PART 2U.K.Modifications of Part 4 of the Finance Act 2004

CHAPTER 4U.K.Lifetime allowance charge

Charges paid by Chapter 1 new schemes treated as paid by Chapter 1 legacy schemesU.K.

32.—(1) Paragraphs (2) to (4) apply where, before the coming into force of section 2(1) of PSPJOA 2022 (and disregarding the effect of that provision)—

(a)a benefit crystallisation event has taken place in relation to an individual in connection with the individual’s entitlement under a Chapter 1 new scheme to any remediable service benefits, and

(b)the scheme administrator of that scheme became liable under section 217 of FA 2004 (persons liable to the lifetime allowance charge)(1) for a lifetime allowance charge(2) in connection with the benefit crystallisation event.

(2) Any accounting-for-tax return made by the scheme administrator of the Chapter 1 new scheme in respect of the liability, so far as it relates to the remediable service benefits, is to be treated for all purposes—

(a)as not having been made by the scheme administrator of the Chapter 1 new scheme, and

(b)as having been made instead by the scheme administrator of the relevant Chapter 1 legacy scheme.

(3) Any payment made by the scheme administrator of the Chapter 1 new scheme in respect of the liability, so far as it relates to the remediable service benefits, is to be treated for all purposes—

(a)as not having been paid by the scheme administrator of the Chapter 1 new scheme, and

(b)as having been paid instead by the scheme administrator of the relevant Chapter 1 legacy scheme.

(4) The scheme administrator of the Chapter 1 new scheme must give to the scheme administrator of the relevant Chapter 1 legacy scheme the following information—

(a)the particulars included in any accounting-for-tax return that the scheme administrator of the Chapter 1 new scheme has previously made in respect of the liability, and

(b)such further information relating to any such return as the scheme administrator of the relevant Chapter 1 legacy scheme may reasonably request.

(5) A request under paragraph (4)(b) may be made in relation to accounting-for-tax returns generally, or in relation to a particular return.

(6) In this Chapter “remediable service benefits” means benefits that are calculated by reference to an individual’s remediable service in an office or employment.

(7) When determining, for the purposes of paragraph (6), the benefits that are calculated by reference to an individual’s remediable service in an employment or office, any benefits that result from voluntary arrangements entered into by the individual are to be ignored.

Reporting and payment by public service scheme of charges affected by rectificationU.K.

33.—(1) Paragraphs (3) to (5) apply where—

(a)before the relevant time, a benefit crystallisation event takes place in relation to an individual in connection with the individual’s entitlement under a Chapter 1 scheme or a judicial scheme to any remediable service benefits, and

(b)a lifetime allowance charge, or any part of such a charge, that is charged in connection with the benefit crystallisation event is attributable to a relevant rectification provision.

(2) In paragraph (1) “the relevant time” means—

(a)in relation to an individual’s entitlement under a Chapter 1 scheme, the time at which section 2(1) of PSPJOA 2022 comes into force;

(b)in relation to an individual’s entitlement under a judicial scheme, the time at which a 2015 scheme election is made in respect of the individual.

(3) The relevant scheme administrator is not required, as a result of the effect of the relevant rectification provision, to amend any accounting-for-tax return previously made in respect of their liability for the charge.

(4) For the purposes of section 254(2) of FA 2004 (which specifies when a scheme administrator must account for tax to HMRC), the lifetime allowance charge, or the part of the lifetime allowance charge, mentioned in paragraph (1)(b) is to be taken to be charged on the relevant scheme administrator in the period following that in which the scheme administrator becomes aware of the effect of the relevant rectification provision on the lifetime allowance charge.

(5) An accounting-for-tax return for a period in which tax is to be treated by paragraph (4) as having been charged—

(a)must be accompanied by a declaration by the relevant scheme administrator that the return accounts for tax that is attributable to the application of a relevant rectification provision,

(b)must state whether a payment (“the previous payment”) in respect of the lifetime allowance charge has already been reported by the scheme administrator, or by the scheme administrator of a Chapter 1 new scheme, and

(c)if so, must contain the following information—

(i)the amount of the previous payment, the tax year to which it relates and the date on which the payment was made;

(ii)the period covered by the accounting-for-tax return that included particulars of the previous payment;

(iii)whether the previous payment was made by the scheme administrator or by the scheme administrator of a Chapter 1 new scheme;

(iv)if the previous payment was made by the scheme administrator of a Chapter 1 new scheme, the pension scheme tax reference number of that scheme.

(6) In this regulation “the relevant scheme administrator” means the scheme administrator who (after taking into account the relevant rectification provisions) is liable under section 217(1) of FA 2004) for the lifetime allowance charge in question.

(7) For the purposes of this Chapter a lifetime allowance charge, or a part of such a charge, is “attributable” to a relevant rectification provision if it would not have been charged apart from the provision.

Application required by schemes to reclaim overpayment resulting from rectificationU.K.

34.—(1) Paragraphs (3) and (4) apply where—

(a)before the relevant time, a benefit crystallisation event takes place in relation to an individual in connection with the individual’s entitlement under a Chapter 1 scheme or a judicial scheme to any remediable service benefits,

(b)the relevant scheme administrator has (after taking into account regulation 32(3)) paid an amount of a lifetime allowance charge that arose in connection with the benefit crystallisation event, and

(c)the amount paid is, as a result of the effect of a relevant rectification provision, greater than the amount owed in respect of the lifetime allowance charge.

