The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024

Explanatory Note

(This note is not part of the Regulations)

References in this Explanatory Note to “FA” followed by a year are to the Finance Act of that year.

Section 14 of, and Schedule 9 to, FA 2024 (c. 3) make provision in connection with the abolition of the lifetime allowance charge by section 18 of the Finance (No. 2) Act 2023 (c. 30). Paragraph 41 of Schedule 9 to FA 2024 inserted new provisions into Chapter 15A of ITEPA 2003 (c. 1) as to the “pension commencement excess lump sum”.

These Regulations make consequential, transitional and saving provision in connection with the abolition of the lifetime allowance charge and as to the operation of the pension commencement excess lump sum.

Part 2 of these Regulations contains amendments to primary legislation.

Regulation 2 amends Chapter 15A of Part 9 of ITEPA 2003 by inserting provision in section 637G(2) as to the amount of the member’s taxable pension income in respect of a payment of a trivial commutation lump sum or a winding-up lump sum.

Regulation 3 amends Part 4 of FA 2004 (c. 12). It inserts a new section 244ID to make provision about the information to be provided by a relieved relevant non-UK scheme when it makes a block transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme). It amends section 244K to make provision about “the chargeable portion” for the purposes of calculating the overseas transfer charge. It makes amendments to definitional provisions in section 280 and Schedule 29. It also amends Schedule 36 to omit paragraph 29A and to substitute the definition of “D” in the formula in paragraph 34 for calculating the permitted maximum in relation to pension commencement lump sums.

Regulation 4 amends Schedule 9 to FA 2024. It amends the transitional provision in paragraphs 125 as to the availability of an individual’s lump sum allowance, so that where the conditions specified in amended sub-paragraph (1) and new sub-paragraph (3A) are met, paragraph 125(3) applies as if the amount of the lump sum available were £375,000.

It amends the transitional provision in paragraph 126 as to the availability of an individual’s lump sum and death benefit allowance, so that where the conditions specified in amended sub-paragraph (1) and new sub-paragraph (3A) are met, paragraph 126(3) applies as if the amount of the lump sum and death benefit allowance were £375,000.

It inserts a new paragraph 127A which makes provision about the availability of a member’s overseas transfer allowance where a benefit crystallisation event takes place before 6 April 2024 and a transfer of the kind mentioned in section 244IA of FA 2004 occurs on or after 6 April 2024.

It amends paragraph 128 as to the definition of “the appropriate percentage”.

It amends the interpretation provisions in paragraph 129 as to “lump sum transitional tax-free amount”, “lump sum and death benefit transitional tax-free amount” and inserts a definition for “stand-alone lump sum”. It corrects an error in the definition of “uncrystallised funds pension lump sum”.

It amends paragraph 130 to require the provision of information in respect of benefit crystallisation events occurring before 6 April 2024.

It inserts a new paragraph 130A which makes provision about entitlement to lump sums before 6th April 2024 where the sum is paid on or after that date.

It inserts a new paragraph 132A to make provision about the continuity of the law where provision which is made in or under Schedule 9 to FA 2024 re-enacts a provision of or made under Part 4 of FA 2004 or Part 9 of ITEPA 2003 that has been repealed by or under Schedule 9.

Part 3 of these Regulations contains amendments to secondary legislation.

Regulation 5 amends regulation 5 of the Tax Credits (Definition and Calculation of Income) Regulations 2002 (S.I. 2002/2006), which defines “pension income” for the purposes of those Regulations.

Regulation 6 amends the definition of “relevant lump sum payment” in regulation 58 of the Income Tax (Pay As You Earn) Regulations 2003 (S.I. 2003/2682).

Regulation 7 amends the Registered Pension Schemes (Accounting and Assessment) Regulations 2005 (S.I. 2005/3454) to omit entries relating to the lifetime allowance charge and insert references to provisions about the overseas transfer charge.

Regulation 8 amends the Pension Schemes (Information Requirements – Qualifying Overseas Pension Schemes, Qualifying Recognised Pension Schemes and Corresponding Relief) Regulations 2006 (S.I. 2006/208) to insert provisions and references to provisions about the overseas transfer charge and member’s overseas transfer allowance.

Regulation 9 amends the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567). It substitutes a new event 24 in the Table of reportable events in regulation 3 and requires information to be provided by the scheme administrator to HMRC in relation to reportable payments of lump sums or lump sum death benefits. It amends regulation 3 to make provision as to what is “reportable” for the purposes of new event 24 and inserts definitions.

It amends regulation 8 to provide the period within which information must be provided by a scheme administrator to personal representatives in the event of a member’s death. It amends regulation 14ZA to alter the amount of annual allowance for pension inputs to other arrangements (from £4,000 to £10,000) where it appears that a member may be first flexibly accessing pension rights. It also substitutes the words “relevant benefit crystallisation events” for “benefit crystallisation events” at the appropriate places.

Regulation 10 amends the Registered Pension Schemes (Splitting of Schemes) Regulations 2006 (S.I. 2006/569). It substitutes regulation 5(1) of those Regulations for a provision which requires references in Chapter 15A of ITEPA 2003 to the scheme administrator of a registered pension scheme to be read as references to a sub-scheme administrator, if the scheme is a split scheme. It also omits certain statutory references from the Table in Schedule 3 to those Regulations.

Regulation 11 makes minor textual amendments to articles 25CA, 25CB and 25CC of the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572).

Regulation 12 amends the Occupational Pension Schemes (Assignment, Forfeiture, Bankruptcy, etc) Regulations 1997 (S.I. 1997/785). It includes a reference in regulation 2(1B)(b) to the lump sum rule at section 166(1)(aa) of FA 2004 and to omit the reference to the lump sum rule at section 166(1)(g) of FA 2004.

Paragraph 133 of Schedule 9 to FA 2024 contains power to make regulations making transitional, transitory or saving provision in connection with the coming into force of amendments made by section 14 of, and Schedule 9 to, FA 2024, and includes the authority for inserting provisions into Part 6 of Schedule 9 and amending any provision of paragraphs 126 to 132 of that Schedule.

Paragraph 134 of Schedule 9 to FA 2024 allows regulations to be made in connection with or in consequence of the provision made by sections 18, 19 and 23 of the Finance (No. 2) Act 2023, and includes the authority to make provision amending any provision of, or amendment made by, Schedule 9 to FA 2024.

A Tax Information and Impact Note covering this instrument will be published on the website at http://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.