Simplified pensions tax rules


Technical changes to rules for lump sum payment and non-cash benefits

The notes accompanying the PBR include details on a number of technical changes that are to be made to the new simplified tax regime for pension schemes. Two of the changes affect winding-up lump sum payments and trivial commutation lump sum payments. Although the payment of such lump sum payments has PAYE implications, the proposed technical changes do not appear to have any direct effect on the taxation by employers.

To help to speed up the winding up of schemes, a change is being made to the winding-up lump sum rules so that the conditions that need to be met by the employer apply only to the member's current employer at the time the winding-up lump sum is paid and not to any previous employer.

Over the coming months, HMRC will be discussing concerns raised by the pensions industry over the administration involved in the checks that have to be made when paying trivial commutation lump sums.

Discussions are also planned with interested parties on concerns raised over the tax charge and the administrative burden involved in the non-cash benefits that former employers provide to pensioners. The Government will review:

• how the current £;100 lower limit applies to low value benefits across different categories of expenditure for less well-off pensioners, and
  
  
• how the tax treatment for non-cash benefits provided to pensioners compares to the treatment of employee benefits.

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