# Finance Act 2004, Paragraph 18


(1) This paragraph applies in the case of an individual where—
(a) before 6th April 2006, the individual has acquired rights under a pension scheme within paragraph 1(1) by virtue of having become entitled to a pension credit,
(b) notice of intention to rely on this paragraph is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs, and
(c) paragraph 7 (primary protection) does not apply in relation to the individual.
(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were the individual’s enhanced lump sum and death benefit allowance (as determined under paragraph 20H of this Schedule).
(3) For the purposes of paragraph 20H a lump sum and death benefit allowance enhancement factor, determined in accordance with sub-paragraphs (4) to (6) of this paragraph, operates in relation to the individual.
(4) The lump sum and death benefit allowance enhancement factor is the pre-commencement pension credit factor calculated under sub-paragraph (5).
(5) The pre-commencement pension credit factor is—
A£1,500,000where A is the amount which is the appropriate amount for the purposes of section 29(1) of WRPA 1999 or Article 26(1) of WRP(NI)O 1999 in relation to the pension credit, as increased by the percentage specified in sub-paragraph (6).
(6) The percentage is the percentage by which the retail prices index for April 2006 is greater than that for the month in which the rights were acquired.
(7) Where this paragraph applies in the case of an individual, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if ... the amount given by the formula in sub-paragraph (8) is less than 25% of the lump sum.
(8) The formula is—
A-B4where—
A is—
(a)in the case of an individual in relation to whom a relevant protection provision applies, the individual’s protected lump sum and death benefit allowance (as specified in that provision for the purposes of paragraph 20H);
(b)in any other case, £1,073,100;
B is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.
(9) In this paragraph “relevant protection provision” has the meaning given in paragraph 20H(3).

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Source: https://www.legislation.gov.uk/ukpga/2004/12/schedule/36/paragraph/18 (the official version)
Page: https://openlegislation.uk/finance-act-2004/schedule-36/paragraph-18
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.