| s179, sch 30 |
Section 179 (1)(a) of Finance Act 2004 restricts the amount of a
loan which can be made to a sponsoring employer to 50% of the
aggregate of the amount of the cash sums held and the net market
value of the assets of the
registered pension scheme valued immediately
before the loan is made. These restrictions are necessary because
although such loans provide a useful source of business funding,
there may be liquidity problems for the scheme if there is a sudden
requirement to provide scheme benefits. It may also not be prudent
to lend scheme funds to one company.
Where, at the time the loan is made it is found to exceed the
50% limit, an unauthorised payments tax charge will be applied to
the additional amount - see
RPSM07103130.
The 50% limit is applied as at the date the money is loaned
to the employer. The loan will not be re-tested at a later date if
there is a drop in value of the scheme assets unless the terms of
the loan are changed.
Any further advances made after the original loan was made
are to be treated as a new loan made on the date the further
advance was made.
| Glossary ( RPSM20000000) |
