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R04 - Pensions > 3 - HMRC Tax regime: Benefits, reliefs and overseas schemes > Flashcards

3 - HMRC Tax regime: Benefits, reliefs and overseas schemes Flashcards

1
Q

What is the earliest date that benefits can be taken from pension schemes

A

55

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2
Q

What age will the min pension age be increased to in 2028? What Act includes legislation for such changes

A

57
Finance Act 2022

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3
Q

Who are exempt from new normal pension age

A

Public sector - firefighters/ police / armed forces

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4
Q

Can benefits be taken early if the person is ill health

A

Yes - if ill health resulted in member ceasing occupation

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5
Q

When can a lump sum be taken out as a result of ill health pension (taking pension out early)

A

Life expectancy of less than one year

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6
Q

How are years calculated to take benefits? E.g. if they are 45 birthday how long until they are 55

A

9 Years to go until age 55 and not 10

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7
Q

What are the 5 conditions for PCLS be taken

A
  1. Relevant person - provision of scheme pension, life time annuity/drawdown pension
  2. Member must not have used all lifetime allowance at time of payment
  3. Lump sum must be piad within a period beginning six months before and ending twelve months after member becomes entitled to relevant person
  4. Lump sum must be paid when member has reached normal minimum pension age
  5. The lump sum is not an excluded lump sum
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8
Q

What is PCLS normally lower of?

A

25% of capital value of benefits coming into payment
25% of available portion of member remaining lifetime allowance

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9
Q

Does a member receieve PCLS with UFPLS

A

NO

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10
Q

How is member pension income taxed under UFPLS

A

via PAYE

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11
Q

Can a UFPLS be taken after age of 75?

A

Yes but only on funds not crystallised before 75

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12
Q

If a member under 75 takes UFPLS what is the gross amount tested against?

A

Lifetime allowance under BCE 6

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13
Q

What are the choices members have if the gross amount of UFPLS exeeds there lifetime allowance

A

Reduce UFPLS amount
Take lump sum and receive the excess as lifetime allowance excess lump sum - taxed as pension income under paYE
Take UFPLS to available lfietime allowance - designate rest into flexi-acess drawdown

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14
Q

What is the difference in post 75 and pre 75 when trying to take out a UFPLS (Tax)

A

Pre 75
- Must have sufficient lifetime allowance to take full amount as UFPLS

Post 75-
Must have some lifetime allowance not necessary sufficient amount - then will have restriction on amount that will be paid tax free (will be taxed as pension income via PAYE)

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15
Q

What is Small Pots payment

A

£10,000 or less

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16
Q

Small pot payments information
- Testing against lifetime allowance
- Does it trigger MPAA

What is the tax treatment from uncrystallised benefits?
What if small pots payment is from crystallisde benefits?

A

Not tested against member lifetime allowance
Not trigger MPAA

Uncrystallised benefits:
25% Is received tax free
75% is taxed as member pension income via PAYE

Crystallised benefits:
All taxed as member pension income via PAYE

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17
Q

What is Trivial commutation lump-sum payment?

A

From Defined benefit arrangement “in payment money purchase in-house scheme pension”

If total benefitis held in DB/payment money purchase in-house scheme pension and value does not exceed commutation limit of £30,000 they may be paid a CASH LUMP SUM rather than income

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18
Q

Can uncrystallised DC funds be taken as a trivial commutation lump sum?

A

No as a member can take any amount of these funds as an UFPLS (subject to lifetime allowance)

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19
Q

What is the tax treatment of serious ill-health lump sum pre and post 75

A

Pre 75:
Made tax free upt to lifetime allowance - rest taxed as pension income under PAYE

Post 75 - entirity taxed as pension income under PAYE

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20
Q

What are the two options that registered pension schemes are able to pay income?

A

Secured pension
Drawdown pension

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21
Q

How is income secured in a secured pension

A

Through scheme pension or buying lifetime annuity

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22
Q

Is the purchase of flexible annuity a trigger event for MPAA

A

yes

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23
Q

How are drawdown pensions taxed?

