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AIA

A small concession

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13th Jul 2009
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Those affected by the pensions forestalling arrangements this year and next have been given a small concession.

The legislation as originally drafted in the Finance Bill Schedule 35 was constructed so that only contributions which are paid under an agreement which pre-dates budget day 2009, and under which are paid at least quarterly would qualify as regular contributions for the purposes of the pensions forestalling legislation. The importance of this is that the regular contributions are regarded as “protected” under the new rules, and establish a base level of contributions which can continue to be made by affected individuals without incurring a tax charge during 2009/10 and 2010/11.

Tax representative bodies including the CIOT and the Tax Faculty of ICAEW have been lobbying hard to get some recognition of a base level of contributions for those who contribute annually, changing provider regularly. These individuals have no existing agreement, as a new agreement is normally made every time they make a contribution, and without quarterly contributions no protected input amount can be established.

The Lords Bill includes amendments from the report stage of the Bill and now includes a new paragraph 17 in Schedule 35. This is entitled “Increased special annual allowance” and permits the mean of any infrequent money purchase contributions to be taken into account as follows.

  • If the mean of the money purchase contributions made in the tax years 2006/07, 2007/08 and 2008/09 is more than £20,000 but less than £30,000, then the special annual allowance is increased to the mean of the contributions made in the three years.
  • If the mean exceeds £30,000 then the special annual allowance is £30,000. This allows those affected by the legislation to contribute up to £30,000 in 2009/10 and 2010/11 without incurring a tax charge.
  • If the mean is less than £20,000 the special annual allowance remains £20,000 allowing them to contribute £20,000 in each of 2009/10 and 2010/11 without incurring a tax charge

HMRC has also released some simple Q and A’s on various aspects of the forestalling legislation.
 

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By User deleted
13th Jul 2009 16:08

A small concession
How generous? I am overwhelmed by our MP's kindness....
I guess it will help some of our clients but how complicated they like to make things...

More and More people will need accountants/tax advisers to deal with all these twists and turns in the legislation...

I suppose it is good for me and will make my job more secure

I despair of this bureaucratic society ...

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
14th Jul 2009 15:07

I agree!

I had a bit of a rant about this last week - see my Editor's blog if you haven't already!

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