Updating your rules to reflect A-day changes
Produced in partnership with Mark Smith and Ian Malone of Taylor Wessing

The following Pensions practice note produced in partnership with Mark Smith and Ian Malone of Taylor Wessing provides comprehensive and up to date legal information covering:

  • Updating your rules to reflect A-day changes
  • A-day—an overview
  • Transitional provisions
  • Changes to scheme rules following A-day
  • Desirable amendments
  • Pension commencement lump sums
  • Serious ill-health lump sums
  • Trivial commutation lump sums
  • Short-service refund lump sums
  • Provisions relating to dependants’ and children's pensions
  • More...

Updating your rules to reflect A-day changes

THIS PRACTICE NOTE APPLIES ONLY TO OCCUPATIONAL PENSION SCHEMES

A-day—an overview

The Finance Act 2004 (FA 2004), which came into force on 6 April 2006 (A-day), introduced a new, simplified regime for the taxation of pension schemes in the UK.

Prior to A-day, pension schemes needed to be exempt approved by the Inland Revenue, now Her Majesty's Revenue and Customs ( HMRC), in order to benefit from favourable tax treatment. To qualify for and maintain exempt approved status, the maximum benefits that could be paid by schemes were restricted in accordance with limits set by HMRC (the HMRC Limits).

For more information, see The pre A-day pensions tax regime.

The Finance Act 2004 abolished the system of tax approval and instead required pension schemes to be registered with HMRC. It also introduced a single, more flexible, tax regime for pension schemes. The main features are:

  1. pension schemes are no longer required to apply HMRC Limits or the 'earnings cap' to members’ benefits, although the trustees and/or employer could choose to do so (see below under Transitional provisions)

  2. an individual's total pension savings in all registered schemes of which they are members became subject to a 'lifetime allowance' and an 'annual allowance'

  3. the concept of 'authorised payments', which provides for tax charges ranging from 25% to 55% for payments made which

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