registered pension scheme may borrow an amount up
to the equivalent of 50% of the net market value of the fund prior
to the borrowing taking place. Any amount borrowed previously must
also be taken into account when calculating the 50% limit.
The value of the fund for this purpose would not include the investment that is to be purchased with the borrowing.
If a scheme borrows more than 50% of the net fund value, the excess amount of the loan that is above the 50% limit will be subject to the scheme sanction charge of 40%. This tax is payable by the scheme administrator.
The 50% limit is the total amount which a registered pension scheme can borrow; there is no separate limit to fund a liability for VAT, for example.
For further information on borrowing see RPSM07104010.
|Glossary ( RPSM20000000)|