Taxation of Pensions Act 2014

“Member's flexi-access drawdown fund

8A

(1)

For the purposes of this Part the member's flexi-access drawdown fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement as are newly-designated funds.

(2)

For the purposes of this Part sums or assets held for the purposes of an arrangement are newly-designated funds if—

(a)

they—

(i)

have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of drawdown pension, and

(ii)

are not member-designated funds, or

(b)

they were member-designated funds immediately before 6 April 2015 and section 165(3A) applied to the arrangement at that time, or

(c)

they have become newly-designated funds by the operation of paragraph 8B, 8C or 8D, or

(d)

they arise, or (directly or indirectly) derive, from newly-designated funds under paragraph (a), (b) or (c) or from sums or assets which so arise or derive.

(3)

Any sums or assets that become newly-designated funds under sub-paragraph (2)(b) cease to be member-designated funds as from the start of 6 April 2015.

Conversion of certain drawdown pension funds into flexi-access drawdown funds

8B

(1)

Sub-paragraph (2) applies if—

(a)

a member's drawdown pension fund in respect of an arrangement came into being before 6 April 2015,

(b)

section 165(3A) did not apply to the arrangement immediately before 6 April 2015, and

(c)

at a time on or after 6 April 2015, a payment—

(i)

of income withdrawal from the fund, or

(ii)

of a short-term annuity purchased using sums or assets out of the fund,

is made that (apart from sub-paragraph (2)) would breach the cap.

(2)

The sums and assets that make up the fund immediately before the payment is made become newly-designated funds immediately before the payment is made (so that the payment is made out of the member's flexi-access drawdown fund in respect of the arrangement and therefore is not part of the total capped by pension rule 5).

(3)

For the purposes of sub-paragraph (1)(c), a payment of drawdown pension in respect of an arrangement is one that would breach the cap if, when its amount is added to the amounts of any drawdown pension in respect of the arrangement—

(a)

paid—

(i)

before it is made, but

(ii)

in the same drawdown pension year in respect of the arrangement, or

(b)

paid at the time it is made,

the total is greater than the cap set by pension rule 5 for that drawdown pension year.

8C

(1)

Sub-paragraph (2) applies if—

(a)

a member's drawdown pension fund in respect of an arrangement came into being before 6 April 2015,

(b)

section 165(3A) did not apply to the arrangement immediately before 6 April 2015, and

(c)

the member notifies the scheme administrator that the member wishes the fund to become the member's flexi-access drawdown fund in respect of the arrangement.

(2)

At—

(a)

the time the scheme administrator accepts the notification, or

(b)

the start of 6 April 2015 if that is later,

the sums and assets that then make up that fund become newly-designated funds, if they have not previously done so by the operation of paragraph 8B.

8D

(1)

Sub-paragraphs (2) and (3) apply if—

(a)

there is a recognised transfer from one registered pension scheme (“the old scheme”) to another registered pension scheme (“the new scheme”) of member-designated funds held for the purposes of an arrangement under the old scheme, and

(b)

the sums or assets transferred are, under the arrangement under the new scheme for whose purposes they are first held after the transfer, designated as available for the payment of drawdown pension.

(2)

If the member, when or before making the designation, notifies the scheme administrator of the new scheme that the member wishes the sums or assets to be newly-designated funds, the sums or assets become newly-designated funds and do so—

(a)

when the designation is made, or

(b)

if later, immediately after the transfer,

except that, if both the designation and transfer are made before 6 April 2015, the sums or assets become newly-designated funds at the start of 6 April 2015.

(3)

If sub-paragraph (2) does not provide for the sums or assets to become newly-designated funds, the sums or assets become member-designated funds and do so—

(a)

when the designation is made, or

(b)

if later, immediately after the transfer.”

“Dependant's flexi-access drawdown fund

22A

(1)

For the purposes of this Part a dependant's flexi-access drawdown fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement as are newly-designated dependant funds.

(2)

For the purposes of this Part sums or assets held for the purposes of an arrangement are newly-designated dependant funds if—

(a)

they—

(i)

have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of dependants' drawdown pension, and

(ii)

are not dependant-designated funds, or

(b)

they were dependant-designated funds immediately before 6 April 2015 and section 167(2A) applied to the arrangement at that time, or

(c)

they have become newly-designated dependant funds by the operation of paragraph 22B, 22C or 22D, or

(d)

they arise, or (directly or indirectly) derive, from newly-designated dependant funds under paragraph (a), (b) or (c) or from sums or assets which so arise or derive.

(3)

Any sums or assets that become newly-designated dependant funds under sub-paragraph (2)(b) cease to be dependant-designated funds as from the start of 6 April 2015.

Conversion of certain dependants' drawdown funds into flexi-access drawdown funds

22B

(1)

Sub-paragraph (2) applies if—

(a)

a dependant's drawdown pension fund in respect of an arrangement came into being before 6 April 2015,

(b)

section 167(2A) did not apply to the arrangement immediately before 6 April 2015, and

(c)

at a time on or after 6 April 2015, a payment—

(i)

of dependants' income withdrawal from the fund, or

(ii)

of a dependants' short-term annuity purchased using sums or assets out of the fund,

is made that (apart from sub-paragraph (2)) would breach the cap.

(2)

The sums and assets that make up the fund immediately before the payment is made become newly-designated dependant funds immediately before the payment is made (so that the payment is made out of the dependant's flexi-access drawdown fund in respect of the arrangement and therefore is not part of the total capped by pension death benefit rule 4).

(3)

For the purposes of sub-paragraph (1)(c), a payment of dependants' drawdown pension in respect of an arrangement is one that would breach the cap if, when its amount is added to the amounts of any dependants' drawdown pension in respect of the arrangement—

(a)

paid—

(i)

before it is made, but

(ii)

in the same drawdown pension year in respect of the arrangement, or

(b)

paid at the time it is made,

the total is greater than the cap set by pension death benefit rule 4 for that drawdown pension year.

22C

(1)

Sub-paragraph (2) applies if—

(a)

a dependant's drawdown pension fund in respect of an arrangement came into being before 6 April 2015,

(b)

section 167(2A) did not apply to the arrangement immediately before 6 April 2015, and

(c)

the dependant notifies the scheme administrator that the dependant wishes the fund to become the dependant's flexi-access drawdown fund in respect of the arrangement.

(2)

At—

(a)

the time the scheme administrator accepts the notification, or

(b)

the start of 6 April 2015 if that is later,

the sums and assets that then make up that fund become newly-designated dependant funds, if they have not previously done so by the operation of paragraph 22B.

