C1C2C3C4C5C6C7C8C9C10C11C12C13C14C15Part 4Pension schemes etc

Annotations:
Modifications etc. (not altering text)
C7

Pt. 4 modified (1.7.2008) (N.I.) (with effect in accordance with reg. 1 of the amending Rule) by The Health and Social Care (Pension Scheme) Regulations (Northern Ireland) 2008 (S.R. 2008/256), regs. 1, 124(1) (with regs. 134, 258)

C9

Pt. 4 applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 35 para. 18

C10

Pt. 4 modified (19.7.2011) by Finance Act 2011 (c. 11), Sch. 18 para. 14(3)

C11

Pt. 4 applied (with modifications) (with application in accordance with Sch. 22 para. 1 of the amending Act) by Finance Act 2013 (c. 29), Sch. 22 para. 1(2)

C12

Pt. 4 modified (17.7.2014) by Finance Act 2014 (c. 26), Sch. 6 para. 1(2)(3)

C13

Pt. 4: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)

C14

Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 1

C15

Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 9(2)

C9C10Chapter 5Registered pension schemes: tax charges

Annual allowance charge

228ZAF1Tapered reduction of annual allowance: high-income individual

F5F21

If the individual is a high-income individual for the tax year, the amount of the annual allowance for the tax year in the case of the individual is the amount specified for the tax year by or under section 228 reduced (but not below F7£10,000) by—

where AI is the individual's adjusted income for the tax year.

2

If the amount of the reduction under subsection (1) would otherwise not be a multiple of £1, it is to be rounded down to the nearest amount which is a multiple of £1.

3

The individual is a “high-income individual” for the tax year if—

a

the individual's adjusted income for the tax year is more than F6£260,000 and

b

the individual's threshold income for the tax year is more than the amount given by F3F4£260,000 minus the amount specified for the tax year by or under section 228.

4

The individual's “adjusted income” for the tax year is—

a

the individual's net income for the year (see Step 2 of the calculation in section 23 of ITA 2007), plus

b

the amount of any relief under section 193(4) or 194(1) deducted at that Step, plus

c

the amount of any deductions made from employment income of the individual for the year—

i

under section 193(2), or

ii

under Chapter 2 of Part 5 of ITEPA 2003 in accordance with paragraph 51(2) of Schedule 36, plus

d

an amount equal to—

i

the total pension input amount calculated in accordance with section 229(1), less

ii

the amount of any contributions paid by or on behalf of the individual during the year under registered pension schemes of which the individual is a member, less

F8e

the amount of any lump sum death benefit which is subject to the charge to tax on pension income under Part 9 of ITEPA 2003 (pension income) in the tax year.

5

The individual's “threshold income” for the tax year is—

a

the individual's net income for the year (see Step 2 of the calculation in section 23 of ITA 2007), plus

b

any amount by which what would otherwise be general earnings or specific employment income of the individual for the year has been reduced by relevant salary sacrifice arrangements or relevant flexible remuneration arrangements, less

c

the amount (before any deduction under section 192(1)) of any contribution paid in the year in respect of which the individual is entitled to be given relief under section 192 (relief at source), less

F9d

the amount of any lump sum death benefit which is subject to the charge to tax on pension income under Part 9 of ITEPA 2003 (pension income) in the tax year.

6

In subsection (5)—

  • “relevant salary sacrifice arrangements” means arrangements—

    1. a

      under which the individual gives up the right to receive general earnings or specific employment income in return for the making of relevant pension provision, and

    2. b

      which are made on or after 9 July 2015 (and whether before or after the start of the employment concerned), and

  • “relevant flexible remuneration arrangements” means arrangements—

    1. a

      under which the individual and an employer of the individual agree that relevant pension provision is to be made rather than the individual receive some description of employment income, and

    2. b

      which are made on or after 9 July 2015 (and whether before or after the start of the employment concerned).

7

In subsection (6) “relevant pension provision” means the payment of contributions (or additional contributions) to a pension scheme in respect of the individual or otherwise (by an employer of the individual or any other person) to secure an increase in the amount of the benefits to which the individual or any person who is a dependant of, or is connected with, the individual is actually or prospectively entitled under a pension scheme.

8

In subsection (7) “increase” includes increase from nil.

9

Section 993 of ITA 2007 (meaning of “connected” persons) applies for the purposes of subsection (7).