Pensions Tax Simplification
Newsletter No 5
October 2005
Contents
1. Introduction
2. Where to find Simplification Information
3. Latest news
a) Registered Pensions Schemes Manual
b) Policy
c) GAD Consultation Tables
d) Pensions Industry Working Group Minutes
e) Pensions Update No 156
f) Draft Forms
g) Preparing for A-Day workshop material
1. Introduction
This is the fifth edition of the Pensions Tax Simplification Newsletter. The Newsletter keeps pension providers, employers and savers informed of new developments before A-Day. If you are a pension provider or an employer, please make sure that the appropriate people in your organisation read it.
2. Where to find Simplification information
As there is so much information available on the HMRC website here are some quick links to the main areas of interest:
3. Latest news
a) Registered Pension Scheme Manual
Following requests from the pensions industry we have made some of the technical chapters of the manual available in a printable version . We plan to publish the remaining technical chapters in a printable version shortly. No decision has been made yet about the long term future of the pdf (printable)chapters. We intend to review the maintenance of the printable version of the technical chapters closer to A-Day.
b) Policy
Further Regulations were published on 21 October 2005.
c) GAD (Government Actuary's Department) Consultation Tables
HMRC will publish draft versions of new comparative tables to determine the annual level of maximum pension that can be drawn from an unsecured or alternatively secured pension fund on 4th November 2005. A limited consultation on the underlying assumptions informing the contents of these tables will then take place. The final tables will be published in time for the introduction of the new simplified regime on 6 April 2006.
d) Pensions Industry Working Group (PIWG)
Newsletter No 2 explained the role of the Pensions Industry Working Group. The minutes from the September 21st meeting have now been published and are available. The minutes from future meetings will also be published here once they have been agreed.
e) Pensions Update No 156
This Update (PDF 18K) has now been published and covers the requirement to submit amendments to rules, trust deeds or contracts where the effective date of change is after 5 April 2006.
f) Draft forms
At the time of going to press we will have just published or will shortly be publishing the latest drafts of the main forms that were first made available in April. These will appear on the “What’s New”.
g) Preparing for A Day workshop material
We have now held the majority of the Preparing for A Day workshops and many of you and your colleagues will have attended these. The powerpoint presentations together with speaking notes will become available on the Internet in the next month. We shall advertise publication on the “What’s New”.
4.Technical point
In our September Newsletter we confirmed that for the purposes of tax relief for employers’ contributions, the new rules in sections 196-200 Finance Act 2004 apply to accounting periods (or, for unincorporated businesses, periods of account) ending on or after 6 April 2006. So, for example, an accounting period that commenced on 1 July 2005 and will end on 30 June 2006 will be within the new rules.
This announcement has been mis-reported in the press as meaning that the annual allowance will apply to contributions made before A Day. This is not the case. The article in our September Newsletter dealt with tax relief for employer contributions only, and not with the annual allowance.
The annual allowance provisions in sections 227-238 Finance Act 2004 have no effect before 6 April 2006. The first “pension input period” begins on the first date after 5 April 2006 when a contribution is made in respect of the individual (or, for defined benefits or cash balance arrangements, the first date after 5 April 2006 when rights accrue to the individual). So a contribution made before 6 April 2006 cannot count towards an individual’s annual allowance or be subject to an annual allowance charge.
The different treatment for the annual allowance and employer contribution relief occurs because the annual allowance is an entirely new concept that does not exist before 6 April 2006, whilst relief for employers’ contributions does exist before that date. So for an employer contribution we need to establish whether it falls within the old/pre A Day rules or the new/post A Day rules. This issue is determined by rules in ICTA 1988 with the effect that the new rules apply to all employer contributions paid in accounting periods ending on or after 6 April 2006.
5. Contact us
If you have any questions about anything to do with Pension Tax Simplification please contact our helpline number 0115 974 1600 or 0115 974 1777 (9.00 to 17.00 Monday to Friday)
If you have any comments about our newsletters then please contact:
Paul Cottis
Audit & Pension Schemes Services
Yorke House
Castle Meadow Road
Nottingham
NG2 1BG
0115 974 1692