(2) In paragraph (1) “the relevant time” means—

(a)in relation to an individual’s entitlement under a Chapter 1 scheme, the time at which section 2(1) of PSPJOA 2022 comes into force;

(b)in relation to an individual’s entitlement under a judicial scheme, the time at which a 2015 scheme election is made in respect of the individual.

(3) The relevant scheme administrator is not required, as a result of the effect of the relevant rectification provision, to amend any accounting-for-tax return previously made in respect of their liability for the charge.

(4) The relevant scheme administrator is entitled to a repayment of the excess mentioned in paragraph (1)(c) only on the making of an application.

[F1(4A) The application must be made on or before 1st April 2027.]

(5) The application—

(a)must be accompanied by—

(i)a declaration that the application is made by the scheme administrator;

(ii)a declaration as to the accuracy of the information contained in the application;

(iii)a declaration that the applicant understands the consequences of providing false information; and

(b)must contain the following information—

(i)the pension scheme name and tax reference number;

(ii)the scheme administrator identity reference provided by HMRC;

(iii)the name and national insurance number of the scheme member;

(iv)the amount of the charge paid, the date on which, and the charge reference number under which, it was paid;

(v)the pension scheme tax reference number of the scheme under which the scheme administrator reported and paid the amount of the charge to HMRC;

(vi)the tax year and quarter covered by the accounting-for-tax return on which the charge was reported to HMRC;

(vii)the revised amount of the lifetime allowance charge;

(viii)the amount of tax being reclaimed;

(ix)if a repayment is claimed, the amount and the account details to which repayment is to be made;

(x)if a reallocation is claimed, that amount and the charge reference to which it is to be allocated.

(6) In this regulation “the relevant scheme administrator” means the scheme administrator who (after taking into account the relevant rectification provisions) is liable under section 217(1) of FA 2004 for the lifetime allowance charge in question.

Public service schemes not permitted to apply for discharge of increased chargeU.K.

35.—(1) Paragraph (3) applies where—

(a)before the relevant time, a benefit crystallisation event takes place in relation to an individual in connection with the individual’s entitlement under a Chapter 1 scheme or a judicial scheme to any remediable service benefits, and

(b)a lifetime allowance charge, or any part of such a charge, that is charged in connection with the benefit crystallisation event is attributable to a relevant rectification provision.

(2) In paragraph (1) “the relevant time” means—

(a)in relation to an individual’s entitlement under a Chapter 1 scheme, the time at which section 2(1) of PSPJOA 2022 comes into force;

(b)in relation to an individual’s entitlement under a judicial scheme, the time at which a 2015 scheme election is made in respect of the individual.

(3) The relevant scheme administrator is not entitled to make an application under section 267 of FA 2004 (application for discharge of scheme administrator’s liability for lifetime allowance charge) in respect of their liability for the unpaid lifetime allowance charge mentioned in paragraph (1)(b).

(4) In this regulation “the relevant scheme administrator” means the scheme administrator who (after taking into account the relevant rectification provisions) is liable under section 217(1) of FA 2004 for the lifetime allowance charge in question.

Public service scheme to be liable where private sector scheme dischargedU.K.

36.—(1) Paragraph (3) applies where—

(a)before the relevant time, a benefit crystallisation event has taken place in relation to an individual (“the individual”) in connection with the individual’s entitlement under a Chapter 1 scheme or a judicial scheme to any remediable service benefits,

(b)a later benefit crystallisation event (“the later BCE”) takes place in relation to the individual in connection with the individual’s entitlement to any benefits under a pension scheme that is not a public service pension scheme (“the private sector scheme”),

(c)a lifetime allowance charge, or any part of such a charge, that is charged in connection with the later BCE is attributable to a relevant rectification provision, and

(d)the scheme administrator of the private sector scheme makes a successful application under section 267 of FA 2004 (application for discharge of scheme administrator’s liability for lifetime allowance charge) in respect of their liability for the lifetime allowance charge, or part of such a charge, mentioned in sub-paragraph (c).

(2) In paragraph (1) “the relevant time” means—

(a)in relation to an individual’s entitlement under a Chapter 1 scheme, the time at which section 2(1) of PSPJOA 2022 comes into force;

(b)in relation to an individual’s entitlement under a judicial scheme, the time at which a 2015 scheme election is made in respect of the individual.

(3) The scheme administrator of the pension scheme under which the remediable service benefits are payable is liable (jointly and severally with the individual) for the lifetime allowance charge, or part of such charge, mentioned in paragraph (1)(c).

(4) The Registered Pension Schemes (Accounting and Assessment) Regulations 2005(3) have effect subject to the following modifications.

(5) Regulation 3 (particulars required to be included in returns under section 254 of FA 2004 of income tax to which a scheme administrator is liable)(4) has effect as if, in Table 1, in the entry for section 214 of FA 2004 (lifetime allowance charge) at the end there were inserted “(other than a charge to which the scheme administrator is liable under regulation 36(3) of the Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) Regulations 2023.”.

(6) Regulation 4 (the making of assessments)(5) has effect as if, in Table 2, at the end there were inserted—

(7) Regulation 5 (interest)(6) has effect as if, in Table 3, at the end there were inserted—