PART 2Application and computation of UK tax charges
F1Order of attributing payments4ZC
1
This regulation applies to determine which part of a RNUKS a payment to, or in respect of, a member, or a crystallisation event referred to in regulation 4ZA(3)(b) is referable.
2
In this regulation a references to “payment” includes payments treated as made under Part 4 of the Act.
3
It is assumed that, subject to the provisions in paragraphs (4) and (5), payments made by the scheme to or in respect of the member, and crystallisation events described in regulation 4ZA(3)(b), are made out of the member’s funds in the following order of priority—
a
so much of the member’s UK tax-relieved funds made under the scheme before 6th April 2017,
b
the member’s RTF,
c
the member’s RFTF with a key date of 5th April 2017 or earlier and where the member has more than one such fund the payment is referable in priority of the RFTF with the earliest key date to the latest key date,
d
so much of the member’s UK tax-relieved funds made under the scheme on or after 6th April 2017,
e
the member’s RFTF with a key date of 6th April 2017 or later, in priority of the RFTF with the earliest key date to the latest key date,
f
any other funds under the scheme.
4
If the payment is a transfer, to the extent that the transfer is not a payment treated as made by virtue of section 174A, it is made out of the member’s fund in the following order of priority—
a
the member’s RFTF made under the scheme (including such funds with a key date of before 6th April 2017) in priority of the latest key date to the earliest key date of the fund,
b
so much of the member’s UK tax-relieved funds’ made under the scheme before 6th April 2017,
c
the member’s RTF,
d
so much of the member’s UK tax-relieved funds’ made under the scheme on or after 6th April 2017,
e
any other funds under that scheme.
5
If the payment is a transfer, to the extent that the transfer is a payment treated as made by virtue of section 174A, it is attributed in the following order of priority—
a
the member’s RFTATF and RFTF in priority of the RFTF with the latest key date to the earliest key date of the fund,
b
if the RFTATF is nil, the member’s RTF and TATF.
6
If the payment is an unauthorised payment by virtue of section 174A, or a payment other than a transfer, treated as made by virtue of section 174A, it is treated as referable to the member’s funds in the following order of priority—
a
the payment shall first be treated as referable to the member’s RTF and TATF,
b
if the member’s TATF is nil, or has been reduced to nil, the payment shall be treated as referable to the member’s RFTF, in priority of the RFTF with the earliest key date to the latest key date, and the RFTATF.
7
Where a payment or crystallisation event described in regulation 4ZA(3)(b) is referable to the member’s RTF or TATF, the funds will be reduced in accordance with the following Rules (with an earlier Rule applying in preference to a later Rule).
Rule 1
Where an unauthorised payment is made by the scheme by virtue of section 174A—
a
the payment shall be treated as made out of the member’s RTF and TATF, but
b
the interest in taxable property, in respect of which the unauthorised payment is treated as made, shall represent the payment and form part of the member’s RTF and TATF (an “appropriated asset”), up to an amount equal to the amount of the payment.
Rule 2
Accordingly, if a scheme transfers that appropriated asset (or an interest in a vehicle through which the scheme holds the interest in the taxable property indirectly), or part of it, to another pension scheme, that transfer will be treated as a transfer of the whole or part, as the case may be, of the member’s RTF and TATF (limited to the amount of the unauthorised payment) to that other scheme, falling (if appropriate) within regulation 3A(1)(b).
Rule 3
If a scheme disposes of (other than to a pension scheme) an appropriated asset (or an interest in a vehicle through which the scheme holds the interest in the taxable property indirectly), or part of it, any other property which directly or indirectly represents proceeds of either of those interests (limited to the amount of the unauthorised payment) will form part of the member’s RTF and TATF.
Rule 4
This rule applies to crystallisation events and payments made by the scheme to or in respect of the member, other than—
a
a transfer of an interest in taxable property or an interest in a vehicle through which the scheme holds the interest in the taxable property indirectly, and
b
payments treated as made by virtue of section 174A.
So far as the member’s RTF and TATF are not represented by appropriated assets—
a
where the member has both an RTF and a TATF, and the amount of his RTF exceeds the amount of his TATF, such payments shall, to the extent of that excess, be treated as made out of his RTF (but not his TATF) and as reducing his RTF, and subject thereto
b
such payments are made out of the member’s RTF and TATF in priority to any other fund under that scheme, and reduce (but not below nil) the amount of the RTF and TATF.
8
Where the payment or crystallisation event described at regulation 4ZA(3)(b) is referable to a member’s RFTF or RFTATF, the funds shall be reduced in accordance with the following Rules (with an earlier Rule applying in preference to a later Rule).
Rule 1
Where an unauthorised payment is treated as made by the scheme by virtue of section 174A—
a
the payment will be treated as made out of the member’s RFTF and RFTATF, but
b
the interest in taxable property, in respect of which the unauthorised payment is treated as made, will represent the payment and form part of the member’s RFTF and RFTATF (an “appropriated asset”), up to an amount equal to the amount of that payment.
Rule 2
Accordingly, if a scheme transfers that appropriated asset (or an interest in a vehicle through which the scheme holds the interest in the taxable property indirectly), or part of it, to another pension scheme, that transfer shall be treated as a transfer of the whole or part, as the case may be, of the member’s RFTF and RFTATF (limited to the amount of the unauthorised payment) to that other scheme, falling (if appropriate) within regulation 3C(b).
Rule 3
If a scheme disposes (other than to another pension scheme) of an appropriated asset (or an interest in a vehicle through which the scheme holds the interest in the taxable property indirectly), or part of it, any other property which directly or indirectly represents proceeds of either of those interests (limited to the amount of the unauthorised payment) will form part of the member’s RFTF and RFTATF.
Rule 4
This Rule applies to crystallisation events and payments made by the scheme to or in respect of the member, other than—
a
a transfer of an interest in taxable property or an interest in a vehicle through which the scheme holds the interest in the taxable property indirectly, and
b
payments treated as made by virtue of section 174A.
So far as the member’s RFTF and RFTATF are not represented by appropriated assets—
a
where the member has both an RFTF and RFTATF, and the aggregate amount of his RFTFs exceeds the amount of his RFTATF, such payments will, to the extent of that excess, be treated as made out of his RFTF (but not his RFTATF) and as reducing the RFTF, and subject thereto
b
such payments are made out of the member’s RFTF and RFTATF and reduce (but not below nil) the amount of the RFTF and RFTATF.
9
References to “payments treated as made by virtue of section 174A” include references to payments treated as made by regulations under paragraph 37 of Schedule 29A and paragraph 7A of Schedule 34.