(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)
In 1986 changes in the treatment of surpluses in occupational
pension schemes were introduced in order to encourage ways to
eliminate over-funding and to prevent the allowance of excessive
tax reliefs to schemes holding more funds than are necessary to
provide for the benefits already accrued. This was achieved by
legislation for the reporting, valuation and reduction of surpluses
and taxing refunds of surplus monies to employers. The current rate
of the tax charge on refunds of surplus monies to employers is 35%.
Surplus Funds Section (SFS) is responsible for dealing with the 35%
tax charge.
