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The government has changed tax legislation to ensure relief received by an employer accurately reflects, but does not exceed, the amount of payments received by its pension scheme, meaning employers will not gain unintended, excessive tax relief.
It follows a consultation on making changes to the rules in relation to employer asset-backed contributions to registered pension schemes.
The contributions entail an employer making a series of payments guaranteed with security over the assets from which the payments derive. The condoc, launched in May, sought views on how to ensure excessive tax relief would not arise from the way in which some of thee contributions are structured.
The new legislation, which has effect from 29 November 2011, will be introduced in Finance Bill 2012.
The use of assets as part of pension scheme deficit funding had become increasingly popular, remarked Alex Henderson, partner at PricewaterhouseCoopers, adding that a ‘specific tax regime for this area’ was to be expected.
He said, ‘Overall, the measures look to restrict relief rather than abolish it. We expect this area to be of continuing interest for many employers facing deficits in their schemes; employers will be pleased to have the additional certainty of specially designed legislation.’
Download the autumn statement's tables of tax and tax credit rates and thresholds for 2012/13
