An unauthorised payment will arise when an investment-regulated
pension scheme uses funds to acquire, improve, convert or adapt
taxable property. This is designed to remove the tax relief granted
on those funds when they are invested in taxable property.
If taxable property is gifted to the scheme no acquisition
tax charges apply. This is because there has been no tax relief
given in relation to that acquisition. If however the gift is
treated as a tax relieved contribution that amount will incur
acquisition tax charges.
If an investment-regulated pension scheme holds an interest
in property which is not taxable property and this then becomes
taxable property without any conversion or adaptation works the
pension scheme is treated as acquiring an interest in taxable
property.
This will most commonly happen due to a change in occupation
or in the use made of the property.
Example,
the pension scheme may hold residential property that is let out to a person who is required to occupy it as a condition of his employment. If subsequently the property is let out to a person who is not in that position it will be deemed to have been acquired at that point and an unauthorised payments charge will arise.
A scheme sanction charge will arise when an investment-regulated
pension scheme receives income or is deemed to receive income from
taxable property.
A scheme sanction charge will arise when an
investment-regulated pension scheme disposes of one or more assets
consisting of interests in taxable property that give rise to
chargeable gains.
| Glossary ( RPSM20000000) |
