Finance Act 2017

Part 1 U.K. Charges where payments made in respect of overseas pensions

Amendments of Schedule 34 to FA 2004 U.K.

1 U.K. Schedule 34 to FA 2004 (non-UK pension schemes: application of certain charges) is amended as follows.

2 (1) Paragraph 1 (application of member payment charges to relevant non-UK schemes) is amended as follows. U.K.

(2) After sub-paragraph (6) insert—

“(6A) There are three types of relevant transfer—

(a) an original relevant transfer,

(b) a subsequent relevant transfer, and

(c) any other (including, in particular, all relevant transfers before 9 March 2017).

(6B) “An original relevant transfer” is—

(a) a relevant transfer within sub-paragraph (6)(a) made on or after 9 March 2017,

(b) a relevant transfer within sub-paragraph (6)(b), made on or after 9 March 2017, of the whole or part of the UK tax-relieved fund of a relieved member of a qualifying recognised overseas pension scheme, or

(c) a relevant transfer within sub-paragraph (6)(b), made on or after 6 April 2017, of the whole or part of the UK tax-relieved fund of a relieved member of a relevant non-UK scheme that is not a qualifying recognised overseas pension scheme.

(6C) The sums or assets transferred as a result of an original relevant transfer constitute a ring-fenced transfer fund, and the key date for that fund is the date of the transfer.

(6D) Where in the case of a ring-fenced transfer fund (“the source fund”) there is a relevant transfer of the whole or part of the fund—

(a) the sums or assets transferred as a result of the transfer constitute a ring-fenced transfer fund,

(b) that fund has the same key date as the source fund, and

(c) the transfer is “a subsequent relevant transfer”, and is not an original relevant transfer.

(6E) Sub-paragraph (6D) applies whether the source fund is a ring-fenced transfer fund as a result of sub-paragraph (6C) or as a result of sub-paragraph (6D).

(6F) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that sums or assets identified in accordance with the regulations are not included in a ring-fenced transfer fund as a result of sub-paragraph (6C) or (6D)(a).”

3 (1) Paragraph 2 (member payment provisions apply to payments out of non-UK schemes if member is UK resident or has been UK resident in any of the preceding 5 tax years) is amended as follows. U.K.

(2) The existing text becomes sub-paragraph (1).

(3) In that sub-paragraph, after “scheme” insert “ so far as it is referable to 5-year rule funds ”.

(4) After that sub-paragraph insert—

“(2) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a relieved member of a relevant non-UK scheme so far as it is referable to 10-year rule funds unless the member—

(a) is resident in the United Kingdom when the payment is made (or treated as made), or

(b) although not resident in the United Kingdom at that time, has been resident in the United Kingdom earlier in the tax year in which the payment is made (or treated as made) or in any of the 10 tax years immediately preceding that year.

(3) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a transfer member of a relevant non-UK scheme, so far as it is referable to any particular ring-fenced transfer fund of the member's under the scheme which has a key date of 6 April 2017 or later, unless—

(a) the member is resident in the United Kingdom when the payment is made (or treated as made), or

(b) although the member is not resident in the United Kingdom at that time—

(i) the member has been resident in the United Kingdom earlier in the tax year containing that time, or

(ii) the member has been resident in the United Kingdom in any of the 10 tax years immediately preceding the tax year containing that time, or

(iii) that time is no later than the end of 5 years beginning with the key date for the particular fund.

(4) In this paragraph—

• “5-year rule funds”, in relation to a payment to or in respect of a relieved member of a relevant non-UK scheme, means so much of the member's UK tax-relieved fund under the scheme as represents tax-relieved contributions, or tax-exempt provision, made under the scheme before 6 April 2017;

• “5-year rule funds”, in relation to a payment to or in respect of a transfer member of a relevant non-UK scheme, means—

  (a)

  the member's relevant transfer fund under the scheme, and

  (b)

  any of the member's ring-fenced transfer funds under the scheme that has a key date earlier than 6 April 2017;

• “10-year rule funds”, in relation to a payment to or in respect of a relieved member of a relevant non-UK scheme, means so much of the member's UK tax-relieved fund under the scheme as represents tax-relieved contributions, or tax-exempt provision, made under the scheme on or after 6 April 2017.

(5) See also—

• paragraph 1(6C), (6D) and (6F) (meaning of “ring-fenced transfer fund”),

• paragraph 3 (meaning of “UK tax-relieved fund”, “tax-relieved contributions” and “tax-exempt provision” etc), and

• paragraph 4 (meaning of “relevant transfer fund” etc).”

4 (1) Paragraph 3 (payments to or in respect of relieved members of schemes) is amended as follows. U.K.

