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 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 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.
Authorised payments from a registered pension scheme are pension benefits that comply with the pension rules in FA 2004, s 165, and lump sum payments that comply with the lump sum rules in FA 2004, s 166.
If a pension benefit or a lump sum payment does not comply with these rules, it is an ‘unauthorised member payment’ and is taxable. Unauthorised member payments give rise to a tax charge of up to 55% of the unauthorised payment and in addition a scheme sanction charge is payable by the administrator of the pension scheme that has granted the unauthorised member payment. The rate of the scheme sanction charge is between 15 and 40% of the unauthorised payment and depends on whether or not the unauthorised payments cha
**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
‘Bed and breakfasting’ was the pre-1998 practice of selling shares and repurchasing them the following day. This technique can still be used in a modified form to achieve capital gains tax (CGT) savings for current or future tax years using:•a spouse / civil partner•a self-invested pension plan
The vast majority of companies will have loan relationships and so will need to consider how they are taxed under the loan relationship rules. There are also specific provisions dealing with relevant non-lending relationships and other deemed loan relationships. Companies are generally taxable on
Why defer a gain?An individual’s net taxable income and chargeable gains for the tax year influence the rate of tax payable on their capital gains. See the Introduction to capital gains tax guidance note.Depending on the nature of the asset disposed of, this can result in the individual paying
Companies sometimes provide directors, employees or shareholders with low interest (or interest-free) loans either as part of the reward package or on special occasions to help the individual meet significant expenditure. The employment income implications of these loans are discussed in detail in