22D

(1)

Sub-paragraphs (2) and (3) apply if—

(a)

there is a recognised transfer from one registered pension scheme (“the old scheme”) to another registered pension scheme (“the new scheme”) of dependant-designated funds held for the purposes of an arrangement under the old scheme, and

(b)

the sums or assets transferred are, under the arrangement under the new scheme for whose purposes they are first held after the transfer, designated as available for the payment of drawdown pension.

(2)

If the dependant, when or before the designation is made, notifies the scheme administrator of the new scheme that the dependant wishes the sums or assets to be newly-designated dependant funds, the sums or assets become newly-designated dependant funds and do so—

(a)

when the designation is made, or

(b)

if later, immediately after the transfer,

except that, if both the designation and transfer are made before 6 April 2015, the sums or assets become newly-designated dependant funds at the start of 6 April 2015.

(3)

If sub-paragraph (2) does not provide for the sums or assets to become newly-designated dependant funds, the sums or assets become dependant-designated funds and do so—

(a)

when the designation is made, or

(b)

if later, immediately after the transfer.”

“(za)

in the case of a member's flexi-access drawdown fund, in the entries in table 3 for provisions not in Schedule 28,”.

“(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.”

“(1E)

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

“(6)

In sub-paragraph (4)(za)(iv) “allowed decreases” means decreases from time to time allowed by regulations under sub-paragraph (1)(c); and any such regulations are to be treated as having effect for this purpose.”

“(1E)

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

“(1A)

In the case of an uncrystallised funds pension lump sum paid under a registered pension scheme when the member has not reached the age of 75—

(a)

no liability to income tax arises on 25% of the sum, and

(b)

section 579A applies in relation to the other 75% of the sum as it applies to any pension under a registered pension scheme.

(1B)

In the case of an uncrystallised funds pension lump sum paid under a registered pension scheme when the member has reached the age of 75—

(a)

if the member's available lifetime allowance when the sum is paid is equal to or greater than the sum—

(i)

no liability to income tax arises on 25% of the sum, and

(ii)

section 579A applies in relation to the other 75% of the sum as it applies to any pension under a registered pension scheme, and

(b)

if the member's available lifetime allowance when the sum is paid is less than the sum—

(i)

no liability to income tax arises on the part of the sum that is equal to 25% of the member's available lifetime allowance when the sum is paid, and

(ii)

section 579A applies in relation to the rest of the sum as it applies in relation to any pension under a registered pension scheme.

(1C)

For the purposes of subsection (1B), the amount of the member's available lifetime allowance when the sum is paid is what it is for the purposes of Part 4 of FA 2004 (see section 219 of FA 2004), but adjusted in accordance with the rules in paragraphs (a) and (b) of paragraph 12(1A) of Schedule 29 to FA 2004.”

““uncrystallised funds pension lump sum”,”.

“(1A)

The chargeable amount (if any) is to be determined in accordance with section 227ZA.”

“227ZAThe chargeable amount

(1)

The chargeable amount is the alternative chargeable amount (see section 227B) if—

(a)

the year is—

(i)

the tax year in which the individual first flexibly accesses pension rights (see section 227G), or

(ii)

a tax year later than that tax year,

(b)

the money-purchase input sub-total (see section 227C) exceeds £10,000, and

(c)

the alternative chargeable amount exceeds the default chargeable amount.

(2)

Otherwise, the chargeable amount is the default chargeable amount.

(3)

The default chargeable amount is the amount (if any) by which—

(a)

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

(b)

the annual allowance for the year in the case of the individual (see sections 228(1) and 228A).”

“227BThe alternative chargeable amount

(1)

The alternative chargeable amount is the total of—

(a)

the amount (if any) by which the defined-benefit input sub-total exceeds the alternative annual allowance, and

(b)

the amount by which the money-purchase input sub-total exceeds £10,000.

(2)

The alternative annual allowance is—

$\mathrm{AA}–\text{£}\mathrm{10,000}$

where AA is the annual allowance for the year in the case of the individual (see sections 228(1) and 228A).

(3)

The defined-benefit input sub-total is the total of—

(a)

the pension input amounts in respect of each defined benefits arrangement relating to the individual under a registered pension scheme of which the individual is a member (see section 229(2)(c)),

(b)

the pension input amounts in respect of each hybrid arrangement—

(i)

relating to the individual under a registered pension scheme of which the individual is a member, and

(ii)

in respect of which the pension input amount is input amount C mentioned in section 237, and

(c)

any amounts required to be included by section 227E(3) or 227F(4) or (6) (pension input periods that end in the year but before the day on which rights are first flexibly accessed or that end in the year and contain that day).

(4)

Subsection (3)(b) is subject to section 227D (pension input amounts for certain hybrid arrangements).

(5)

If, in the case of a hybrid arrangement, input amount C mentioned in section 237—

(a)

is a relevant input amount for the purposes of section 237, and

(b)

is equal to—

(i)

input amount A or B mentioned in section 237 if that is the only other relevant input amount for the purposes of section 237, or

(ii)

the greater of input amounts A and B mentioned in section 237 if both are relevant input amounts for the purposes of section 237,

the pension input amount in respect of the arrangement is, for the purposes of subsection (3)(b) and sections 227C(1)(b) and 227D(1)(c), treated as being input amount A or B or, as the case may be, the greater of input amounts A and B (and, in either case, not input amount C).

227CMeaning of “money-purchase input sub-total”

(1)

The money-purchase input sub-total is the total of—

(a)

the pension input amounts in respect of each money purchase arrangement relating to the individual under a registered pension scheme of which the individual is a member (see section 229(2)(a) and (b)), and

(b)

the pension input amounts in respect of each hybrid arrangement—

(i)

relating to the individual under a registered pension scheme of which the individual is a member, and

(ii)

in respect of which the pension input amount is input amount A or B mentioned in section 237.

(2)

Subsection (1) is to be read with—

(a)

section 227E(2) (pension input periods that end in the tax year but before the day on which rights are first flexibly accessed), and

(b)

section 227F(2), (3) and (5) (pension input periods that end in the tax year and contain that day).

(3)

Subsection (1)(b) is to be read with—

(a)

section 227B(5) (hybrid arrangements where input amount C is highest-equal input amount), and

(b)

section 227D (pension input amounts for certain hybrid arrangements).

227DPension input amounts in respect of certain hybrid arrangements

(1)

In this section “relevant hybrid arrangement” means a hybrid arrangement—

(a)

relating to the individual under a registered pension scheme of which the individual is a member,

(b)

made on or after 14 October 2014 or having become a hybrid arrangement (whether or not for the first time) on or after that day, and

(c)

in respect of which the pension input amount is input amount C mentioned in section 237.