A

As member pension income via paye

24
Q

What are the two types of drawdown pension?

A

Capped Drawdown
Flexi-access drawdown

25
Q

When was capped drawdown stopped

A

Before 06/04/2015 - and not possible to set up a new one since then

26
Q

What is the time period in which death benefits must be designated

A

Two year period

27
Q

What is the tax treatment of lump- sum death benefits paid from uncrystallised/unused funds

A

Tax free before 75
Taxed after 75

Special lump-sum death benefit charge of 45% (outside two year window/75+)

28
Q

How is dependent scheme pension taxed

A

As dependent pension income via PAYE whether member dies before aged 75 or after

29
Q

What is the inheritane tax treatment of death benefits

A

If beneficiary listed no IHT

30
Q

What is two forms of transitional protection?

A

Primary/ Enhanced

31
Q

What is Primary protection

A

Over £1.5mill at 05/04/2006

32
Q

How do you calculate primary protection factor:

A

(Value of pension rights (05/04/2006) - 1.5m)/ 1.5m

33
Q

What is fixed protection 2012

A

1.8million

34
Q

What is fixed protection 2014

A

1.5 million

35
Q

What is fixed protection 2016

A

1.25million

36
Q

How was elections for fixed prtection 2016 made

A

Online and no deadlines which applications must be received

37
Q

What is individual proteciton 2014

A

Aimed at individuals who did not hae primary protection but had pension excess of 1.25mill on 05/04/2014. - it gave them lfietime allowance max to 1.5 mil.

38
Q

What are the different ways for lifetime allowance testing purposes for individual protection 2014

A

Pre-A DAY pension - 25:1
Schgeme pension after 05/04/2016 - 20:1
Uncrystallised DC fund: Value of fund

39
Q

What is individual protection 2016

A

Prtected lifetime allowance of max 1.25mill on 05/04/2016

40
Q

What is the entitlement received by ex-spouse called

A

Pension credit

41
Q

What is the loss in entitlement suffered by member of pension scheme called

A

Pension debit

42
Q

What is the taxation treatment of pension fund investments

A

No liabilities to income tax arises in respect of income derived from investments or deposits
No CGT arises on gains / no allowance for losses
Trading income is taxable

43
Q

What is the unauthorised payment charged taxed at

A

40%

44
Q

Who is responsible for surchargeable unauthorised member payment

A

Member if alive
Person who receives payment (if member is dead)

45
Q

Who is responsible for surchargeable unauthorised employer payment

A

Sponsoring employer

46
Q

What is scheme sanction charge

A

40% of chargeable payment

or lower of:
amount of unauthroised payments charge that has been paid
25% of scheme chargeable payments that are tax paid

47
Q

What is de-registration charge and who is responsible for this

A

40% paid by scheme administrator

48
Q

What are the two overseas pension schemes?

A

Qualifying recognised overseas pension schemes
Currently relieved non-UK pension schemes

49
Q

What is a QROPS

A

Recognised by HMRC
Recognised transfer

50
Q

How do you transfer a UK pension fund to QROPS

what BCE is it?

A

under bce 8

51
Q

What tax charge is there on transfers between a
UK registered pension scheme to QROPS
QROPS to QROPS

A

25% overseas transfer charge

52
Q

What is the member payment charge

A

If a QROPS makes payment from former UK funds that would not have been permitted under UK scheme

(transfer to overseas pension scheme that is not QROPS or payment of an excess lump sum)

53
Q

When are benefits taken from a RNUKS(relevant non uk scheme) taxed in uk

A

If total withdrawls during time is more than £100k

54
Q

What is period of temporary non UK residence before 06/04/2017

A

5 years

55
Q

What is period of temporary non UK residence after 06/04/2017

A

10 years

R04 - Pensions (10 decks)

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