(2) After sub-paragraph (5) insert—

“(5A) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that, in circumstances specified in the regulations, something specified in the regulations is to be treated as done by, to, in respect of or in the case of a relieved member of a relevant non-UK scheme.”

(3) In sub-paragraph (6) (power to specify whether payments by scheme are referable to UK tax-relieved fund), after “payments made (or treated as made) by” insert “ , or other things done by or to or under or in respect of or in the case of, ”.

(4) After sub-paragraph (7) insert—

“(8) Where regulations under sub-paragraph (6) make provision for a payment or something else to be treated as referable to a member's UK tax-relieved fund under a scheme, regulations under that sub-paragraph may make provision for the payment or thing, or any part or aspect of the payment or thing, also to be treated as referable to a particular part of that fund.”

5 (1) Paragraph 4 (payments to or in respect of transfer members of schemes) is amended as follows. U.K.

(2) In sub-paragraph (1), after “relevant transfer fund” insert “ , or ring-fenced transfer funds, ”.

(3) In sub-paragraph (2) (meaning of “relevant transfer fund”), before “so much of” insert “ , subject to sub-paragraph (3A), ”.

(4) After sub-paragraph (3) insert—

“(3A) The member's relevant transfer fund under the scheme does not include sums or assets that are in any of the member's ring-fenced transfer funds under the scheme.”

(5) In sub-paragraph (4) (power to specify whether payments by scheme are referable to relevant transfer fund), after “payments or transfers made (or treated as made) by” insert “ , or other things done by or to or under or in respect of or in the case of, ”.

(6) After sub-paragraph (4) insert—

“(5) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that, in circumstances specified in the regulations, something specified in the regulations is to be treated as done by, to, in respect of or in the case of a transfer member of a relevant non-UK scheme.

(6) Regulations made by the Commissioners for Her Majesty's Revenue and Customs may make provision for determining whether payments or transfers made (or treated as made) by, or other things done by or to or under or in respect of or in the case of, a relevant non-UK scheme are to be treated as referable to a member's ring-fenced transfer funds under the scheme (and so whether or not they reduce the funds or any of them).

(7) Where regulations under sub-paragraph (6) make provision for a payment or transfer or something else to be treated as referable to a member's ring-fenced transfer funds under a scheme, regulations under that sub-paragraph may make provision for the payment or transfer or other thing, or any part or aspect of the payment or transfer or thing, also to be treated as referable to a particular one of those funds.”

6 U.K. In paragraph 7(2)(c) (regulations about application of member payment provisions), after “relevant transfer fund” insert “ or ring-fenced transfer funds ”.

7 (1) Paragraph 9ZB (application of section 227G) is amended as follows. U.K.

(2) In sub-paragraph (2), after “relevant transfer fund” insert “ or ring-fenced transfer funds ”.

(3) After sub-paragraph (3) insert—

“(4) The reference in sub-paragraph (2) to the individual's ring-fenced transfer funds under the relevant non-UK scheme is to be read in accordance with paragraph 1.”

8 U.K. The amendments made by paragraph 3 apply in relation to payments made (or treated as made) on or after 6 April 2017, and the amendments made by paragraphs 2 and 4 to 7 come into force on 9 March 2017.

Consequential amendments in ITEPA 2003 U.K.

9 (1) Section 576A of ITEPA 2003, as it applies where the year of departure is the tax year 2013-14 or a later tax year, is amended as follows. U.K.

(2) In subsection (6)(b) (pension income: temporary non-residents: non-application where payment not referable to relevant transfer fund)—

(a) for “not referable” substitute “ referable neither ”, and

(b) after “relevant transfer fund” insert “ , nor to the member's ring-fenced transfer funds, ”.

(3) In subsection (10) (interpretation), at the end insert—

““member's ring-fenced transfer fund” (see paragraph 1(6C) and (6D)).”

(4) The amendments made by this paragraph apply in relation to relevant withdrawals on or after 6 April 2017.

10 (1) Section 576A of ITEPA 2003, as it applies where the year of departure is the tax year 2012-13 or an earlier tax year, is amended as follows. U.K.

(2) In subsection (6) (pension income: temporary non-residents: non-application unless payment referable to relevant transfer fund), after “member's relevant transfer fund” insert “ , or the member's ring-fenced transfer funds, ”.

(3) In subsection (8) (interpretation), before the definition of “scheme pension” insert—

““member's ring-fenced transfer funds” has the same meaning as in that Schedule (see paragraph 1(6C) and (6D));”.

(4) The amendments made by this paragraph apply in relation to relevant withdrawals on or after 6 April 2017.