(2)

As respects each relevant hybrid arrangement in the maximising set of relevant hybrid arrangements—

(a)

the pension input amount in respect of the arrangement is for the purposes of sections 227B(3)(b) and 227C(1)(b) treated as being not input amount C mentioned in section 237 but, instead, the greater of such of input amounts A and B mentioned in section 237 as are, for the purposes of section 237, relevant input amounts in the case of the arrangement, and

(b)

accordingly, the arrangement—

(i)

is not to be included among the arrangements mentioned in section 227B(3)(b) whose pension input amounts are totalled under section 227B(3), but

(ii)

is to be included among the arrangements mentioned in section 227C(1)(b) whose pension input amounts are totalled under section 227C(1).

(3)

For the purposes of subsection (2)—

(a)

the maximising set contains no relevant hybrid arrangements,

(b)

a particular relevant hybrid arrangement makes up that set, or

(c)

two or more particular relevant hybrid arrangements make up that set,

if the alternative chargeable amount with the maximising set so made up is not less than it would be with the maximising set made up in any other way.

(4)

In particular, the maximising set may be identified by taking the following steps—

• Step 1 Identify all of the relevant hybrid arrangements.

• Step 2 Identify all of the different combinations of the arrangements identified at Step 1 (including the combination consisting of all of those arrangements, and the combination consisting of none of them, as well as every possible combination of each possible size in between).

• Step 3 For each combination identified at Step 2 calculate what the money-purchase input sub-total would be if each relevant hybrid arrangement in the combination were treated in accordance with the rules in paragraphs (a) and (b) of subsection (2).

• Step 4 If the result of each calculation at Step 3 is less than or equal to £10,000 the chargeable amount is the default chargeable amount.

• Step 5 If the amount calculated at Step 3 for a combination is greater than £10,000 then calculate in accordance with section 227B what the alternative chargeable amount would be if—

  1. (a)

     each relevant hybrid arrangement in the combination were treated in accordance with the rules in paragraphs (a) and (b) of subsection (2), and

  2. (b)

     for each relevant hybrid arrangement not in the combination, input amount C mentioned in section 237 were included in the total under section 227B(3).

• Step 6 Identify the highest (or higher) of the amounts calculated at Step 5. The maximising set is made up of each relevant hybrid arrangement in the combination concerned.

(5)

Subsection (1)(c) is to be read with section 227B(5) (hybrid arrangements where input amount C is highest-equal input amount).

(6)

A hybrid arrangement is not a relevant hybrid arrangement if section 227E(2) applies in the case of that arrangement.

227EPension input periods ending before rights are first flexibly accessed

(1)

Subsections (2) and (3) apply if, for an arrangement mentioned in section 227C(1), the pension input period ending in the tax year is a period that ends before the individual first flexibly accesses pension rights.

(2)

The pension input amount in respect of the arrangement is for the purposes of section 227C(1) treated as being nil.

(3)

The (actual) pension input amount in respect of the arrangement (see section 229(2)(a), (b) or (d)) is required to be included in the defined-benefit input sub-total calculated under section 227B(3).

227FPension input periods in which rights are first flexibly accessed

(1)

Subject to subsection (7), subsections (2) to (6) apply if, for an arrangement mentioned in section 227C(1), the pension input period ending in the tax year contains the day on which the individual first flexibly accesses pension rights (whether or not that day is in the tax year).

(2)

If the arrangement is a cash balance arrangement, the pension input amount in respect of that arrangement is for the purposes of section 227C(1)(a) treated as being—

$\frac{F}{\mathrm{PIP}}\times \mathrm{APIA}$

where—

APIA is the (actual) pension input amount in respect of the arrangement (see section 229(2)(a)),

F is the number of days in the period—

1. (a)

   beginning with the day after that on which the individual first flexibly accesses pension rights, and

2. (b)

   ending at the end of the pension input period mentioned in subsection (1), and

PIP is the number of days in that pension input period.

(3)

If the arrangement is a money purchase arrangement other than a cash balance arrangement, the pension input amount in respect of that arrangement is for the purposes of section 227C(1)(a) treated as being the amount in respect of the arrangement that would be arrived at under section 233 for a pension input period—

(a)

beginning with the day after that on which the individual first flexibly accesses pension rights, and

(b)

ending at the end of the pension input period mentioned in subsection (1).

(4)

If the arrangement is a money purchase arrangement, the amount (if any) by which—

(a)

the (actual) pension input amount in respect of the arrangement (see section 229(2)(a) or (b)), exceeds

(b)

the amount treated by subsection (2) or (3) as being the pension input amount in respect of the arrangement,

is required to be included in the defined-benefit input sub-total calculated under section 227B(3).

(5)

If the arrangement is a hybrid arrangement—

(a)

input amount A mentioned in section 237 is for the purposes of sections 227C(1)(b) and 227D(2) treated as being—

$\frac{F}{\mathrm{PIP}}\times \mathrm{AAIAA}$

where—

AAIAA is the (actual) amount of input amount A for the arrangement,

F is the number of days in the period—

1. (a)

   beginning with the day after that on which the individual first flexibly accesses pension rights, and

2. (b)

   ending at the end of the pension input period mentioned in subsection (1), and

PIP is the number of days in that pension input period, and

(b)

input amount B mentioned in section 237 is for the purposes of sections 227C(1)(b) and 227D(2) treated as being the amount for the arrangement that would be arrived at under section 233 for a pension input period—

(i)

beginning on the day after that on which the individual first flexibly accesses pension rights, and

(ii)

ending at the end of the pension input period mentioned in subsection (1).

(6)

If the arrangement is a hybrid arrangement, the amount (if any) by which—

(a)

the (actual) pension input amount in respect of the arrangement (see section 229(2)(d)), exceeds

(b)

the amount which, in accordance with subsection (5) and section 227D, is for the purposes of section 227C(1)(b) the pension input amount in respect of the arrangement,

is required to be included in the defined-benefit input sub-total calculated under section 227B(3).

(7)

Subsections (2) to (6) do not apply if section 165(3A) applied in the individual's case to the arrangement, or any other arrangement, at any time before 6 April 2015.

227GWhen pension rights are first flexibly accessed

(1)

References in sections 227B to 227F to when the individual first flexibly accesses pension rights are to the time, or the earlier or earliest of the times, given for that by the following subsections.

(2)

If—

(a)

the individual has a member's flexi-access drawdown fund in respect of an arrangement, and

(b)

the fund came into being—

(i)

as a result of sums or assets being designated on or after 6 April 2015 as available for the payment of drawdown pension, or

(ii)

as a result of the operation of paragraph 8D(2) of Schedule 28,

the individual first flexibly accesses pension rights immediately before the first qualifying payment is made from the fund (see subsection (10)).

