A
registered pension scheme may borrow an amount up
to the equivalent of 50% of the value of the fund prior to the
borrowing taking place, though this may be restricted by the
Pensions Act. Any amount borrowed previously (from any source) 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 registered pension 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 that 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) |
