Pensions Tax Simplification Newsletter No 3
You’ll remember from BeeLines earlier in the year that the HM Revenue & Customs types (nee Inland Revenue) have set out on a mission to write down all of the new post A-Day pension tax laws and rules in one place. That one place is their website and its target audience is “pension providers, employers and savers”.
This is obviously a big job and given the broad church it’s aimed at it will need to be written in an accessible way. That, of course, is something that’s not that easy to do. The whole thing is best described as being ‘a work in progress’ I suppose, but as regular BeeHive users will be aware there’s a fair bit for them to write about.
The way they’ve chosen to go about this daunting task is to publish a constantly updated Newsletter. They’ve had two goes at it so far and have now just published their third newsletter, creatively entitled ‘Pensions Tax Simplification Newsletter No 3’ and it kicks off by saying that if the reader is a pension provider or an employer then they should ensure that the appropriate people in their organisation read it. Now, you know when you read things sometimes and the author seems to be speaking directly to you? It happens in some novels and stuff, doesn’t it? Well it happened to me when I read that sentence in this newsletter, like I felt it was directly aimed at me and was asking me to let BeeHive readers know all about it. I guess that makes you ‘appropriate people’, and the BeeHive an organisation. So that’s nice all round.
Anyway the stuff is being put onto the site in a sort of random and piecemeal fashion. The first newsletter dealt with a lot of the issues around primary and enhanced protection for Fat Cats and I covered it in a BeeLine back in July called The forms for Enhanced and Primary Protection and you can get a copy of that if you like by hitting the link. The second newsletter covered all things to do with the registration of pension schemes on and after A-Day and was again covered by a BeeLine at the time entitled Return to the Nightmare on Tax-Free Cash Street. You can refresh your memory on that too if you like.
This third newsletter covers the international aspects of tax simplification including bits on transferring pensions to or from the UK; changes to the process for pension schemes applying for approval; some news on additional chapters on ‘Pension Age’ and ‘Scheme Registration’ that have been added to the online Registered Pension Scheme Manual (the Glossary’s also been updated you’ll be pleased to hear); and, some new policy updates including stuff on the consultation on tax-free cash lump sums from money-purchase schemes.
On that last point the good news is that the tax-free cash provided by money-purchase schemes after A-Day will be standardised at 25% of the accumulated fund, but this will not change the way that pension benefits will be ‘valued’ using a factor of 20:1 for the purposes of comparison with the ‘Lifetime Allowance’ (£1.5 million in 2006). What this means is the provisions of the 2004 Finance Act will have to be amended and this will be done in the 2006 Finance Act (it’s the next bus in the queue), but it will all be effective from A-Day anyway.
Right, as I’ve said before I think this ongoing build of an online resource by the HMRC is the nearest thing to a working manual we’re going to get this side of A-Day (or the other side probably), so everyone working in pensions should make sure they keep up to date with it as it is put together. To make that a bit easier for you I’ve listed a load of links here some of which will take you directly to the new bits. Don’t ever say I don’t look after you! Mollycoddle you even…
1 September 2005
This document is based on Scottish Life's current understanding of the Finance Act 2004. This may be affected by future changes in legislation and the individual circumstances of the investor. Independent advice must be sought regarding the effect on a specific individual or scheme.
Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.