Pensioners are set to benefit from a court of appeal ruling which could save pension funds £200m in tax.
The case was brought against the Government by two of the biggest pension schemes in Britain which argued sub-underwriting was an integral part of their investing activities and as such should be tax exempt.
Sub-underwriting refers to the situation when a listed company needs to raise more capital and issues further shares. A sub-underwriter is contracted to take part of the risk in exchange for a small commission.
But the Inland Revenue decided the activity constituted a trade and that any commission was subject to tax.
The Court of Appeal decided in favour of the British Telecommunications and Post Office pension schemes which brought the case and refused the Revenue's request for leave to appeal.
National Association of Pension Funds director-general Ann Robinson says: “This will benefit pension holders. If the Inland Revenue taxes pension funds, you end up either with smaller or more expensive pensions.”