Finance Act 2004 (c. 12)

SCHEDULES

SCHEDULE 29 U.K. Registered pension schemes: authorised lump sums—supplementary

Modifications etc. (not altering text)

C1 Sch. 29 modified (6.4.2006) by The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 (S.I. 2006/207), regs. 1(1), 15 (as amended: (13/8/2009) by S.I. 2009/2047, regs. 1(1), 2-10; (with effect in accordance with reg. 1(3) of the amending S.I.) by S.I. 2012/1795, regs. 1(1), 6; (with effect in accordance with Sch. 1 para. 96(16)(a) of the amending Act) by 2014 c. 30, Sch. 1 para. 96(3)-(14) (with Sch. 1 para. 96(16)(b)); and (for the tax year 2024-25 and subsequent tax years) by 2024 c. 3, Sch. 9 paras. 62(6), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4))

C2 Sch. 29 modified by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), art. 23C (as inserted (1.6.2009) by S.I. 2009/1172, arts. 1, 3 (as amended (with effect in accordance with s. 42(9) of the amending Act) by Finance Act 2014 (c. 26), s. 42(5); and as amended by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 72(1) (with Sch. 1 para. 72(2)(b)))

Part 1 U.K. Lump sum rule

Modifications etc. (not altering text)

C3 Sch. 29 Pt. 1 modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 25(1)(2)(4)

C4 Sch. 29 Pt. 1 applied (with modifications) (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 11

[F1 Pension commencement lump sums: anti-avoidance] U.K.

Textual Amendments

F1 Sch. 29 para. 3A cross-heading inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 26(6), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

[F2 3A (1) Where this paragraph applies in relation to a pension commencement lump sum paid to the member, the pension scheme is to be treated as making to the member an unauthorised payment of the appropriate amount. U.K.

(2) Subject to [F3 sub-paragraphs (3) to (4A)], this paragraph applies in relation to a pension commencement lump sum if—

(a) because of the lump sum, the amount of the contributions paid by or on behalf of, or in respect of, the member to the pension scheme, or to any other registered pension scheme, is significantly greater than it otherwise would be, and

(b) the member envisaged at the relevant time that that would be so.

(3) This paragraph does not apply in relation to any lump sum paid to the member on any day if the amount of the lump sum, when added to any other pension commencement lump sum paid to the member within the period of 12 months ending with that day, does not exceed [F4 £7,500].

(4) This paragraph does not apply if the amount by which the contributions paid as mentioned in sub-paragraph (2)(a) is greater than it otherwise would be because of the lump sum does not exceed 30% of the amount of the lump sum.

[F5 (4A) This paragraph does not apply if—

(a) the member has reached the age of 75 when the contributions are paid as mentioned in sub-paragraph (2)(a), and

(b) the contributions are not paid by an employer of the member.]

[F6 (5) “The appropriate amount” is [F7 the amount of the lump sum].

(6) “The relevant time” is—

(a) if paragraph (a) of sub-paragraph (2) is satisfied before the lump sum is paid, the time when that paragraph is first satisfied, and

(b) otherwise, the time when the lump sum is paid.]]

Textual Amendments

F2 Sch. 29 para. 3A inserted (retrospective to 6.4.2006) by Finance Act 2006 (c. 25), s. 159(1)(2)

F3 Words in Sch. 29 para. 3A(2) substituted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 27(2)

F4 Sum in Sch. 29 para. 3A(3) substituted (17.12.2014) (with effect in accordance with Sch. 1 para. 70(2) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 70(1)

F5 Sch. 29 para. 3A(4A) inserted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 27(3)

F6 Sch. 29 para. 3A(5) substituted (with effect in accordance with Sch. 16 paras. 85, 102 of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 27(4)

F7 Words in Sch. 29 para. 3A(5) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 26(7), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

Modifications etc. (not altering text)

C5 Sch. 29 para. 3A excluded (N.I.) (1.4.2015) by The Teachers Pension Scheme Regulations (Northern Ireland) 2014 (S.R. 2014/310), regs. 1, 167(1)

C6 Sch. 29 para. 3A excluded (E.W.) (1.4.2015) by The Teachers' Pension Scheme Regulations 2014 (S.I. 2014/512), reg. 167(1) (with reg. 183)

[F8 3B (1) Sub-paragraph (2) applies if— U.K.

(a) sums or assets held for the purposes of, or representing accrued rights under, a money purchase arrangement relating to the member under a registered pension scheme (“member money purchase funds”) are subject to a relevant surrender or a relevant transfer,

(b) the sole or main purpose of the relevant surrender or relevant transfer is to increase the applicable amount for the purposes of paragraph 2 on the member becoming entitled to a scheme pension, and

(c) the member becomes entitled to a scheme pension under a relevant defined benefits arrangement.

(2) The pension scheme under which the relevant defined benefits arrangement is an arrangement is to be treated as making an unauthorised payment to the member of the amount by which—

(a) the applicable amount in relation to the relevant defined benefits arrangement (as determined under paragraph 2C), exceeds

(b) what would be the applicable amount (as determined under paragraph 2D) if the arrangement were a money purchase arrangement.

(3) For the purposes of sub-paragraph (1)—

(a) member money purchase funds are subject to a “relevant surrender” if they are surrendered and, in consequence of the surrender, there is a corresponding increase in the sums or assets held for the purposes of, or representing rights under, a defined benefits arrangement relating to the member under the pension scheme (or such an arrangement is established), and

(b) member money purchase funds are subject to a “relevant transfer” if they are transferred so as to become held for the purposes of, or to represent rights under, a defined benefits arrangement relating to the member under any other registered pension scheme.

(4) In this paragraph “relevant defined benefits arrangement” means—

(a) the defined benefits arrangement mentioned in paragraph (a) or (b) of sub-paragraph (3), or

(b) any other defined benefits arrangement relating to the member (under the pension scheme or any other registered pension scheme) in the case of which any of the sums or assets held for the purposes of, or representing accrued rights under, the arrangement directly or indirectly represent sums or assets previously held for the purposes of, or representing accrued rights under, the defined benefits arrangement so mentioned.]

Textual Amendments

F8 Sch. 29 para. 3B inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 26(8), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)