The Pensions and Lifetime Savings Association (PLSA) has published additional information on HMRC’s guaranteed minimum pension (GMP) equalisation guidance on pensions tax considerations when equalising benefits for the effects of inequalities in GMPs.
PLSA clarifies the tax treatment of the interest element, particularly in relation to tax due and responsibilities of pension schemes to deduct the tax due at the source, as follows (with HMRC approval):
the interest payment for pensions tax purposes should have the same treatment as the interest payment made in respect of a late payment of pension instalments;
it is likely there will be ‘yearly interest’ for tax purposes, but it is unlikely an obligation to withhold income tax will arise under ITA 2007 s 874, unless the payment relates to s 874(1)(d) (ie where payment is made by any person to another person whose ‘usual place of abode is outside the UK’); and
the interest element should be covered by the personal savings allowance.
The Pensions and Lifetime Savings Association (PLSA) has published additional information on HMRC’s guaranteed minimum pension (GMP) equalisation guidance on pensions tax considerations when equalising benefits for the effects of inequalities in GMPs.
PLSA clarifies the tax treatment of the interest element, particularly in relation to tax due and responsibilities of pension schemes to deduct the tax due at the source, as follows (with HMRC approval):
the interest payment for pensions tax purposes should have the same treatment as the interest payment made in respect of a late payment of pension instalments;
it is likely there will be ‘yearly interest’ for tax purposes, but it is unlikely an obligation to withhold income tax will arise under ITA 2007 s 874, unless the payment relates to s 874(1)(d) (ie where payment is made by any person to another person whose ‘usual place of abode is outside the UK’); and
the interest element should be covered by the personal savings allowance.
