Finance Act 2004 (c. 12)

SCHEDULES

SCHEDULE 36 U.K. Pension schemes etc: transitional provisions and savings

Modifications etc. (not altering text)

C1 Sch. 36 modified by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), art. 23D (as inserted (1.6.2009) by S.I. 2009/1172, arts. 1, 3)

C2 Sch. 36 applied (1.6.2018) by The Local Government Pension Scheme (Scotland) Regulations 2018 (S.S.I. 2018/141), regs. 1(1), 48(2)

Part 2 U.K. Pre-commencement rights: [F1 enhancement of allowances etc]

Textual Amendments

F1 Words in Sch. 36 Pt. 2 heading substituted (6.4.2024 for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 66, 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

Modifications etc. (not altering text)

C3 Sch. 36 Pt. 2 applied (with modifications) (1.5.2010) by The Financial Assistance Scheme (Tax) Regulations 2010 (S.I. 2010/1187), regs. 1(1), 5-11

Pre-commencement pensions U.K.

20 (1) This paragraph makes provision about an individual who, on 5th April 2006— U.K.

[F2 (a)] has an actual (rather than a prospective) right to the payment of one or more relevant existing pensions [F3 , and]

[F3 (b) during the period beginning on 5th April 2006 and ending on 5th April 2024, no benefit crystallisation event within the meaning of section 216 as that provision had effect at the end of that period has occurred in relation to the individual.]

[F4 (1A) Section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) applies as if, immediately before the first relevant benefit crystallisation event occurring in relation to the individual on or after 6th April 2024—

(a) a relevant benefit crystallisation event within the meaning of that section had occurred in relation to the individual, and

(b) the amount of the lump sum to which the relevant benefit crystallisation event relates was an amount equal to 25% of the value of the individual’s pre-commencement pension rights immediately before the relevant benefit crystallisation event.]

(2) [F5 Section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance)] applies as if, immediately before the first [F6 relevant benefit crystallisation event] occurring in relation to the individual—

(a) a [F7 relevant benefit crystallisation event within the meaning of that section] had occurred in relation to the individual, and

(b) the [F8 amount of the lump sum or lump sum death benefit to which the relevant benefit crystallisation event relates was 25% of] the value of the individual’s pre-commencement pension rights immediately before the [F9 relevant benefit crystallisation event].

(3) The value of the individual’s pre-commencement pension rights at any time is—

where (subject to sub-paragraph (4)) ARP is an amount equal to—

(a) the annual rate at which the relevant existing pension is payable to the individual at that time, or

(b) if more than one relevant existing pension is payable to the individual at that time, the aggregate of the annual rates at which each of the relevant existing pensions is so payable.

[F10 (4) In the case of drawdown pension, ARP is—

(a) [F11 80% of] the maximum amount that may be paid in the drawdown pension year in which the time falls in accordance with pension rule 5 (see section 165), or

(b) in the case of an arrangement to which subsection (3A) of section 165 [F12 applied at any time before 6 April 2015], [F13 80% of] the maximum amount that could have been paid in accordance with that rule in the drawdown pension year in which that subsection first applied to the arrangement if it had not so applied.]

[F14 (c) in the case of an arrangement to which section 165(3A) never applied but only if the time falls after the member's drawdown pension fund in respect of the arrangement is converted into the member's flexi-access drawdown fund in respect of the arrangement by the operation of any of paragraphs 8B to 8D of Schedule 28, 80% of the maximum amount that could have been paid in accordance with pension rule 5 in the drawdown pension year in which the conversion occurs had no conversion happened in that year by the operation of any of paragraphs 8B to 8D of Schedule 28.

, or]

(5) In this paragraph “relevant existing pension” has the same meaning as in paragraph 10(2); and paragraph 10(4) and (5) operates for the purposes of this paragraph for determining the annual rate at which a relevant existing pension is payable at any time (treating the references there to 5th April 2006 as to that time).

Textual Amendments

F2 Words in Sch. 36 para. 20(1) renumbered as Sch. 36 para. 20(1)(a) (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 77(2)(a), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F3 Sch. 36 para. 20(1)(b) and word inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 77(2)(b), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F4 Sch. 36 para. 20(1A) inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 77(3), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F5 Words in Sch. 36 para. 20(2) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 77(4)(a)(i), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F6 Words in Sch. 36 para. 20(2) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 77(4)(a)(ii), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F7 Words in Sch. 36 para. 20(2)(a) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 77(4)(b), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F8 Words in Sch. 36 para. 20(2)(b) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 77(4)(c)(i), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F9 Words in Sch. 36 para. 20(2)(b) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 9 paras. 77(4)(c)(ii), 124 (with Sch. 9 paras. 125-132A) (as amended by S.I. 2024/356, regs. 1, 4)

F10 Sch. 36 para. 20(4) substituted (with effect in accordance with Sch. 16 paras. 85, 104(1) of the amending Act) by Finance Act 2011 (c. 11), Sch. 16 para. 82(2)

F11 Words in Sch. 36 para. 20(4)(a) inserted (17.12.2014) (with effect in accordance with Sch. 1 para. 77(2) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 77(1)

F12 Words in Sch. 36 para. 20(4)(b) substituted (6.4.2015) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 28(1)(a), (2)

F13 Words in Sch. 36 para. 20(4)(b) inserted (17.12.2014) (with effect in accordance with Sch. 1 para. 77(3) of the amending Act) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 77(1)

F14 Sch. 36 para. 20(4)(c) and word inserted (6.4.2015) by Taxation of Pensions Act 2014 (c. 30), Sch. 1 para. 28(1)(b), (2)

Modifications etc. (not altering text)

C4 Sch. 36 para. 20(2)(b) modified (6.4.2006) by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), arts. 1(1), 20

C5 Sch. 36 para. 20(4) applied (with modifications) (17.7.2014) by Finance Act 2014 (c. 26), Sch. 6 para. 2(3)(4)(7)(8)

C6 Sch. 36 para. 20(4) applied (with modifications) (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 10(3)

C7 Sch. 36 para. 20(4) applied (with modifications) (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 10(7)