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My clients (husband and wife now retired) were directors / employees of a limited company in the late 1980's and a Pension Scheme was constituted in their names by Trust Deed on 7 June 1988. They were taxed on pre A-day employer contributions and the employment relationship between the members (my clients) and employer has long since ceased.

They understand that (pre- A Day), this scheme was a FURB.

In the early 90's they lent c£70k cash from the scheme to another private limited company ( in 2 similar tranches/ agreements). In the period from April 92, interest on the loans was rolled-up by the private limited company, but not paid (with permission from the Pension Scheme).

In 2011, my clients acquired land in a separate transaction, the purchase price of which was paid direct from the private limited company in full and final settlement of the pension scheme loan principal (c£70k) and most of the interest (c£30k).

Direction Required

1) Interest paid to the pension was paid gross – presumably, the pension scheme should pay tax at trust rates on this income?

2) My clients have effectively drawn down the pension scheme (principal and most of the gross interest earned) to acquire the land referenced above. Can you confirm that my clients (under FURB rules; as now superceded by EFRBS rules?) can withdraw the full lump-sum of the pension principal tax free.

3) Separately, there appears to be some confusion over whether the land should have been registered in my clients own name (meaning an effective near total withdrawal from the FURB arrangement) OR if there would have been significant IHT benefits for leaving the monies in the scheme ?

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1. The requirement to deduct

eastangliantaxadvisor |
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2. If the payment was made

eastangliantaxadvisor |
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