HMRC 'Buries Away' Pension Law
HM Revenue & Customs has published draft legislation for asset-backed pension contributions allowing tax relief in certain circumstances ‘in a surprise move’, according to PwC.
It came at the same time as the chancellor’s autumn statement and takes effect immediately.
HMRC says legislation has been introduced to ensure that the amount of tax relief given to employers using asset-backed contribution (ABC) arrangements reflects accurately the total amount of payments the employer makes to the pension scheme directly or through a special purpose vehicle such as a partnership.
An HMRC spokesman admitted it was ‘buried away’ in other legislation.
Alex Henderson, tax partner at PwC, said: ‘With stock market deficits and troublesome pension deficits, this legislation could have a huge effect on how companies manage pensions. The use of corporate assets instead of cash to fund pension schemes is an increasingly popular way for companies to improve pension scheme security while easing cashflow.’
He added: ‘the specific legislation brought in yesterday was in line with our expectations but its immediate introduction was unexpected. This could cause problems for employers who already have one of these arrangements who will still need to assess whether they will still get tax relief.’