(3)

If section 165(3A) applied in the individual's case to an arrangement at any time before 6 April 2015, the individual first flexibly accesses pension rights at the start of 6 April 2015.

(4)

If—

(a)

the individual has a member's drawdown pension fund in respect of an arrangement, and

(b)

the sums and assets that make up the fund become newly-designated funds by the operation of paragraph 8B of Schedule 28,

the individual first flexibly accesses pension rights immediately before the first qualifying payment (see subsection (10)) is made from the individual's member's flexi-access drawdown fund in respect of the arrangement (whether that is the payment that triggers the operation of paragraph 8B of Schedule 28 or a subsequent payment).

(5)

If—

(a)

the individual has a member's drawdown pension fund in respect of an arrangement, and

(b)

the sums and assets that make up the fund become newly-designated funds by the operation of paragraph 8C of Schedule 28,

the individual first flexibly accesses pension rights immediately before the first qualifying payment is made from the individual's member's flexi-access drawdown fund in respect of the arrangement (see subsection (10)).

(6)

The individual first flexibly accesses pension rights immediately before the payment of the first uncrystallised funds pension lump sum paid to the individual.

(7)

If the individual is entitled to payment of a lifetime annuity under a flexible annuity contract (see subsection (8)), the individual first flexibly accesses pension rights immediately before the first payment of the annuity is made.

(8)

In subsection (7) “flexible annuity contract” means a contract for a lifetime annuity where—

(a)

the annuity is within paragraph 3(1A) of Schedule 28, and

(b)

the terms of the contract are such that there will or could be decreases in the amount of the annuity other than decreases from time to time allowed by regulations under paragraph 3(1)(d) of Schedule 28 (and any such regulations are to be treated as having effect for this purpose).

(9)

If—

(a)

the individual is entitled to payment of a scheme pension under a money purchase arrangement under a registered pension scheme,

(b)

the individual became entitled to the scheme pension—

(i)

on or after 6 April 2015, and

(ii)

at a time when fewer than 11 other individuals were entitled to the present payment of a scheme pension, or dependants' scheme pension, under the registered pension scheme, and

(c)

the scheme pension is not payable under an annuity contract treated under section 153(8) or (8A) as having become a registered pension scheme,

the individual first flexibly accesses pension rights immediately before the first payment of the scheme pension is made.

(10)

In subsections (2), (4) and (5), a reference to a qualifying payment from a fund is a reference to—

(a)

payment of income withdrawal from the fund, or

(b)

payment of a short-term annuity purchased using sums or assets out of the fund,

but does not include payment at a time when the whole of the fund represents rights attributable to a disqualifying pension credit.

(11)

In subsection (10) “disqualifying pension credit” is to be read in accordance with paragraph 2(3) and (4) of Schedule 29.”

“(8)

If, for a tax year preceding the current tax year, the chargeable amount in the individual's case was the alternative chargeable amount—

(a)

a reference in subsection (3)(a) or (b), (4)(b) or (6)(a) to the annual allowance for that preceding tax year is a reference to the alternative annual allowance for that preceding tax year (see section 227B(2)), and

(b)

a reference in subsection (3)(a) or (b), (4)(b) or (6)(a) to the total pension input amount in the case of the individual for that preceding tax year is a reference to the defined-benefit input sub-total in the case of the individual for that preceding tax year (see section 227B(3) to (5)).

(9)

Subsection (3) does not apply in relation to a tax year—

(a)

preceding the current tax year, and

(b)

ending not later than 5 April 2015,

if, at any time in that preceding tax year, section 165(3A) or 167(2A) applied to an arrangement relating to the individual.”

“(4)

If—

(a)

a stand-alone lump sum is paid—

(i)

on or after 6 April 2015,

(ii)

to a member of a pension scheme,

(iii)

under a money purchase arrangement, and

(iv)

in circumstances where article 25B(2) (circumstance A) applies, and

(b)

no previous stand-alone lump sum has been paid—

(i)

on or after that day,

(ii)

to the member,

(iii)

under a money purchase arrangement, and

(iv)

in circumstances where article 25B(2) applies,

subsection (1) of section 227G of the 2004 Act (individual first flexibly accesses pension rights at earliest time given by the following subsections of that section) has effect as if there were a subsequent subsection of that section stating that the member first flexibly accesses pension rights immediately before the stand-alone lump sum is paid.”

“Payments to members receiving annuities

10

A payment by a registered pension scheme to a member which would be a payment that is described in regulation 11, 11A(1)(a) to (c) or 12 but for the continuance after the payment of an annuity if the member has not previously received a payment, by that scheme, under this regulation.”

“(1A)

Condition A is that the lump sum—

(a)

is paid to a dependant entitled under the pension scheme to pension death benefit in respect of the member, and

(b)

extinguishes the dependant's entitlement under the pension scheme to pension death benefit and lump sum death benefit in respect of the member.

(1B)

Condition B is that—

(a)

the lump sum is paid after the member's death to an individual entitled to be paid a pension under the scheme—

(i)

which the member was entitled to be paid immediately before the member's death, and

(ii)

which is payable to the individual under pension rule 2 (see section 165),

(b)

if the pension is an annuity or scheme pension payable by an insurance company, the lump sum extinguishes all entitlements in respect of the member under the contract concerned, and

(c)

if the pension is a scheme pension payable by the scheme administrator, the lump sum extinguishes all entitlements to receive a scheme pension in respect of the member from the scheme administrator under pension rule 2.”

“(4)

Sub-paragraph (5) has effect for the purposes of benefit crystallisation event 2 as it applies in relation to the individual's becoming entitled to the lifetime annuity.

(5)

If the total of—

(a)

the sums applied to purchase the lifetime annuity and any related dependants' annuity, and

(b)

the market value, at the time they are applied, of the assets applied to make the purchase,

is greater than the amount that would apart from this sub-paragraph be the amount crystallised by the event, that total is the amount crystallised by the event.”

“23ZA

(1)

Sub-paragraph (2) applies if—

(a)

there is a recognised transfer from one registered pension scheme (“the old scheme”) to another registered pension scheme (“the new scheme”), and

(b)

as a result of paragraph 21 or the previous operation of sub-paragraph (2), immediately before the transfer this Part (except for section 218(6) and paragraph 19) applied in relation to all of the transferred sums or assets as if references to normal minimum pension age were to the member's protected pension age as defined by paragraph 22(8) or, as the case may be, paragraph 23(8).

