Tax Flashcards
Do In-Specie contributions qualify for tex relief?
No, as do not qualify as contributions paid
Tax rate and punishment for breaching MPAA and recycling tax free cash?
55% based on entire tax free cash amount not just funds recycled
Conditions for full amount of tax free cash (25%) to be treated as unauthorised (3)
All 3 must be met:
- PCLS over £7.5k within 12 months
- contributions increased by 30%+ due to recycling
- recycling was pre planned
Tax due for RPS on any investment?
None, unless for personal use e.g. art, holiday home, vintage wine, sports car, etc.
Unauthorised payment taxation:
- unauthorised payments charge
- unauthorised payment surcharge
- scheme sanction charge
- de-registration charge
UPC - Flat 40% rate on property value
UPS - additional 15% rate on value if value is over 25% more than RPS value
SSC - RPS itself faces a charge of 15%-40%
DRC - RPS pays 40% tax on all scheme assets and is then de-registered
Tax charge on QROPS/ROPS/within EEA or none of the above?
If resi. in same country as QROPS/ROPS or within EEA - not subject to tax and no LTA, everything subject to no tax
If not above then - 25% overseas tax charge
What are tax rules if your a temporary non-resi. and take out QROPS/ROPS?
Classified as non-resi.:
- pre 5th April 2017 - Upto 5yrs
- post 6th April 2017 - Upto 10yrs
Withdrawal amount upto £100k:
- Not UK taxable
Withdrawal amount over £100k:
- Taxed in UK on return at marginal rate
What must a person do if non-resi. and have a QROPS/ROPS?
Report to HMRC any payments that would not be allowed under UK registered pension scheme
Tax rate if any pension paid to a trust or personal representative?
Entire payment on a rate of 45%
How are dependent pensions taxed when member dies?
Taxes in full at recipients marginal rate as earned income
What if transfer funds from UK DB pension to QROPS/ROPS? & non-QROPS/ROPS?
QROPS/ROPS:
- No tax
Non:
Payable by member:
- unauthorised payment charge - 40%
- unauthorised payment surcharge - 15%
Payable by scheme:
- scheme sanction charge - 15%
Transfers from abroad to UK tax rules:
- Received from recognised pension
- Received from non-recognised pension
Recognised pension:
- No tax paid & LTA enhancement given to member
Unrecognised pension:
- No tax paid but no enhancement either
Taxation rules of guarantee period pension protection income received?
Treat as taxable earned income
Tax rules for nominee, dependent & successor
Under age 75 on death - No tax
Age 75+ on death - Taxable on recipients marginal rate
Mortality gain
Mortality drag
Gain - Every annuitant will be given a slightly higher annuity rate
Drag - amount of growth needed to compensate for mortality gain
How are QROPS or ROPS treated for tax?
If within same country as pension scheme based then no overseas tax charge otherwise flat rate of 25%
Only taxable in 1 country if abides by double taxation agreement
No tax above LTA
Must report to HMRC any charges that would not be allowed under a UK RPS
40% tax charge and 15% surcharge if tax rules are broken
Tax rules for receiving pension due to serious ill health
-if suffer serious ill health pre age 75 - usual tax rules apply
Or
If suffer serious I’ll health age 75+ - all lump sum paid taxable at marginal rate
How are small pots funds taxable when refunded to member?
25% tax free
What tax is charged on a deferred state pension?
Fixed at whatever marginal rate is, so if state pension takes income into new tax bracket still use original tax bracket.
Tax bands if have pension refunded?
20% - First £20k
50% - Over £20k
Tax rules for a scheme pension
Age does not matter. Recipient will be taxed at marginal rate
Which 3 schemes have different tax rules and are fully taxable at marginal rate? Which 2 schemes are an odd ball and has different rules?
Dependent pension
Scheme pension
Guarantee period pension
Odd balls:
Deferred state pension - taxable in full at marginal rate already in and cannot increase
Small pension pot when refunded - tax relief of 25% less than marginal rate
