In December the Government will publish copies of draft legislation to be included in the Finance Bill 2013, along with draft explanatory notes, tax information and impact notes for the legislative measures. The draft clauses will be open for consultation until 6 February 2013, and many of them will affect pensions. The key points to note from the March 2012 Budget Report are:
- HMRC will be given a regulation making power so that it can amend the fixed protection rules to prevent members inadvertently losing fixed protection in certain circumstances. One concern has been that, where trustees provide discretionary increases in excess of (i) those set out under their rules and (ii) the HMRC threshold of 5%, then HMRC will regard this as an increase determined by the trustees. This fixed protection may result in a loss of fixed protection.
- Regulations will be introduced in order to improve the annual "scheme pays" mechanism for tax payments due where the annual allowance is exceeded. Currently the rules are complicated and do not work as was intended. The new regulations will correct this issue, and will have retrospective effect.
- Arrangements where an employer pays a pension contribution into a registered pension scheme for an employee's spouse or family member will not obtain tax or NIC advantages for the employee or the employer.
- As contracting out through defined contribution pension schemes was abolished from 6 April 2012, legislation will be amended to remove references to tax relief on employee contracted-out contributions to defined contribution pension schemes.
- Legislation will be amended in order to align the tax rules on the payment of occupational pension schemes bridging pensions with forthcoming changes to the state pension age.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
