Pensions

Pensions

This subtopic provides an overview of the UK pension system for the Private Client practitioner, including regulation, governance, taxation, lifetime planning, the treatment of pension funds on death and overseas aspects of pension schemes.

An introduction to the UK pension systems for the private client practitioner—how pension schemes are governed and the key regulatory bodies

In the UK, the overwhelming majority of pension schemes in the private sector, ie both occupational and personal pension schemes, are established under trust and are therefore subject to trust law. The trustees appointed under the trust deed are required to act in accordance with the trust deed and rules and overriding legislation governing pension schemes. Probably the most important tenet of trust law is that the trustees must act in the best interests of the members of the pension scheme.

In the public sector, pension schemes are established mainly by statute and are subject to their scheme rules and overriding legislation, but some are established under trust and thus subject to trust law and are therefore required to act in accordance with the trust deed and rules as well as any overriding legislation.

For

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Latest Private Client News

Private Client weekly highlights—3 July 2025

This week’s edition of Private Client weekly highlights includes: (1) the case of David Peace, in which the High Court confirmed that the beneficiaries could agree to waive the forfeiture rule following Mr Peace’s assisted death; (2) the Court of Protection case of Neath Port Talbot County Borough Council v A, in which the court found that an elderly dementia sufferer was moved from Spain to Wales unlawfully and continued to have habitual residence in Spain; (3) Mudan v Revenue and Customs Commissioners, in which the Court of Appeal confirmed the FTT and UT decisions that property requiring significant renovations should still be treated as residential property for SDLT purposes; (4) Khatun v Hasan, in which the Chancery Division held that the defendants failed to establish on the balance of probabilities that the disputed Will was genuine; and (5) Haworth v HMRC, in which The Court of Appeal dismissed the taxpayers’ appeal and upheld the decisions of the FTT and UT that the place of effective management of certain family trusts was in the UK, and not Mauritius.

ICAEW reports HMCTS advances in probate processing and digital enhancements

The Institute of Chartered Accountants in England and Wales (ICAEW) reports on HM Courts and Tribunals Service (HMCTS) probate service developments as of June 2025. HMCTS data for April 2025 indicates that although caseloads have stabilised at approximately 35,000 cases as of 31 May 2025, digital grant applications are now processed in 4.9 weeks compared to 12.3 weeks for paper applications. Service enhancements include improved case ownership by support officers, the continued availability of surgery appointments for complex cases, streamlined phone support through merged lines, and targeted improvements in the scanning process to reduce document errors. The update also notes recent Law Commission recommendations from May 2025 proposing the acceptance of electronic Wills and signatures—however, implementation remains the responsibility of the Ministry of Justice policy teams, and HMCTS is monitoring these potential changes.

Question of the week: An interim distribution was made from a deceased's estate to A (30%), B (30%), and C (30%), and D (10%). A, B, and C now wish to keep the deceased's house, which may involve repayment of some or all of the interim distribution. B also wants to buy out C at the same time. A is the trustee of a discretionary trust. D consents to the proposal. What are the SDLT implications of the proposal? Are there any other tax consequences?

This Q&A considers whether, if an interim distribution was made from a deceased's estate to A (30%), B (30%), and C (30%), and D (10%). A, B, and C now wish to keep the deceased's house, which may involve repayment of some or all of the interim distribution. B also wants to buy out C at the same time. A is the trustee of a discretionary trust. D consents to the proposal. What are the SDLT implications of the proposal and if there are any other tax consequences.

Upper Tribunal rules on application of purpose tests in the context of Transactions in Securities regime (Osmond and Allen v HMRC)

Tax analysis: In Osmond and Allen v HMRC, the Upper Tribunal (UT) allowed the taxpayers’ appeal, holding that they did not necessarily have a main purpose of obtaining ‘an income tax advantage’ under the Transactions in Securities (TIS) regime simply by virtue of having a main purpose of obtaining the benefit of Enterprise Investment Scheme (EIS) disposal relief. Obtaining EIS relief from capital gains tax created an ‘income tax advantage’ for the purposes of section 687 of the Income Tax Act 2007 (ITA 2007). The First-tier Tax Tribunal (FTT) found as a matter of fact that the taxpayers did not have the subjective purpose of obtaining this income tax advantage. Surprisingly, however, the FTT held that because they had a main purpose of obtaining the EIS benefit (notably, a capital gains tax), it followed that they had a main purpose of obtaining an income tax advantage. Concluding that the FTT had erred as a matter of law, the UT held that the taxpayers’ desire to crystallise their EIS disposal relief did not mean that they necessarily had a main purpose of obtaining an income tax advantage. Written by Susanna Breslin, barrister at 11 New Square.