REGULATORY EXPERTISE
Helen Shepherd , Pensions Technical Adviser
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When
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Directors
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What
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Commercial
is someone exempt from being automatically enrolled into a workplace pension scheme ?
are exempt from AE if they do not have a contract of employment . A contract of employment doesn ’ t have to be in writing and could instead be verbal or implied . However , if there is no written contract or any other evidence of an intention to create an employee / worker relationship with the company and the director , then the Pensions Regulator will not seek to argue that there is an implied contract . One-person companies are also exempt , regardless of whether they have an employment contract . Whilst these individuals are usually classed as workers , there are other scenarios where the employer can choose to exempt them . These include directors who do have a contract of employment , someone working their notice period , partners in an LLP ( not salaried members ), individuals who have Lifetime Allowance protection such as Enhanced or Fixed Protection , or those who have ceased active membership of the scheme within the past 12 months .
are the main advantages of buying the commercial property that the business trades from through the business owner ’ s pension scheme ? property can be purchased via a SIPP or SSAS and it is relatively common for them to do so . The reasons why this is a popular choice is because the increase in value of the property would not be subject to CGT when the pension scheme sells the property , younger members of the scheme can take over the property holding leaving older members free to retire allowing for the premises to remain in the pension scheme over the longer term , the rental income paid into the SSAS / SIPP can be offset as a business expense against the company ’ s corporation tax liability and is paid into the scheme tax free , these pension plans are usually outside the estate for IHT and the premises would usually be protected from creditors in the evewnt of bankruptcy . In addition , if the company currently owns the property , then selling this to the pension scheme generates a valuable cash injection into the business . Of course , this rental income paid into the pension scheme is effectively investment growth on the scheme owned asset and it is not therefore assessed against any pension tax relief or Annual Allowance limits .
Allison Rushton , Pensions Technical Adviser
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I
A
It
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What
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Although
have a pension with a protected pension age of 55 . Can I transfer benefits into this from another scheme to take advantage of the protected pension age ?
depends . In most cases , where benefits are transferred into a pension scheme that has a protected pension age , the transferred in benefits can also be paid from the protected pension age . This applies even if the transfer in is from a scheme that is subject to the normal minimum pension age . However , there is an exception if transferring into a scheme that has a protected pension age that is the result of an individual transfer . In such cases the new monies received must be placed into a separate pot to which the normal minimum pension age , not the protected pension age of 55 , will apply .
happens if a member dies after age 75 and the pension scheme rules only permit the lump sum death benefit to be paid to the deceased ’ s estate ?
many schemes give trustees discretion regarding the payment of death benefits , there are some schemes whose rules only allow the death benefit to be paid to the deceased ’ s estate , and the trustees have not discretion in the matter . In such circumstances , the payment will be made the to deceased ’ s personal representatives . HMRC class personal representatives as ‘ nonqualifying persons ’. This is because although they are individuals , the payment is being made to them in their capacity as personal representatives . As a result , the lump sum death benefit payment will be subject to a flat rate special lump sum death benefit charge of 45 %. This is in contrast to the beneficiary ’ s marginal rate of income tax that applies to death benefits where a member dies after age 75 and discretion is exercised by trustees to pay the benefit to individuals . The scheme administrators will deduct the 45 % tax charge before paying out the balance . As no trustee discretion has been exercised , the payment will also form part of the deceased ’ s estate for inheritance tax purposes .
You can get hold of the Pensions Technical Team to discuss your own query on 01484 439126 , or at pensions @ simplybiz . co . uk
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