Generous tax relief is given on contributions made to a
registered pension scheme in order to provide for
an income for life in retirement.
The new simplified regime therefore imposes various tax
charges where funds within a registered scheme are used for
purposes other than providing retirement benefits. This will apply,
for example, where a member seeks to extract value from the scheme,
perhaps by selling an asset to the scheme for more than it is
worth. Other examples include where a scheme sells an asset to a
member for less than it is worth, or leases an asset to a scheme
member at a low or nil rent.
For example, if the member sells an asset worth £600,000
to the scheme for £1 million, there is value of £400,000
passing out of the scheme to the member.
There is no objection in principle to a registered pension
scheme entering into transactions with a member or a person/company
connected with a member. However, various tax charges are imposed
where any investment transactions entered into by the scheme
(involving assets or liabilities) with people connected to the
scheme are not on arm’s length terms. These rules are
explained in
RPSM07102130 and
RPSM07102140.
| Glossary ( RPSM20000000) |