(2)

This Part (except for section 218(6) and paragraph 19) applies in relation to—

(a)

the transferred sums or assets while held for the purposes of an arrangement under the new scheme, and

(b)

any sums or assets held for the purposes of such an arrangement that arise, or (directly or indirectly) derive, from—

(i)

any of the transferred sums or assets, or

(ii)

sums or assets which so arise or derive,

as if references to normal minimum pension age were to the member's protected pension age as defined by paragraph 22(8) or, as the case may be, paragraph 23(8).

(3)

Paragraphs 22(7)(a) and 23(7) have effect as if the benefits or pensions to which they refer do not include any that are in respect of sums or assets within sub-paragraph (2)(a) or (b) of this paragraph.”

“, but only if the total amount of—

(a)

the relevant withdrawals within subsection (3), and

(b)

the relevant withdrawals (as defined by section 576A(4)) within section 576A(3) for the same temporary period of non-residence,

exceeds £100,000”.

“(4)

A “relevant withdrawal” is—

(a)

any income withdrawal paid to the person from a member's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(b)

any dependants' income withdrawal paid to the person from a dependant's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(c)

any nominees' income withdrawal paid to the person from a nominee's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(d)

any successors' income withdrawal paid to the person from a successor's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(e)

any payment to the person of a short-term annuity purchased using sums or assets out of a member's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(f)

any payment to the person of a dependants' short-term annuity purchased using sums or assets out of a dependant's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(g)

any payment to the person of a nominees' short-term annuity purchased using sums or assets out of a nominee's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(h)

any payment to the person of a successors' short-term annuity purchased using sums or assets out of a successor's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(i)

any uncrystallised funds pension lump sum paid to the person in respect of an arrangement relating to the person under a registered pension scheme, but only so far as section 579A applies in relation to the sum (see section 636A),

(j)

any income withdrawal, or dependants' income withdrawal, paid before 6 April 2015 to the person under a registered pension scheme in respect of an arrangement relating to the person under the scheme which at the time of the payment was an arrangement to which section 165(3A) or 167(2A) of FA 2004 applied (flexible drawdown arrangements),

(k)

any payment to the person of a lifetime annuity or dependants' annuity where—

(i)

the annuity is within paragraph 3(1A) or 17(1ZA), as the case may be, of Schedule 28 to FA 2004,

(ii)

the terms of the contract under which the annuity is paid are such that there will or could be decreases in the amount of the annuity other than decreases from time to time allowed by regulations under paragraph 3(1)(d) or 17(1)(c), as the case may be, of Schedule 28 to FA 2004 (and any such regulations are to be treated as having effect for this purpose), and

(iii)

the annuity is purchased using sums or assets held for the purposes of a registered pension scheme, or

(l)

any payment to the person of a scheme pension, or dependants' scheme pension, under a money purchase arrangement under a registered pension scheme where—

(i)

the person first acquired an actual (rather than a prospective) right to receive the scheme pension on or after 6 April 2015,

(ii)

when the person first acquired that actual right, fewer than 11 other individuals were entitled to the present payment of a scheme pension, or dependants' scheme pension, under the registered pension scheme, and

(iii)

the scheme pension is not payable under an annuity contract treated under section 153(8) or (8A) of FA 2004 as having become a registered pension scheme.

(4A)

For the purpose of determining whether the figure specified in subsection (2) is exceeded, any relevant withdrawal paid in a currency other than sterling is to be translated into sterling using the average exchange rate for the year ending with 31 March in the tax year in which the relevant withdrawal is paid.”

““dependants' annuity”, “dependant's flexi-access drawdown fund”, “dependants' scheme pension”, “dependants' short-term annuity”, “lifetime annuity”, “member's flexi-access drawdown fund”, “money purchase arrangement”, “nominee's flexi-access drawdown fund”, “scheme pension”, “short-term annuity”, “successor's flexi-access drawdown fund” and “uncrystallised funds pension lump sum” have the same meaning as in Part 4 of FA 2004 (see section 152 of FA 2004 and paragraphs 2, 3, 6, 8A, 16 to 16C, 17, 20, 22A, 27E and 27K of Schedule 28, and paragraph 4A of Schedule 29, to FA 2004).”

“(3A)

A “relevant withdrawal”, in relation to a person, is—

(a)

any income withdrawal paid to the person from a member's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(b)

any dependants' income withdrawal paid to the person from a dependant's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(c)

any nominees' income withdrawal paid to the person from a nominee's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(d)

any successors' income withdrawal paid to the person from a successor's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(e)

any payment to the person of a short-term annuity purchased using sums or assets out of a member's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(f)

any payment to the person of a dependants' short-term annuity purchased using sums or assets out of a dependant's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(g)

any payment to the person of a nominees' short-term annuity purchased using sums or assets out of a nominee's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(h)

any payment to the person of a successors' short-term annuity purchased using sums or assets out of a successor's flexi-access drawdown fund in respect of an arrangement relating to the person under a registered pension scheme,

(i)

any uncrystallised funds pension lump sum paid to the person in respect of an arrangement relating to the person under a registered pension scheme, but only so far as section 579A applies in relation to the sum (see section 636A),

(j)

any income withdrawal, or dependants' income withdrawal, paid before 6 April 2015 to the person under a registered pension scheme in respect of an arrangement relating to the person under the scheme which at the time of the payment was an arrangement to which section 165(3A) or 167(2A) of FA 2004 applied (flexible drawdown arrangements),

(k)

any payment to the person of a lifetime annuity or dependants' annuity where—

(i)

the annuity is within paragraph 3(1A) or 17(1ZA), as the case may be, of Schedule 28 to FA 2004,

(ii)

the terms of the contract under which the annuity is paid are such that there will or could be decreases in the amount of the annuity other than decreases from time to time allowed by regulations under paragraph 3(1)(d) or 17(1)(c), as the case may be, of Schedule 28 to FA 2004 (and any such regulations are to be treated as having effect for this purpose), and

(iii)

the annuity is purchased using sums or assets held for the purposes of a registered pension scheme, or

(l)

any payment to the person of a scheme pension, or dependants' scheme pension, under a money purchase arrangement under a registered pension scheme where—

(i)

the person first acquired an actual (rather than a prospective) right to receive the scheme pension on or after 6 April 2015,

(ii)

when the person first acquired that actual right, fewer than 11 other individuals were entitled to the present payment of a scheme pension, or dependants' scheme pension, under the registered pension scheme, and

(iii)

the scheme pension is not payable under an annuity contract treated under section 153(8) or (8A) of FA 2004 as having become a registered pension scheme.

(3B)

For the purpose of determining whether the figure specified at the end of subsection (1) is exceeded, any relevant withdrawal paid in a currency other than sterling is to be translated into sterling using the average exchange rate for the year ending with 31 March in the tax year in which the relevant withdrawal is paid.”

