Finance Act 2004

Member payment chargesU.K.

1(1)For the purposes of the member payment charges the member payment provisions apply in relation to payments made (or treated by this Part as made) to or in respect of—U.K.

(a)a relieved member of a relevant non-UK scheme, or

(b)a transfer member of such a scheme,

as in relation to payments made (or treated by this Part as made) to or in respect of a member of a registered pension scheme.

(2)Sub-paragraph (1) has effect subject to the provision made by and under paragraphs 2 to 7.

(3)“The member payment charges” are—

(a)the unauthorised payments charge [F1(except as imposed by virtue of section 174A (taxable property held by investment-regulated pension schemes))],

(b)the unauthorised payments surcharge,

(c)the short service refund lump sum charge,

[F2(ca)the serious ill-health lump sum charge,]

(d)the special lump sum death benefits charge, and

(e)the charges under sections 636B and 636C of ITEPA 2003 (trivial commutation and winding-up lump sums and lump sum death benefits) (inserted by Schedule 31).

(4)“The member payment provisions” are the provisions of this Part [F3(apart from the taxable property provisions)] relating to payments made (or treated by this Part as made) to or in respect of a member of a registered pension scheme.

(5)A scheme is a relevant non-UK scheme if—

(a)relief from tax has been given in respect of contributions paid under the scheme by virtue of Schedule 33 (overseas pension schemes: migrant member relief),

(b)relief from tax has been so given at any time after 5th April 2006 under double tax arrangements,

(c)a member of the scheme has been, or members of the scheme have been, exempt from liability to tax by virtue of section 307 of ITEPA 2003 (exemption for provision made by employer for retirement or death benefit) in respect of provision made under the scheme at any time after 5th April 2006 when the scheme was an overseas pension scheme, or

(d)there has been a relevant transfer at any time after 5th April 2006 when the scheme was a qualifying recognised overseas pension scheme.

(6)“A relevant transfer” means a (direct or indirect) transfer of sums or assets held for the purposes of, or representing accrued rights under, an arrangement made under—

(a)a registered pension scheme, or

(b)another scheme which is a relevant non-UK scheme,

in relation to a member so as to become held for the purposes of, or to represent rights under, an arrangement under the scheme relating to the member; F4...

(7)A member of a relevant non-UK scheme is a relieved member of the scheme if—

(a)any of the contributions in respect of which relief has been given as mentioned in sub-paragraph (5)(a) or (b) were contributions paid by or on behalf of, or in respect of, the member, or

(b)the member is the member, or one of the members, who has been exempt from liability to tax as mentioned in sub-paragraph (5)(c).

(8)A member of a relevant non-UK scheme is a transfer member of the scheme if a relevant transfer related to the member.

2U.K.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 or transfer member of a relevant non-UK scheme 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 five tax years immediately preceding that tax year.

3(1)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 unless the payment is referable to the member’s UK tax-relieved fund under the scheme.U.K.

(2)A member’s UK tax-relieved fund under a relevant non-UK scheme is so much of—

(a)the sums or assets held for the purposes of, or representing accrued rights under, the scheme as, in accordance with regulations made by the Board of Inland Revenue, represents

(b)any tax-relieved contributions made under the scheme by or on behalf of, or in respect of, the member and any tax-exempt provision made under the scheme in relation to the member.

(3)“Tax-relieved contributions” means contributions in respect of which relief from tax—

(a)has been given by virtue of Schedule 33 (overseas pension schemes: migrant member relief), or

(b)has been given at any time after 5th April 2006 under double tax arrangements.

(4)“Tax-exempt provision” means provision in respect of which exemption from tax has been given by virtue of section 307 of ITEPA 2003 (exemption for provision made by employer for retirement or death benefit) at any time after 5th April 2006 when the scheme was an overseas pension scheme.

(5)Regulations under sub-paragraph (2) may (in particular) provide that the sums or assets which represent any tax-relieved contributions or tax-exempt provision are to be determined otherwise than by reference to the actual amount of the contributions or the amount or value of the provision (for instance by reference to the increase in the value of the member’s rights under the scheme during a period for which relief or exemption in respect of such contributions or provision was given).

