportunity to select the insurance company,

[F1 (ba) the member becomes entitled to it before 6 April 2015,]

(c) it is payable until the member’s death or until the later of the member’s death and the end of a term certain not exceeding ten years, and

[F2 (d) its amount either cannot decrease or falls to be determined in any manner prescribed by regulations made by the Board of Inland Revenue.]

[F3 (1A) For the purposes of this Part, but subject to any provision made under sub-paragraph (2C)(za), an annuity payable to the member is also a lifetime annuity if—

(a) it is payable by an insurance company,

(b) the member becomes entitled to it on or after 6 April 2015, and

(c) it is payable until the member's death or until the later of the member's death and the end of a term certain.]

(2) An annuity is payable until the end of a term certain even if it may, after the death of the member during the term, end on the annuitant—

(a) marrying,

[F4 (aa) entering into a civil partnership,]

(b) reaching the age of 18, or

(c) ceasing to be in full-time education.

[F5 (2A) An annuity does not fail to satisfy sub-paragraph (1)(d) by reason of the operation of

[F6 (a)] a pension sharing order or provision [F7 , or]

[F8 (b) an order under section 377A of the Financial Services and Markets Act 2000 (court order writing down liabilities of insurer).]

(2B) The Board of Inland Revenue may by regulations make provision in relation to cases in which a lifetime annuity payable by an insurance company (“the original lifetime annuity”) ceases to be payable and in consequence of that—

(a) sums or assets (or both) are transferred from the insurance company to another insurance company and are applied towards the provision of either another lifetime annuity (a “new lifetime annuity”) or a scheme pension, short-term annuity, dependants' scheme pension, dependants' annuity[F9 , nominees' annuity] or dependants' short-term annuity by the other insurance company, or

(b) sums or assets are transferred to the relevant registered pension scheme.

(2C) The regulations may provide that—

[F10 (za) in a case where—

(i) a new annuity becomes payable,

(ii) the member becomes entitled to it on or after 6 April 2015,

(iii) it would be a lifetime annuity if any provision made under this paragraph were ignored,

(iv) the terms of the contract for it are such that there will or could be decreases in its amount other than allowed decreases (see sub-paragraph (2E)), and

(v) any other conditions prescribed by the regulations are met,

the new annuity is not a lifetime annuity for the purposes of this Part,]

(a) in a case where a new lifetime annuity becomes payable, the new lifetime annuity is to be treated, to such extent as is prescribed by the regulations and for such of the purposes of this Part as are so prescribed, as if it were the original lifetime annuity, and

(b) in [F11 a case other than one where a new lifetime annuity becomes payable], the relevant registered pension scheme is to be treated as making an unauthorised payment to the member of an amount equal to the aggregate of the amount of the sums, and the market value of the assets, transferred.

F12 (2CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2D) For the purposes of sub-paragraphs (2B) and (2C) a registered pension scheme is the relevant registered pension scheme if the original lifetime annuity was acquired using sums or assets held for the purposes of the pension scheme.]

[F13 (2E) In sub-paragraph (2C)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(d); and any such regulations are to be treated as having effect for this purpose.]

F14 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Sch. 28 para. 3(1)(ba) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 43

F2 Sch. 28 para. 3(1)(d) substituted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 13(2), 64(1)

F3 Sch. 28 para. 3(1A) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 37

F4 Sch. 28 para. 3(2)(aa) inserted (22.2.2007) by The Tax and Civil Partnership Regulations 2007 (S.I. 2007/493), regs. 1, 2(2)

F5 Sch. 28 para. 3(2A)-(2D) inserted (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 13(3), 64(1)

F6 Words in Sch. 28 para. 3(2A) renumbered as Sch. 28 para. 3(2A)(a) (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 33(2)(a)

F7 Word in Sch. 28 para. 3(2A)(a) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 33(2)(b)

F8 Sch. 28 para. 3(2A)(b) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 33(2)(c)

F9 Words in Sch. 28 para. 3(2B)(a) inserted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 4 para. 13(2)

F10 Sch. 28 para. 3(2C)(za) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 44(1)(a)

F11 Words in Sch. 28 para. 3(2C)(b) substituted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 44(1)(b)

F12 Sch. 28 para. 3(2CA) omitted (21.7.2009) by virtue of Finance Act 2009 (c. 10), s. 75(2)(d)

F13 Sch. 28 para. 3(2E) inserted (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 44(2)

F14 Sch. 28 para. 3(3)-(6) repealed (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 13(4), 64(1), Sch. 11 Pt. 4