Pensions Update No. 150, 29 March 2005
Sets out the Revenue’s position on certain practices that are intended to increase a person’s personal lifetime allowance. The following example is given: a member leaves his scheme and transfers benefits to a personal pension scheme; he then sets up a new scheme under Section 590 Income and Corporation Taxes Act 1988 (to which the Revenue must give mandatory approval); the Section 591 scheme (normal discretionary approval) then winds up, and the Section 590 scheme provides additional benefits, back-funded for the period of service which had already been fully funded in the Section 591 scheme. The effect of this is to get around the benefits limits approved under normal Revenue discretionary practice. The Revenue may view this type of activity as a tax avoidance scheme and call into question the approval of the original Section 591 scheme.
Pensions Update No. 151, 29 March 2005
Explains the revised procedures for claiming tax relief on members’ contributions to overseas pension schemes, known as corresponding relief, including the completion of form PS 3008
Pensions Update No. 152, 29 March 2005
Sets out amendments to overseas transfer practice. Currently, all contracted-out rights such as GMPs and protected rights are not subject to Revenue requirements because the DWP Regulations apply instead. From 6 April 2005, overseas transfers of contracted-out rights also had to meet Revenue requirements, in particular that the transferee must have left the UK on a permanent basis with no intention of returning to the UK to work or to retire. The change in practice coincides with the issue of the Contracting-out, Protected Rights and Safeguarded Rights (Transfer Payment) Amendment Regulations 2005.
Also sets out the revised procedure for making such transfers.
Pensions Update No. 153, 29 March 2005
Sets out the increase in the level of the permitted maximum, or earnings cap, for members joining schemes from June 1989, to £105,600. In addition the “1987 permitted maximum”, relevant for calculating final remuneration, has also been increased from £100,000 to £105,600.
Pensions Update No. 154, 29 July 2005
Outlines members’ ability to rely on primary protection or enhanced protection. The Revenue acknowledge that they are aware that certain individuals may be establishing arrangements that are intended to inflate members’ relevant pre-commencement pension rights (primary protection) or relevant existing arrangements (enhanced protection). Such arrangements are viewed by the Revenue as an abuse of such protection and amount to avoidance of the lifetime allowance charge.
Gives example of artificial inflation of pension rights under a small self-administered scheme (SSAS). However, the Update states that “there is no objection to individuals legitimately maximising their benefits in the run-up to A Day, where they able to do so”. Where the action is considered to be an abuse, approval may be jeopardised.
Pensions Update No. 155, 16 September 2005
Confirms that actuarial valuation reports (AVRs) will not need to be submitted to the Revenue if due after 5 April 2006. This means that no AVR will need to be submitted in the case of a small self-administered scheme (SSAS) if it has an “as at” date of on or after 6 April 2005. In the case of a large self-administered scheme an AVR will not be required to be submitted if it has an “as at” date on or after 6 April 2004.
In the case of a SSAS where no member has a notionally earmarked share of the fund in excess of £750,000, an AVR will not need to be submitted in the period up to A-Day. The Update goes on to acknowledge that a function of the AVR is to justify future contributions. The Revenue expects schemes to make contributions which are justified in accordance with the current funding guidelines and to retain evidence of that justification. The Revenue reserves the right to inspect the justification.
States that where scheme rules are amended to reflect the easement contained in the Update the Revenue would not want to see copies of the amendment.
Pensions Update No. 156, 26 October 2005
Confirms that amendments to schemes which are effective after 5 April 2006 should not be submitted to Audit & Pension Schemes Services (APSS);
Provides that scheme rules may be amended before 6 April 2006 to cover authorised payments which are not currently allowed under the scheme rules provided such amendments are not effective before that date;
Confirms amending scheme rules will not disapply the proposed Pension Schemes (Modification of Rules of Existing Schemes) Regulations unless the amendment specifically states that the regulations will not apply and amendments made before 6 April 2006 but effective after 5 April 2006 will not prejudice existing approval;
Changes effective before 6 April 2006 must continue to be submitted to the APSS.
Pensions Update No. 157, 12 December 2005
Sets out processes to allow scheme administrators to bring up to date all outstanding issues surrounding form 1(SF) (Chargeable events) for the tax year 2004-5 and earlier.
Pensions Update No.158, 14 December 2005
Explains the actions the Revenue will take in relation to pre-A Day avoidance.
This article first appeared in our Pensions update January 2006. To view this publication please click here to download it as a pdf in a new window.
For further information please contact:
Kevin Pither, Documentation Consultant at kevin.pither@cms-cmck.com