(6)Regulations made by the Board of Inland Revenue may make provision for determining whether or not payments made (or treated as made) by a relevant non-UK scheme are to be treated as referable to a member’s UK tax-relieved fund under the scheme (and so whether or not they reduce the fund).

[F5(7)The provision which may be made under sub-paragraph (6) includes (in particular) provision in consequence of Part 7A of ITEPA 2003.]

4(1)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 unless it is referable to the member’s relevant transfer fund under the scheme.U.K.

(2)A member’s relevant transfer fund under a relevant non-UK scheme is so much of—

(a)the sums or assets held for the purposes of, or representing accrued rights under, the scheme as, in accordance with regulations made by the Board of Inland Revenue, represents

(b)relevant transferred sums or assets.

(3)“Relevant transferred sums or assets” means sums or assets held for the purposes of, or representing accrued rights under, an arrangement under—

(a)a registered pension scheme, or

(b)another scheme which is a relevant non-UK scheme,

which at any time after 5th April 2006 when the scheme was an overseas pension scheme have been transferred (directly or indirectly) so as to become held for the purposes of, or to represent rights under, an arrangement under the scheme relating to the member; F6...

(4)Regulations made by the Board of Inland Revenue may make provision for determining whether payments or transfers made (or treated as made) by a relevant non-UK scheme are to be treated as referable to a member’s relevant transfer fund under the scheme (and so whether or not they reduce the fund).

[F74A(1)For the purposes of determining whether a person meets the flexible drawdown conditions in section 165(3A) or 167(2A)—U.K.

(a)any reference in paragraph 14A or 24C of Schedule 28 (minimum income requirement) to payments made to or in respect of a member of a registered pension scheme includes a reference to payments made to or in respect of a relieved member or transfer member of a relevant non-UK scheme,

(b)any tax-relieved contributions made under a relevant non-UK scheme by or on behalf of, or in respect of, a member of the scheme are to be treated as if they were relevant contributions paid under a registered pension scheme,

(c)any tax-exempt provision made under a relevant non-UK scheme in relation to a member of the scheme is to be treated as if it was a relevant contribution paid under a registered pension scheme, and

(d)a person who is an active member of a relevant non-UK scheme is to be treated as if the person were an active member of a registered pension scheme.

(2)In this paragraph—

• “relevant contributions” has the meaning given by paragraph 14D or 24F of Schedule 28;

• “tax-exempt contributions” and “tax-exempt provision” have the same meaning as in paragraph 3 of this Schedule.]

5U.K.[F8Sections 205 to 206] (short service refund lump sum charge[F9, serious ill-health lump sum charge] and special lump sum death benefits charge) apply with respect to a lump sum or lump sum death benefit paid to or in respect of—

(a)a relieved member of a relevant non-UK scheme, or

(b)a transfer member of such a scheme,

so as to make the person to whom the lump sum or lump sum death benefit is paid (rather than the scheme administrator) liable to any charge imposed by either of those sections.

6(1)The amount of any liability to tax imposed on any individual in relation to a payment by virtue of the operation of the member payment charges in consequence of paragraph 1 is to be reduced by the amount of any tax paid in respect of the payment under the law of any country or territory outside the United Kingdom.U.K.

(2)Where, after any tax which an individual is liable to pay in respect of a payment in consequence of paragraph 1 has been paid, tax is paid in respect of the payment under the law of any country or territory outside the United Kingdom, an appropriate adjustment is to be made in the individual’s liability to tax (by way of discharge or repayment of tax).

7(1)The member payment provisions apply with respect to a payment made (or treated by this Part as made) to or in respect of—U.K.

(a)a relieved member of a relevant non-UK scheme, or

(b)a transfer member of such a scheme,

subject to any omissions, additions and other modifications contained in regulations made by the Board of Inland Revenue.

(2)Regulations under sub-paragraph (1) may—

(a)include provision having effect in relation to times before they are made,

(b)confer discretion on the Board of Inland Revenue or the Inland Revenue (subject to a right of appeal against any decision taken in exercise of the discretion),

(c)make different provision in relation to payments treated (in accordance with regulations under paragraph 3(6) or 4(4)) as being referable to a member’s UK tax-relieved fund, or to a member’s relevant transfer fund, under a relevant non-UK scheme, and

(d)otherwise make different provision for different cases.