| [s179, sch 30] |
Where the interest rate charged by the registered pension scheme is less than the prescribed interest rate calculated using the formula in RPSM07103080 an unauthorised payment charge will be made on the amount owing based on the percentage that the interest rate applied to the loan is less than the official rate using the formula
| 100 – [(IR/PIR) x 100] | x AO | |
| 100 |
Where
IR is the rate of interest payable
PIR is the prescribed rate of interest - see
RPSM07103080
AO is the amount of loan outstanding (excluding interest)
JJ Ltd Registered Pension Scheme makes a loan to JJ Ltd of £50,000. At the time the loan is made the prescribed rate of interest is 5%. The rate of interest payable under the loan agreement is 4.5%
The amount of the unauthorised payment is
| 100 – [(4.5/5) x 100] | x 50,000 = £5,000 | |
| 100 |
JJ Ltd will be liable to an unauthorised payments charge of
£5,000 @ 40%.
JJ Ltd Registered Pension Scheme will be liable to a scheme
sanction charge.
| Glossary ( RPSM20000000) |
