What payments are counted before breaching allowance?
My client has her own company which pays pension contributions to a self-invested personal pension (SIPP) in her name. She has paid the annual allowance amount via her independent financial adviser (IFA) for several years, so I had believed that she has no unused allowance brought forward.
This year, she has asked if she can pay £60,000 to the pension fund and the the adviser’s 3% commission separately to the IFA, without breaching the annual allowance.
My reading of the HMRC guidance suggests that the annual allowance is the amount paid into the pension fund, so the IFA’s commission doesn’t count towards the £60,000. Is there any reason she cannot do this, or anything that should be done to make sure there is no question? Is it possible that she has unused allowance from past years, if the IFA’s charges were taken out of the gross contribution she paid?
Query 20,491 – Potholder.
Offshore bond in the form of French life insurance policy.
The list of eligible investment held by a UK tax resident into an offshore bond (in a French assurance cie format) has been expanded by the policy provider at its sole discretion to include about 100 blue chip shares which are part of the main indices (CAC 40, DAX, Ibex, etc) of the eurozone. The policyholder can select the investment into his offshore bond.
The policyholder which has only used five funds (the general insurance policy fund and 4 ETF) out of the more than 300 which were previously accessible (all of those being within the permissible categories) is now concerned about his offshore bond potential exposure to a personal portfolio bond (PPB) qualification further to this addition of direct share investment into the list of eligible investment even if he has no intention of investing into any of the shares now made available.
- As the shares that are now available to all policyholders have been selected solely by the insurer, are listed on recognised stock exchange and are part of the main indices for each of those exchanges, does it shield the UK tax resident policyholder from a PPB risk?
- What can the UK tax resident policyholder do to remove the PPB risk, if any, while keeping its policy in place and continue to only select investments that are permissible?
- Are there any other recommendations or considerations for this UK tax resident on its holding of this offshore bond?
Views on this matter in general and points 1 and 2 in particular would be most appreciated.
Query 20,492 – Uncle Benny.
Could there be a problem with giving too generously?
My client’s company has a 31 March year end. He has completed a contract that will lead to a very large payout this year, and may retire.
He has established a registered charity some years ago and has made substantial gifts in the past that have been used on various projects. He now wants to make a large gift out of the current taxable profit that will fund the charity for several years to come.
My understanding is that the company has to make a payment to the charity before the year end to obtain a deduction (as there may be minimal profits next year), but do readers foresee any challenge or problem with giving so much to the charity that it has more money than it will spend in the immediate future? It is a genuine charity with objects that are wholly unconnected to the client, and independent trustees.
Query 20,493 – Angel.
VAT on contract for project management.
My client operates in the construction sector, principally providing project-management services for refurbishments of office buildings. He has been doing this for many years and has an excellent reputation in the sector.
A Jersey holding company, which owns a number of UK companies, but does not, itself, have an establishment in the UK, has hired my client to assist in project managing the refurbishment of a major office complex in a UK city.
The office complex itself belongs to one of the group companies owned by the Jersey holding company, but for reasons best known to the clients, the contract is with the Jersey holding company, which will recharge the works to the company which actually owns the property.
As this is a B2B supply, the Jersey customer has suggested the supply should be zero rated. However, I am worried it is a land-related supply and so subject to UK VAT at 20%. The Jersey company does not have a UK VAT number and will resist being charged the VAT.
Can anyone help?
Query 20,494 – Oaktree.
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