As we reported when the 2008 Finance Bill appeared, Sch 29 para 1(2) introduces a new subsection (2) into s.164 FA 2004 (Authorised member payments). This new subsection widens the existing regulation-making power, in what becomes s.164(1)(f), to treat certain payments prescribed in regulations as authorised member payments by providing a power for such regulations also to:

• treat all or part of those payments as pension income under Part 9 of ITEPA 2003 or as authorised lump sums;
• provide for all or part of the payments to be subject to tax as short service refund lump sums (Sch 29 para 5 FA 2004) or as lump sum death benefits (Sch 29 Part 2);
• provide that the lifetime allowance charges under s.214 may apply in respect of the payments; or
• have retrospective effect where this does not increase any person’s tax liability.

This is the solution HMRC has devised to partially address, for the time being at least, the serious problem of the large volume of unauthorised payments created by the current legislation (see Aries article). HMRC promised new regulations to ensure certain payments are treated as authorised payments when:

there is an overpayment of an ongoing pension;
• a pension continues to be paid after the member has died;
• certain payments are made after the member has died where payment before death was not possible; and
• certain trivial commutation payments are made to allow "stranded" pots to be commuted as lump sums and to allow a de minimis limit for commutation payments by occupational schemes.

The last of these in particular was welcomed by the industry; but in the weeks that have followed many have been asking when shall registered pension schemes actually be permitted to commute trivial pensions on the new basis?

Today HMRC responded with the following announcement:

"We have been asked about the interaction of new regulation-making powers included in the Finance Bill and any regulations HM Revenue & Customs (HMRC) are planning to make using those powers. The regulation-making powers included in the Finance Bill do not become law until the Bill has received Royal Assent. This process is normally completed by mid-July. Any regulations using the powers within the Finance Act can not be laid before Royal Assent; when these will be laid will depend, in part, on the number and nature of representations made. The proposed commencement date will normally be included in each draft. Some regulations may be retrospective and so will ultimately have effect from a time even before they are made and laid."