The House of Lords has overturned an Inland Revenue ruling that would have made it impossible for retired directors to take their company pension as long as they remain a non-executive director.
The Revenue had tried to recover £230,000 from a non-executive director of a carpentry firm after he resigned his full-time post and took his occupational pension on the basis that he remained an employee.
But in the case of Venables HM Inspector of Taxes, the House of Lords said a retirement pension could be paid in relation to employment that had ceased.
Pension providers and advisers have criticised the Revenue's position as being in opposition to the Department for Work and Pensions' policy of phased retirement. The Revenue's position had been seen as an obstacle for many small family companies running small self-administered schemes where a key member of staff retires but stays on in a consultative capacity.
GE Life marketing manager Matt Trott says: “This is the sensible solution and is more consistent with what the Government is trying to do. Government policy is going down the route of phased retirement yet at the same time the Revenue has been blocking it.”