““dependants' annuity”, “dependant's flexi-access drawdown fund”, “dependants' scheme pension”, “dependants' short-term annuity”, “lifetime annuity”, “member's flexi-access drawdown fund”, “money purchase arrangement”, “nominee's flexi-access drawdown fund”, “scheme pension”, “short-term annuity”, “successor's flexi-access drawdown fund” and “uncrystallised funds pension lump sum” have the same meaning as in Part 4 of FA 2004 (see section 152 of FA 2004 and paragraphs 2, 3, 6, 8A, 16 to 16C, 17, 20, 22A, 27E and 27K of Schedule 28, and paragraph 4A of Schedule 29, to FA 2004).”

“, but only if the total amount of—

(a)

the relevant withdrawals within subsection (3), and

(b)

the relevant withdrawals (as defined by section 579CA(4)) within section 579CA(3) for the same temporary period of non-residence,

exceeds £100,000”.

“(4)

A “relevant withdrawal” is an amount paid under a relevant non-UK scheme that—

(a)

is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be income withdrawal (within the meaning of paragraph 7 of Schedule 28 to FA 2004) paid to the person from the person's member's flexi-access drawdown fund in respect of the arrangement,

(b)

is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be dependants' income withdrawal (within the meaning of paragraph 21 of Schedule 28 to FA 2004) paid to the person from the person's dependant's flexi-access drawdown fund in respect of the arrangement,

(c)

is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be nominees' income withdrawal (within the meaning of paragraph 27D of Schedule 28 to FA 2004) paid to the person from the person's nominee's flexi-access drawdown fund in respect of the arrangement,

(d)

is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be successors' income withdrawal (within the meaning of paragraph 27J of Schedule 28 to FA 2004) paid to the person from the person's successor's flexi-access drawdown fund in respect of the arrangement,

(e)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a short-term annuity (within the meaning of paragraph 6 of Schedule 28 to FA 2004) purchased using sums or assets out of the person's member's flexi-access drawdown fund in respect of the arrangement,

(f)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a dependants' short-term annuity (within the meaning of paragraph 20 of Schedule 28 to FA 2004) purchased using sums or assets out of the person's dependant's flexi-access drawdown fund in respect of the arrangement,

(g)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a nominees' short-term annuity (within the meaning of paragraph 27C of Schedule 28 to FA 2004) purchased using sums or assets out of the person's nominee's flexi-access drawdown fund in respect of the arrangement,

(h)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a successors' short-term annuity (within the meaning of paragraph 27H of Schedule 28 to FA 2004) purchased using sums or assets out of the person's successor's flexi-access drawdown fund in respect of the arrangement,

(i)

is paid before 6 April 2015 to the person in respect of an arrangement relating to the person under the scheme which at the time of the payment was an arrangement to which section 165(3A) or 167(2A) of FA 2004 (flexible drawdown arrangements) applied and would, if the scheme had been a registered pension scheme, have been income withdrawal or dependants' income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to FA 2004),

(j)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme where—

(i)

the payment would, if the scheme were a registered pension scheme, be of a lifetime annuity or dependants' annuity within paragraph 3(1A) or 17(1ZA), as the case may be, of Schedule 28 to FA 2004, and

(ii)

the terms of the contract under which it is paid are such that there will or could be decreases in the amount of the annuity other than decreases which, if the scheme were a registered pension scheme, would be decreases from time to time allowed by regulations under paragraph 3(1)(d) or 17(1)(c), as the case may be, of Schedule 28 to FA 2004 (and any such regulations are to be treated as having effect for this purpose), or

(k)

is a payment to the person under a money purchase arrangement relating to the person under the scheme that, if the scheme were a registered pension scheme, would be a payment to the person of a scheme pension that the person would for the purposes of Part 4 of FA 2004 be treated as having become entitled to at a time on or after 6 April 2015 when fewer than 11 other individuals were entitled to present payment of a scheme pension under the scheme.

(4A)

For the purpose of determining whether the figure specified in subsection (2) is exceeded, any relevant withdrawal paid in a currency other than sterling is to be translated into sterling using the average exchange rate for the year ending with 31 March in the tax year in which the relevant withdrawal is paid.”

“(4A)

A “relevant withdrawal”, in relation to a person, is an amount paid under a relevant non-UK scheme that—

(a)

is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be income withdrawal (within the meaning of paragraph 7 of Schedule 28 to FA 2004) paid to the person from the person's member's flexi-access drawdown fund in respect of the arrangement,

(b)

is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be dependants' income withdrawal (within the meaning of paragraph 21 of Schedule 28 to FA 2004) paid to the person from the person's dependant's flexi-access drawdown fund in respect of the arrangement,

(c)

is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be nominees' income withdrawal (within the meaning of paragraph 27D of Schedule 28 to FA 2004) paid to the person from the person's nominee's flexi-access drawdown fund in respect of the arrangement,

(d)

is paid to the person in respect of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be successors' income withdrawal (within the meaning of paragraph 27J of Schedule 28 to FA 2004) paid to the person from the person's successor's flexi-access drawdown fund in respect of the arrangement,

(e)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a short-term annuity (within the meaning of paragraph 6 of Schedule 28 to FA 2004) purchased using sums or assets out of the person's member's flexi-access drawdown fund in respect of the arrangement,

(f)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a dependants' short-term annuity (within the meaning of paragraph 20 of Schedule 28 to FA 2004) purchased using sums or assets out of the person's dependant's flexi-access drawdown fund in respect of the arrangement,

(g)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a nominees' short-term annuity (within the meaning of paragraph 27C of Schedule 28 to FA 2004) purchased using sums or assets out of the person's nominee's flexi-access drawdown fund in respect of the arrangement,

(h)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme and would, if the scheme were a registered pension scheme, be a payment of a successors' short-term annuity (within the meaning of paragraph 27H of Schedule 28 to FA 2004) purchased using sums or assets out of the person's successor's flexi-access drawdown fund in respect of the arrangement,

(i)

is paid before 6 April 2015 to the person in respect of an arrangement relating to the person under the scheme which at the time of the payment was an arrangement to which section 165(3A) or 167(2A) of FA 2004 (flexible drawdown arrangements) applied and would, if the scheme were a registered pension scheme, be income withdrawal or dependants' income withdrawal (within the meaning of paragraphs 7 and 21 of Schedule 28 to FA 2004),

(j)

is a payment to the person of an annuity purchased using sums or assets held for the purposes of an arrangement relating to the person under the scheme where—

(i)

the payment would, if the scheme were a registered pension scheme, be of a lifetime annuity or dependants' annuity within paragraph 3(1A) or 17(1ZA), as the case may be, of Schedule 28 to FA 2004, and

(ii)

the terms of the contract under which it is paid are such that there will or could be decreases in the amount of the annuity other than decreases which, if the scheme were a registered pension scheme, would be decreases from time to time allowed by regulations under paragraph 3(1)(d) or 17(1)(c), as the case may be, of Schedule 28 to FA 2004 (and any such regulations are to be treated as having effect for this purpose), or

(k)

is a payment to the person under a money purchase arrangement relating to the person under the scheme that, if the scheme were a registered pension scheme, would be a payment to the person of a scheme pension that the person would for the purposes of Part 4 of FA 2004 be treated as having become entitled to at a time on or after 6 April 2015 when fewer than 11 other individuals were entitled to present payment of a scheme pension under the scheme.

