HMRC has published its draft guidance on the 'Disguised Remuneration' legislation included in the Finance Act 2011. For our e-bulletin which considers the Disguised Remuneration FAQs, click here.
We shall be issuing a full e-bulletin on the draft guidance in due course. In the interim, click here for the draft guidance here.
HMRC Pension schemes newsletter 48
HMRC has published issue 48 of its pension schemes newsletters, click here to access. HMRC has already issued guidance on other aspects of the Finance Act 2011 including:
- Annual Allowance guidance.
- Lifetime Allowance guidance.
- Age 75 guidance.
- Paying your annual allowance charge from your pensions saving – Scheme administrator guidance.
Matters covered in the newsletter include:
- The legislative changes required to implement the Government's pensions and tax reforms for the removal of the effective requirement to purchase an annuity by age 75 and the restriction of pensions tax relief have been finalised. In addition to the legislation in the Finance Act 2011, eight sets of regulations and one Treasury Order have also been laid to support these pension tax reforms. These statutory instruments came into force on 11 August 2011.
- The DWP has also made regulations, The Occupational Pension Schemes (Assignment, Forfeiture, Bankruptcy etc.) (Amendment) Regulations 2011, which remove a legislative barrier which would otherwise prevent a consequential reduction to a scheme member's benefits for the purpose of paying an annual allowance tax charge on behalf of that member. Sections 68-71 of the Finance Act 2011 concern changes relating to NEST and other qualifying schemes when automatic enrolment is introduced from 2012. This means that all the legislation for UK registered pension schemes relating to the pension tax reform is now in force.
- The application form for fixed protection of the lifetime allowance (APSS227) is now available from the DWP website. Completed applications will need to be received by HMRC on or before 5 April 2012 (forms cannot be filed online). Individuals who give up enhanced protection to benefit from fixed protection, must also ensure that HMRC receive their separate notice giving up enhanced protection no later than 5 April 2012.
- Administrators have to report to HMRC any flexible drawdown payments made within each tax year. For flexible drawdown payments made in the tax years from 2012-2013 onwards, this must be done online (via the Event Report). For flexible drawdown payments made in the tax year 2011-2012 administrators have to be submit the information in writing. Form APSS315 has been produced to make this easier for administrators.
- As part of the pension benefit reforms in the Finance Act 2011, a change of tax rate from 35% to 55% was introduced for the special lump death benefits charge (for deaths occurring from 6 April 2011 onwards) under section 206 Finance Act 2006 and a new income tax charge (the serious ill-health lump sum charge) at the rate of 55% was introduced under section 205A Finance Act 2006. This tax charge applies to lump sum payments made in cases of serious ill-health to a member who has reached the age of 75. Administrators must account for each of these tax charges using the online Accounting for Tax ('AFT') form. Where a serious ill-health lump sum is paid before the member has reached the age of 75 it remains not liable to income tax but the amount of the lump sum counts towards the member's lifetime allowance.