PTM113255 - International: UK tax charges on non-UK schemes: the member payment charges and taxable property charges: crystallisation events that will reduce a member's UK funds from 6 April 2017

Throughout this page of guidance the phrase 바카라 사이트˜UK funds바카라 사이트™ means a:

  • UK tax-relieved fund,
  • relevant transfer fund,
  • ring-fenced transfer fund, or
  • a combination of more than one of those funds.

For guidance on the definition of these types of fund go to PTM113230.

Overview of crystallisation events reduce the member바카라 사이트™s UK funds
Drawdown pension
Scheme pension
Dependants바카라 사이트™ or nominees바카라 사이트™ drawdown pension
Dependants바카라 사이트™ scheme pension

Overview of crystallisation events reduce the member바카라 사이트™s UK funds

Regulation 4ZA(3)(b) The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 - SI 2006/207

Certain crystallisation events relating to drawdown pension and scheme pension will reduce a member바카라 사이트™s UK funds.  For these types of pension, some or all of the member바카라 사이트™s funds under the scheme are 바카라 사이트˜earmarked바카라 사이트™ to provide a pension from the scheme.  As the member바카라 사이트™s funds are still held under the scheme until the pension is paid the member바카라 사이트™s funds would not normally be reduced.  By allowing a deduction when benefits are crystallised, this allows members to use/earmark their UK funds to provide an authorised pension and then use the non-UK funds to pay benefits in accordance with the law of the country under which the relevant non-UK scheme (RNUKS) is established.

However, because the individual is effectively getting a deduction 바카라 사이트˜up front바카라 사이트™, certain payments and events trigger a 바카라 사이트˜reverse depletion바카라 사이트™ of the member바카라 사이트™s funds.  Go to PTM113265 for guidance on when and how reverse depletion occurs.

Regulation 4ZD(8) The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006- SI 2006/207

The reduction of the member바카라 사이트™s UK funds due to a crystallisation event does not apply for the purpose of the temporary non-residence rules.

PTM113260 provides guidance on the order in which a member바카라 사이트™s UK funds will be reduced by a crystallisation event.

PTM113270 gives examples of how a crystallisation event will reduce a member바카라 사이트™s UK funds.

Drawdown pension

Regulations 4ZA(3)(b)(i) and 4ZB(5) The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 - SI 2006/207

A member바카라 사이트™s UK funds may be reduced where, on or after 6 April 2017, they designate sums or assets as available for the payment of drawdown pension (see PTM062700).  A reduction of the member바카라 사이트™s UK funds is available only if the member has reached normal minimum pension age or the member is retiring due to ill-health (see PTM062100).  

The member바카라 사이트™s UK funds are reduced at the point the member designates funds as available to pay drawdown pension.  The amount of the reduction is the total of the amount of the sums and the market value of the assets designated as available to pay drawdown pension.

There will be no reduction of the member바카라 사이트™s UK funds if they designate funds before reaching normal minimum pension age and do not satisfy the ill-health condition.

Scheme pension

Regulations 4ZA(3)(b)(iii) and 4ZB(7) The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 - SI 2006/207

A member바카라 사이트™s UK funds may be reduced where, on or after 6 April 2017, a member who has reached normal minimum pension age or is retiring due to ill-health (see PTM062100) becomes entitled to a scheme pension (see PTM062300).  The reduction is made on the date of payment of the first instalment of scheme pension.  The amount of the reduction is:

20 x P

Where P is the amount of pension that will be payable to the member in the 12 months beginning with date of entitlement.  It is to be assumed that the pension continues to be payable throughout those 12 months at the rate at which it is payable when the member first becomes entitled to the scheme pension.

For example, if a member becomes entitled to a scheme pension of £10,000 per annum, the amount that reduces the member바카라 사이트™s UK funds is £200,000 (20 x £10,000).

If entitlement to the scheme pension arises before the member reaches normal minimum pension age and they do not satisfy the ill-health condition, there will be no reduction of the member바카라 사이트™s UK funds.

Dependants바카라 사이트™ or nominees바카라 사이트™ drawdown pension

Regulations 4ZA(3)(b)(ii) and 4ZB(6) The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 - SI 2006/207

The designation of the member바카라 사이트™s funds as available for the payment of either dependants바카라 사이트™ drawdown pension or nominees바카라 사이트™ drawdown pension following the member바카라 사이트™s death (see PTM072410) may also reduce the member바카라 사이트™s UK funds.  The member바카라 사이트™s UK funds will be reduced if the designation occurs on or after 6 April 2017 and the reduction occurs when the sums or assets are designated.

The amount by which the member바카라 사이트™s funds are reduced depends on the nature of the funds being designated.  The amount of the deduction is the total of the amount of the sums and the market value of the assets designated to provide dependants바카라 사이트™ or nominees바카라 사이트™ drawdown pension that are 바카라 사이트˜unused uncrystallised funds바카라 사이트™.  Paragraph 27E(4) and (5) of Schedule 28 Finance Act 2004 gives the meaning of 바카라 사이트˜unused uncrystallised funds바카라 사이트™ 바카라 사이트“ see PTM072430.

Dependants바카라 사이트™ scheme pension

Regulations 4ZA(3)(b)(iv) and 4ZB(8) to (10) The Pensions Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006 - SI 2006/207

A member바카라 사이트™s UK funds may be reduced where following the member바카라 사이트™s death an individual becomes entitled to a dependants바카라 사이트™ scheme pension (see PTM072110) on or after 6 April 2017.  The reduction will occur on the date that the individual becomes entitled to a dependants바카라 사이트™ scheme pension.

The member바카라 사이트™s UK fund will be reduced broadly where the dependant바카라 사이트™s scheme pension is provided from uncrystallised rights.

The amount of the reduction is the total of the amount of the sums and market value of the assets applied in connection with the purchase or provision of the dependants바카라 사이트™ scheme pension, provided that it is not related to the member바카라 사이트™s scheme pension.  A dependants바카라 사이트™ scheme pension is connected to a member바카라 사이트™s scheme pension if:

  • the day on which one is purchased, or sums or assets are applied for its provision, is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased or sums or assets are applied for its provision, and
  • the dependants' scheme pension will be payable to a dependant of the member.

However this amount will be reduced where part or all of the dependants바카라 사이트™ scheme pension is funded from a:

  • member바카라 사이트™s drawdown pension fund
  • member바카라 사이트™s flexi-access drawdown fund
  • dependants바카라 사이트™ drawdown pension fund or
  • dependants바카라 사이트™ flexi-access drawdown fund.

The total of the amount of the sums and market value of the assets derived from those types of fund will be deducted from the amount used to purchase or provide the dependants바카라 사이트™ scheme pension.

Example

Tom was a member of a QROPS and following his death the scheme manager uses £450,000 to provide a dependants바카라 사이트™ scheme pension for Tom바카라 사이트™s widow, Samantha.  Before he died the only pension Tom received from the scheme was drawdown pension.  This means Samantha바카라 사이트™s dependants바카라 사이트™ scheme pension cannot be related to a scheme pension in respect of Tom (as he wasn바카라 사이트™t getting scheme pension).

Part of Samantha바카라 사이트™s dependants바카라 사이트™ scheme pension was funded from the £400,000 remaining in Tom바카라 사이트™s flexi-access drawdown fund.  This amount (£400,000) is deducted from the £450,000 applied by the scheme to provide Samantha바카라 사이트™s dependants바카라 사이트™ scheme pension.

The amount by which Tom바카라 사이트™s UK funds is reduced is £50,000 (£450,000 바카라 사이트“ £400,000).