(4B)

For the purpose of determining whether the figure specified at the end of subsection (1) is exceeded, any relevant withdrawal paid in a currency other than sterling is to be translated into sterling using the average exchange rate for the year ending with 31 March in the tax year in which the relevant withdrawal is paid.”

“Pension death benefit rule 3A No payment of pension death benefit, other than nominees' drawdown pension in respect of a money purchase arrangement, may be made to a nominee of the member.

Pension death benefit rule 3B No payment of pension death benefit, other than successors' drawdown pension in respect of a money purchase arrangement, may be made to a successor of the member.”

“(1A)

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.”

“Meaning of “nominee”

27A

(1)

“Nominee of the member” means an individual—

(a)

nominated by the member, or

(b)

nominated by the scheme administrator,

who is not a dependant of the member, but see sub-paragraph (2).

(2)

In relation to any particular benefits under an arrangement, no individual nominated by the scheme administrator counts as a nominee of the member at any time when there is—

(a)

a dependant of the member, or

(b)

an individual, or charity, nominated by the member in relation to the benefits.

(3)

The reference in sub-paragraph (2)(b) to being nominated in relation to particular benefits under an arrangement includes—

(a)

a reference to being nominated in relation to the scheme,

(b)

a reference to being nominated in relation to arrangements that include the arrangement,

(c)

a reference to being nominated in relation to the arrangement, and

(d)

a reference to being nominated in relation to benefits that include the particular benefits.

Nominees' drawdown pension

27B

“Nominees' drawdown pension” means—

(a)

a nominees' short-term annuity, or

(b)

nominees' income withdrawal.

Nominees' short-term annuity

27C

(1)

For the purposes of this Part an annuity payable to a nominee is a nominees' short-term annuity if—

(a)

it is purchased by the application of sums or assets representing the whole or any part of the nominee's flexi-access drawdown fund in respect of an arrangement,

(b)

it is payable by an insurance company,

(c)

the nominee becomes entitled to it on or after 6 April 2015, and

(d)

it is payable for a term which does not exceed five years and ends before the nominee dies.

(2)

The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision in relation to cases in which a nominees' short-term annuity payable to a person (“the original nominees' short-term 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—

(i)

towards the provision of another nominees' short-term annuity (a “new nominees' short-term annuity”) by the other insurance company, or

(ii)

otherwise, or

(b)

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

(3)

The regulations may provide that—

(a)

in a case where a new nominees' short-term annuity becomes payable, the new nominees' short-term 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 nominees' short-term annuity, and

(b)

in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the sums, and the market value of the assets, transferred.

(4)

For the purposes of sub-paragraphs (2) and (3) a registered pension scheme is the relevant registered pension scheme if the original nominees' short-term annuity was acquired using sums or assets held for the purposes of the pension scheme.

Nominees' income withdrawal

27D

“Nominees' income withdrawal” means an amount (other than an annuity) which the nominee is entitled to be paid from the nominee's flexi-access drawdown fund in respect of an arrangement.

Nominee's flexi-access drawdown fund

27E

(1)

For the purposes of this Part a nominee's flexi-access drawdown fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement as are newly-designated nominee funds.

(2)

For the purposes of this Part sums or assets held for the purposes of an arrangement are newly-designated nominee funds if—

(a)

they—

(i)

have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of nominees' drawdown pension, and

(ii)

were, immediately before being so designated, unused drawdown funds or unused uncrystallised funds, or

(b)

they arise, or (directly or indirectly) derive, from newly-designated nominee funds under paragraph (a) or from sums or assets which so arise or derive.

(3)

Sums or assets held for the purposes of an arrangement after the member's death are unused drawdown funds if—

(a)

immediately before the member's death, they were held for the purposes of the arrangement and represented (whether alone or with other sums or assets) the member's flexi-access drawdown fund, or drawdown pension fund, in respect of the arrangement, or

(b)

they arise, or (directly or indirectly) derive, from unused drawdown funds under paragraph (a) or from sums or assets which so arise or derive.

(4)

In the case of a cash balance arrangement, sums or assets held for the purposes of the arrangement after the member's death are unused uncrystallised funds if—

(a)

they represent the whole or any part of the sum that would have been available immediately before the member's death for the provision of benefits to or in respect of the member if entitlement had arisen immediately before the member's death to all benefits under the arrangement to which entitlement had not previously arisen, and

(b)

since the member's death they have not been designated as available for the payment of dependants' drawdown pension, not been designated as available for the payment of nominees' drawdown pension, not been applied towards the provision of a dependants' annuity and not been applied towards the provision of a dependants' scheme pension.

(5)

In the case of any other money purchase arrangement, sums or assets held for the purposes of the arrangement after the member's death are unused uncrystallised funds if—

(a)

immediately before the member's death they were held for the purposes of the arrangement and at that time—

(i)

were not member-designated funds,

(ii)

were not newly-designated funds,

(iii)

had not been applied towards the provision of a scheme pension, and

(iv)

had not been applied towards the provision of a dependants' scheme pension, or

(b)

they arise, or (directly or indirectly) derive, from unused uncrystallised funds under paragraph (a) or from sums or assets which so arise or derive,

and since the member's death they have not been designated as available for the payment of dependants' drawdown pension, not been designated as available for the payment of nominees' drawdown pension, not been applied toward the provision of a dependants' annuity and not been applied toward the provision of a dependants' scheme pension.

Meaning of “successor”

27F

(1)

“Successor of the member” means an individual—

(a)

nominated by a dependant of the member,

(b)

nominated by a nominee of the member,

(c)

nominated by a successor of the member, or

(d)

nominated by the scheme administrator,

but see sub-paragraph (2).

