Standard Life head of pensions policy John Lawson revealed in May a very appealing loophole that would allow directors to set up a Ssas and pass on assets to members of their family without paying
At the time there were grumblings that Lawson was in danger of letting the Revenue find out all about ways around IHT. But Lawson’s argument has always been that they will find out anyway and that it is better to highlight issues and then try and find out what the Revenue
In detail what Lawson suggested was that residual pension funds are passed between members of the scheme and retiring members are paid an income equal to that from an annuity. At death, anything left is passed on to members – or family – with no IHT payable.
But the Revenue has apparently said in private that it would shut down this loophole. Axa has now launched a scheme pension facility in the form of a Ssass that appears to exploit this loophole – or at least fails to highlight the Revenues potential to close it retrospectively.
Standard Life has now written to the Revenue asking it to clarify its position. Lawson has accused Axa of pulling the wool over HMRC’s eyes as well as failing to tell clients of the potential for the door to be firmly closed on this opportunity. Someone must be right. If only HMRC would just publicly say who.
Standard Life UK has announced strong results in life and pensions for the first six months of 2006, particularly in Sipp and investment bonds. In the first set of results since the life companys floatation, new UK life and pensions business to June 30 2006 amounted to APE sales of 594m, up 25 per cent from 475m in 2005. Sipp sales increased by 75 per cent to 105m, compared with 60m in 2005.
Disappointingly perhaps, group pensions business fell by 2 per cent to 228m from 233m in 2005. These results include those for the much heralded new group Sipp, launched in November 2005, which achieved APE sales in the first half of 22m.
ASP makes it into the web-log for the third week running following the Ed Balls saga. One Revenue spokesman said it had received over 40 phone calls on this subject on Friday from a pink national paper. HMRC says, very loudly and clearly: “We will not hesitate to act if these clearly prescribed rules are abused by those they were never intended for in the first place and we will be keeping a close watch on how the rules are used in practice.”
Richard Jacobs Pensions and Trustee Services director Richard Jacobs says that ASP should be done away with altogether as the rules concerning USP are sufficient to cover every situation. He suggests that the 35 per cent tax charge applicable on an untimely death in USP should be raised to 40 per cent instead. He says: “This avoids the ludicrous situation where pensioners are joining a religion to obtain what they see as their normal rights.” Unfortunately, and not for the lack of trying, the Plymouth Brethren were unavailable for comment.
Goodness me, what else in this pension-packed week? Jacobs again – he is afraid of a post A-day meltdown while Scottish Life pensions guru Steve Bee is half-concerned that we are entering a period he has calls “the perfect storm”. He suggests that the UK has not seen the worst shake-up of pensions yet as we still await the outcome of the Governments white paper and the introduction of age-discrimination legislation from Europe. So, fasten your seat belts – it is going to be a bumpy ride.