The following Employment Tax guidance note Produced by Tolley in association with John Hayward provides comprehensive and up to date tax information covering:
The purpose of a registered pension scheme is to provide retirement and death benefits for its members, and the financial dependants of members. The UK pensions taxation system is predicated upon tax privileges through relief on contributions when made, a tax-privileged pension fund which grows largely free of taxation and benefits on retirement which are subject to taxation with the exception of the pension commencement lump sum (PCLS) which is (currently) free from UK income tax.
A registered pension scheme is authorised to pay out benefits to or in respect of a member in two forms: as a pension or as a lump sum (or of course both).The legislation lists all the authorised forms of pensions and lump sum payments, the circumstances in which they can be paid, and sets out the conditions and restrictions that these payments must meet or follow in order for them to be authorised.
The legislation authorises a registered pension scheme to provide lump sum payments that comply with the lump sum rules in FA 2004, s 166. Authorised member payments are frequently chargeable to tax on the recipient.
If a pension benefit or a lump sum payment does not comply with the above rules, it is an ‘unauthorised member payment’ and any such payments made are taxable. Unauthorised member payments (that is to say payments made outside of these rules) give rise to a tax charge of up to 55% of the unauthorised payment and in addition, a scheme sanction charge may be payable by the administrator of the pension scheme that has granted the unauthorised member payment. This charge is 15% of the payment made or deemed to have been made.
As set out above, two of the forms of authorised member payments permitted are:
pensions permitted by the pension rules or pension death benefit rules
lump sums permitted by the lump sum
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
If the taxpayer does not have sufficient information to enable them to complete the tax return in the time allowed, they should include either a best estimate or a provisional figure. The taxpayer should not either leave a box blank or enter ‘details to follow’ as HMRC will regard this as an
Duty to prepare trust accountsUnder the laws of England and Wales, trustees have a duty to account to the beneficiaries for their financial administration of the trust fund. This duty is established by a substantial body of case law. In the case of Armitage v Nurse, Millett LJ stated:“Every
The detailed definition of a close company is set out below but in summary the rules are targeted at those companies where the owners can manipulate the activities of the company to influence their own tax position. Therefore, broadly speaking, most owner-managed or private family businesses will be
Close companies ― overviewMeaning of close companyThe tax rules for close companies are intended to address those companies that are closely controlled (ie by the owners and their families) and therefore could be used to manipulate the tax position of its activities and its investors. Therefore,