(2)

In relation to any particular benefits under an arrangement relating to a dependant, nominee or successor of the member (“the beneficiary”) in that capacity, no individual nominated by the scheme administrator counts as a successor of the member at any time after the beneficiary's death when there is an individual, or charity, nominated by the beneficiary in relation to the benefits.

(3)

A reference in sub-paragraph (2) to being nominated in relation to particular benefits under an arrangement includes—

(a)

a reference to being nominated in relation to the scheme,

(b)

a reference to being nominated in relation to arrangements that include the arrangement,

(c)

a reference to being nominated in relation to the arrangement, and

(d)

a reference to being nominated in relation to benefits that include the particular benefits.

(4)

Where a successor of the member is an individual who is also a dependant of the member, the individual in the capacity of a successor of the member is to be treated as not also being a dependant of the member.

Successors' drawdown pension

27G

“Successors' drawdown pension” means—

(a)

a successors' short-term annuity, or

(b)

successors' income withdrawal.

Successors' short-term annuity

27H

(1)

For the purposes of this Part an annuity payable to a successor is a successors' short-term annuity if—

(a)

it is purchased by the application of sums or assets representing the whole or any part of the successor's flexi-access drawdown fund in respect of an arrangement,

(b)

it is payable by an insurance company,

(c)

the successor becomes entitled to it on or after 6 April 2015, and

(d)

it is payable for a term which does not exceed five years and ends before the successor dies.

(2)

The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision in relation to cases in which a successors' short-term annuity payable to a person (“the original successors' short-term 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—

(i)

towards the provision of another successors' short-term annuity (a “new successors' short-term annuity”) by the other insurance company, or

(ii)

otherwise, or

(b)

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

(3)

The regulations may provide that—

(a)

in a case where a new successors' short-term annuity becomes payable, the new successors' short-term 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 successors' short-term annuity, and

(b)

in any other case, the relevant registered pension scheme is to be treated as making an unauthorised payment in respect of the member of an amount equal to the aggregate of the sums, and the market value of the assets, transferred.

(4)

For the purposes of sub-paragraphs (2) and (3) a registered pension scheme is the relevant registered pension scheme if the original successors' short-term annuity was acquired using sums or assets held for the purposes of the pension scheme.

Successors' income withdrawal

27J

“Successors' income withdrawal” means an amount (other than an annuity) which the successor is entitled to be paid from the successor's flexi-access drawdown fund in respect of an arrangement.

Successor's flexi-access drawdown fund

27K

(1)

For the purposes of this Part a successor's flexi-access drawdown fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement as are newly-designated successor funds.

(2)

For the purposes of this Part sums or assets held for the purposes of an arrangement are newly-designated successor funds if—

(a)

they—

(i)

have, at any time on or after 6 April 2015, been designated under the arrangement as available for the payment of successors' drawdown pension, and

(ii)

were, immediately before being so designated, unused drawdown funds of the same deceased dependant, nominee or successor of the member, or

(b)

they arise, or (directly or indirectly) derive, from newly-designated successor funds under paragraph (a) or from sums or assets which so arise or derive.

(3)

Sums or assets held for the purposes of an arrangement after the death of a dependant, nominee or successor (“the beneficiary”) are unused drawdown funds of the beneficiary's if—

(a)

immediately before the beneficiary's death, they were held for the purposes of the arrangement and represented (whether alone or with other sums or assets) the beneficiary's—

(i)

dependant's flexi-access drawdown fund,

(ii)

dependant's drawdown pension fund,

(iii)

nominee's flexi-access drawdown fund, or

(iv)

successor's flexi-access drawdown fund,

in respect of the arrangement, or

(b)

they arise, or (directly or indirectly) derive, from unused drawdown funds of the beneficiary's under paragraph (a) or from sums or assets which so arise or derive.”

“(2A)

A lump sum death benefit is also a charity lump sum death benefit if—

(a)

it is paid on the death of an individual who is—

(i)

a nominee of the member, or

(ii)

a successor of the member,

(b)

there are no dependants of the member,

(c)

it is paid in respect of the individual's nominee's flexi-access drawdown fund or successor's flexi-access drawdown fund at the date of the individual's death in respect of an arrangement relating to the individual in the capacity of a nominee or successor of the member, and

(d)

it is paid to a charity nominated by the member or, if the member made no nomination, by the individual.”

“(1ZA)

In subsection (1) the reference to a member (and to the member's death) are to be read—

(a)

in relation to—

(i)

a drawdown pension fund lump sum death benefit under paragraph 17(2) of Schedule 29, or

(ii)

a flexi-access drawdown fund lump sum death benefit under paragraph 17A(2) of Schedule 29,

as a reference to a dependant (and to the dependant's death),

(b)

in relation to a flexi-access drawdown fund lump sum death benefit under paragraph 17A(3) of Schedule 29, as a reference to a nominee (and to the nominee's death), and

(c)

in relation to a flexi-access drawdown fund lump sum death benefit under paragraph 17A(4) of Schedule 29, as a reference to a successor (and to the successor's death).”

“(1B)

The special lump sum death benefits charge also arises where—

(a)

a lump sum death benefit is paid by a registered pension scheme in respect of a member of the scheme who had not reached the age of 75 at the date of the member's death,

(b)

the lump sum death benefit is—

(i)

a drawdown pension fund lump sum death benefit under paragraph 17(1) of Schedule 29,

(ii)

a flexi-access drawdown fund lump sum death benefit under paragraph 17A(1) of Schedule 29, or

(iii)

an uncrystallised funds lump sum death benefit, and

(c)

the lump sum death benefit is not paid before the end of the period of two years beginning with the earlier of the day on which the scheme administrator of the scheme first knew of the member's death and the day on which the scheme administrator could first reasonably have been expected to have known of it.

(1C)

The special lump sum death benefits charge also arises where—

(a)

a lump sum death benefit is paid by a registered pension scheme on the death of a dependant, nominee or successor of a deceased member of the scheme,

(b)

the dependant, nominee or successor (“the beneficiary”) had not reached the age of 75 at the date of the beneficiary's death,

(c)

the lump sum death benefit is—

(i)

a drawdown pension fund lump sum death benefit under paragraph 17(2) of Schedule 29, or

(ii)

a flexi-access drawdown fund lump sum death benefit under paragraph 17A(2), (3) or (4) of Schedule 29, and

(d)

the lump sum death benefit is not paid before the end of the period of two years beginning with the earlier of the day on which the scheme administrator of the scheme first knew of the beneficiary's death and the day on which the scheme administrator could first reasonably have been expected to have known of it.”

“(7)

A lump sum death benefit in respect of which income tax is charged under this section is not to be treated as income for any purpose of the Tax Acts.”