Free pensions revisited

19 January 2006 / Mike Truman , Liz Lathwood

Issue: 4041 / Categories: Comment & Analysis , Investments

MIKE TRUMAN and LIZ LATHWOOD discuss a recent suggestion by Mike that the new rules for tax credits could mean claimants can get a sizeable pension fund for free

Deprivation

Dear Mike
I was catching up on some reading last night and read your pre-Christmas leader with interest particularly the part relating to tax credits (Taxation 15 December page 297). I just thought I should mention in case you are not already aware of it SI 2002/2006 regulation 15 (the tax credit income regulations) which reads:

'If a claimant has deprived himself of income for the purpose of securing an entitlement to or increasing the amount of a tax credit he is treated as having that income.'

I think HMRC could use this to stop the 'free pension' effectively being achieved by your single parent.
I haven't seen any examples of them using this anti-avoidance provision as yet and such guidance on it as I have managed to find is fairly meagre (go to: http://www.hmrc.gov.uk/manuals/tctmanual/TCTM04903.htm)...

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