Chancellor George Osborne has announced a retrospective crackdown on pension schemes which use assets to fund defined-benefit pension deficits due to concerns the arrangements allow employers to gain “excessive tax relief”.
In his autumn statement, Osborne (pictured) said large companies had been able to claim double the amount of tax relief that was intended by making asset-backed contributions to their pension scheme.
He said: “We will take action to stop some large firms using complex asset-backed pension funding arrangements to claim double the amount of tax relief that was intended.
“This will save the Exchequer almost £500m a year.”
The Government will introduce legislation in the Finance Bill 2012 to ensure no excessive relief can arise for new asset-backed funding arrangements.
The Treasury says transitional rules will also apply to existing arrangements to ensure the correct amount of tax-relief is given by the end of the arrangement.