PSI6.4.24 - Total Benefits on Retirement at
Normal Retirement Age: Pensionable Remuneration and Final
Remuneration - Large Salary Increases Shortly before
Retirement
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(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
You should look out for cases where the employee's salary is
substantially increased shortly before retirement and benefits are
to be based on this higher figure. Let the Divisional Manager see
the case to decide whether to take any action. Where a controlling
director is involved we can tell the company's Schedule D or CT
District what has happened and ask whether the increased salary is
an acceptable deduction from profits for tax purposes. The memo to
the Inspector should explain what the consequences will be if the
remuneration is successfully challenged. These are:
- the benefits will be based on a
correspondingly reduced level of remuneration, and
- The employer's contributions to provide the
benefits may be reduced (such last minute increases are sometimes
coupled with special contributions to fund the additional
benefits).
Contact: | Date issued: | Next review:
