Finance Act 2004

215 Amount of charge U.K.

(1) The lifetime allowance charge is a charge in respect of the chargeable amount.

(2) The lifetime allowance charge is a charge—

(a) at the rate of 55% in respect of so much (if any) of the chargeable amount as constitutes the lump-sum amount, and

(b) at the rate of 25% in respect of so much (if any) of the chargeable amount as constitutes the retained amount.

[F1 (2A) The Treasury may by order amend subsection (2) so as to vary the rates of the lifetime allowance charge.

(2B) An order under subsection (2A) may make provision for there to be different rates in different circumstances.]

(3) The “chargeable amount” is the aggregate of—

(a) the basic amount, and

(b) any amount which is treated as forming part of the lump-sum amount under subsection (6) or of the retained amount under subsection (8).

(4) The “basic amount”—

(a) if the first lifetime allowance [F2 charge] condition is met, is the amount by which the amount crystallised by the benefit crystallisation event exceeds the amount of the individual’s lifetime allowance available on it, and

(b) if the second lifetime allowance charge condition is met, is the amount crystallised by the benefit crystallisation event.

(5) The “lump-sum amount” is the aggregate of—

(a) so much of the basic amount as is paid as a lump sum to the individual or a lump sum death benefit in respect of the individual, and

(b) any amount which is treated as forming part of the lump-sum amount under subsection (6).

(6) If and to the extent that the tax payable under this section on any of the lump-sum amount is covered by a scheme-funded tax payment, it is to be treated as itself forming part of the lump-sum amount.

(7) The “retained amount” is the aggregate of—

(a) so much of the basic amount as is not paid as a lump sum to the individual or a lump sum death benefit in respect of the individual, and

(b) any amount which is treated as forming part of the retained amount under subsection (8).

(8) If and to the extent that the tax payable under this section on any of the retained amount is covered by a scheme-funded tax payment, it is to be treated as itself forming part of the retained amount.

(9) An amount of tax payable under this section is “covered by a scheme-funded tax payment” if—

(a) the tax is paid by the scheme administrator, F3 ...

F3 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4 (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11) The chargeable amount is not to be treated as income for any purpose of the Tax Acts.

Textual Amendments

F1 S. 215(2A)(2B) inserted (with effect in accordance with Sch. 2 para. 25 of the amending Act) by Finance Act 2009 (c. 10), Sch. 2 para. 14

F2 Word in s. 215(4)(a) inserted (21.7.2008) by Finance Act 2008 (c. 9), Sch. 29 para. 15

F3 S. 215(9)(b) and word repealed (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 41(a), 64(1), Sch. 11 Pt. 4

F4 S. 215(10) repealed (6.4.2006) by Finance Act 2005 (c. 7), Sch. 10 paras. 41(b), 64(1), Sch. 11 Pt. 4

Modifications etc. (not altering text)

C1 Ss. 214-226 applied by 2003 c. 1, s. 636A(5) (as inserted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 31 para. 11 (with Sch. 36))

C2 Ss. 214-226 applied (with modifications) (1.5.2010) by The Financial Assistance Scheme (Tax) Regulations 2010 (S.I. 2010/1187), regs. 1(1), 5-11

C3 S. 215(9) modified (6.4.2006) by The Registered Pension Schemes (Splitting of Schemes) Regulations 2006 (S.I. 2006/569), regs. 1(1), 3(1)(2), Sch. 3 Pt. 1

Commencement Information

I1 Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284