| [s179] |
Registered pension schemes are authorised to make certain
payments to a person who is, or has been, a
sponsoring employer –
authorised employer payments. Any payment made
outside of these rules is an unauthorised employer payment and
subject to different tax consequences. A loan is not treated as a
scheme administration employer payment.
Section 175(d) of Finance Act 2004 treats authorised employer
loans as authorised employer payments providing that the terms of
section 179 are satisfied.
There are five key tests that a loan must satisfy to qualify
as an authorised employer loan. If a loan fails to meet one or more
of these tests an unauthorised payment charge will apply. The
unauthorised payment is calculated separately for each of the five
key tests but to prevent double charging, if the loan fails on more
than one test the unauthorised payment will be the greatest amount
calculated under each test. In any case the amount of the
unauthorised payment must not exceed the amount of the loan when it
was made.
The five key tests are
These are covered in
RPSM07103060 to
RPSM07103150.
If the
registered pension scheme is not an
occupational pension scheme there will be no
sponsoring employer. Therefore any loans made by the scheme to an
employer who is connected to the member will attract a tax charge
on the member.
| Glossary ( RPSM20000000) |
