<b>Tax News:</b> HMRC bears down on pension recycling. By Nichola Ross Martin

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Draft legislation has been published to prevent what is termed by HM Revenue and Customs as 'pension recycling', in the run up to pensions A-day on 6th April 2006.

Pensions recycling, which is also know as staggered vesting, would involve a scheme member withdrawing their tax-free lump sum from their pension fund, as part of a phased retirement under the new rules of pension simplification. The lump sum would then be reinvested back into the member's scheme, which would attract a tax credit on the contribution, and if the scheme member was a higher rate tax payer, further tax relief against the individual's personal tax liability. Repeating this process four times, without rules to stop the practice, would double the individual's pension plot.

The new draft clause of the Finance Bill 2006 in...

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