Statutory Instrument 1996 No. 2951

The Retirement Benefits Schemes (Indexation of Earnings Cap) Order 1996

---

© Crown Copyright 1996

Statutory Instruments printed from this website are printed under the superintendence and authority of the Controller of HMSO being the Queen's Printer of Acts of Parliament.

The legislation contained on this web site is subject to Crown Copyright protection. It may be reproduced free of charge provided that it is reproduced accurately and that the source and copyright status of the material is made evident to users.

It should be noted that the right to reproduce the text of Statutory Instruments does not extend to the Queen's Printer imprints which should be removed from any copies of the Statutory Instrument which are issued or made available to the public. This includes reproduction of the Statutory Instrument on the Internet and on intranet sites. The Royal Arms may be reproduced only where they are an integral part of the original document.

The text of this Internet version of the Statutory Instrument which is published by the Queen's Printer of Acts of Parliament has been prepared to reflect the text as it was Made. A print version is also available and is published by The Stationery Office Limited as the The Retirement Benefits Schemes (Indexation of Earnings Cap) Order 1996, ISBN 0110633415. The print version may be purchased by clicking here. Braille copies of this Statutory Instrument can also be purchased at the same price as the print edition by contacting TSO Customer Services on 0870 600 5522 or e-mail:customer.services@tso.co.uk.

Further information about the publication of legislation on this website can be found by referring to the Frequently Asked Questions.

To ensure fast access over slow connections, large documents have been segmented into "chunks". Where you see a "continue" button at the bottom of the page of text, this indicates that there is another chunk of text available.

1996 No. 2951

INCOME TAX

The Retirement Benefits Schemes (Indexation of Earnings Cap) Order 1996

The Treasury, in pursuance of section 590C(6) of the Income and Corporation Taxes Act 1988^[1], hereby make the following Order:

    1.    This Order may be cited as the Retirement Benefits Schemes (Indexation of Earnings Cap) Order 1996.

    2.    The figure specified in this Order, which is the figure found for the year of assessment 1997 - 98, for the purposes of section 590C of the Income and Corporation Taxes Act 1988, by virtue of subsections (4) and (5) of that section, is £84,000.

Bowen Wells

Michael Bates

Two of the Lords Commissioners of Her Majesty's Treasury

26th November 1996

Section 590C(1) of the Income and Corporation Taxes Act 1988 ("the Act") provides that in arriving at an employee's final remuneration for the purposes of section 590(3)(a) or (d) of the Act (conditions for approval of retirement benefits schemes), any excess over the permitted maximum figure ("the earnings cap") for the year of assessment in which the employee's participation in the scheme ceases shall be disregarded. Section 590C(3) fixed the earnings cap for the years of assessment 1988 - 89 and 1989 - 90 at £60,000.

Subsections (4) and (5) of section 590C of the Act (as amended by section 107(4) and (5) of the Finance Act 1993) provide for the earnings cap to be increased, for any subsequent year of assessment, in accordance with the percentage increase in the retail prices index for the September preceding that year of assessment over that for the previous September, rounded up to the nearest amount which is a multiple of £600.

The "retail prices index"is defined in section 833(2) of the Act, as amended by paragraph 5 of Schedule 2 to the Transfer of Functions (Economic Statistics) Order 1989 (S.I.1989/992), as the "general index of retail prices (for all items) published by the Central Statistical Office of the Chancellor of the Exchequer". (The Central Statistical Office is now known as the Office for National Statistics.) The retail prices index for the month of September 1995 is 150.6 and for September 1996 153.8 (based on January 1987 as 100) (see Table 3.1 on page T26 of the October 1996 issue (No. 516) of Economic Trends, a publication of the Government Statistical Service).

Section 590C(6) of the Act provides that the Treasury shall in the year of assessment 1989 - 90, and in each subsequent year of assessment, make an order by statutory instrument, specifying the earnings cap for the following year of assessment.

The earnings cap for the year of assessment 1997 - 98 specified by this Order is £84,000.

This figure is also the figure found as the permitted maximum or allowable maximum for 1997 - 98 for the purposes of the following sections of the Act:
  — section 590B (maximum remuneration for the purposes of calculating the aggregate amount of pension and commuted pension in cases of associated employments and connected schemes);

  — section 592 (maximum remuneration for the purposes of calculating amount deductible in respect of a person's contributions paid under relevant statutory schemes);

  — section 594 (maximum remuneration for the purposes of calculating amount deductible in respect of a person's contributions paid under relevant statutory schemes);

  — section 599 (maximum final remuneration for the purposes of calculating amount of excess of commuted entire pension on which tax chargeable);

  — section 640A (maximum net relevant earnings for the purposes of deductions from contributions under approved personal pension arrangements);

  — section 646A (maximum net relevant earnings for such purposes in cases of associated employments);
and for the purposes of paragraph 20 and, by paragraph 22, for the purposes of paragraph 21 of Schedule 6 to the Finance Act 1989 (rules of retirement benefit schemes approved before 27th July 1989).

[1] 1988 c. 1; section 590C was inserted by paragraph 4 of Schedule 6 to the Finance Act (c.26) and amended by section 107(4) and (5) of the Finance Act 1993 (c. 34). back