Finance Bill 2004 published
Well it’s Maundy Thursday, the day Civil Servants are traditionally given the afternoon off to kick off their Easter celebrations. It’s about midday now, so they’re all away, but before going they’ve just slapped the Finance Bill on their public website. My printer can’t have too much toner left in it as Volumes 1 and 2 of the Bill, plus the 40 Schedules are standing in a three-inch pile of paper on the corner of my desk – it’s a hell of a lot to read. It’s taken the best part of the last hour to print!
Obviously we’re not going to be able to summarise the whole thing right away, but a couple of things just jumped right off the page at me while I was watching it all printing out just now.
I was surprised to see in Section 250 (on page 205) that people who elect to go for ‘Enhanced Protection’ from the new tax and recovery charges are liable to fines if at any time before they reach age 75 they fail to notify the Inland Revenue of any ‘relevant benefit accrual’. The fines are not minor either, failure to notify the Revenue of further pension accrual during the ‘Enhanced Protection’ period within 90 days of the ‘pension accrual’ occurring can lead to a fine of up to £3,000. Ouch! A bit of a far cry from the comfortable view that people taking advantage of the enhanced protection status would be able to undo it at any time by simply rejoining the pension system. I always thought there’d be a bit more to it than that to be honest.
What’s happening here, and I think will turn out to be a bit of a theme running through all this new stuff, is that the onus appears to be more and more towards individual responsibility and accountability. So people will need to approach their pension decisions in the future with their eyes wide open. As compelling an argument for seeking advice on any pension-related matters as we’ll ever hear, that’s for sure. Complex pension decisions made without advice and ongoing monitoring seems like it’ll be a bit on the foolhardy side to me.
The first thing I thought to look up when the £3,000 fine thing leapt off the page at me was what will constitute ‘relevant benefit accrual’, particularly in a money-purchase pension arrangement, where I assume it means ‘contributions paid in’. Well, I was right, it does mean that, but what does ‘contribution’ mean in this context. What if it means a ‘contribution’ in the form of a rebate from the State Second Pension Scheme (S2P, or SERPS as was) in the form of a rebate. Could someone who elects for enhanced protection end up with a three grand fine because they forgot to contract back in? Well, you’ll be pleased to know they won’t. The relevant schedule excludes rebates from being classed as contributions in this respect, even though they are classed as contributions in others.
Whew! But you get an idea of what a nightmare it’s going to be just trawling through this stuff and working out what’s what. We’re going to get on with that right now and will start letting you know what we think about it all after the Easter break. But, if any of you are keen on downloading your own copy of the Finance Bill 2004 yourself, you can get to the relevant part of the UK Parliament website by simply clicking the link below.
Have a nice Easter, and we’ll see you when you’re older……
8 April 2004
The content of this BeeLine is based on The Finance Bill issued on 8 April 2004.