Finance acts Flashcards
Finance Acts 1916 and 1921
Granted tax relief on premiums in connection with all “bona fide pension schemes”
Established EET principle
Requirement to provide annuities
“New code” Finance Act 1970
Limits on conts and amount of lump sum.
Introduction of retirement annuities for the self employed.
Occupational schemes had to be approved by the Inland Revenue.
Max pension of 2/3 final pay, commuted for a lump sum up to 1.5 x final pay (comm factor 9:1 male 65, = 25%LS)
No limit to amount that could be paid out from a retirement annuity. Conts were limited, expressed as a % of remuneration depending on age.
“Simplification” Finance Act 2004
Introduced current pensions tax regime. Came in to effect on 6 April 2006 “A day”.
All employers and members able to benefit from tax advantages, provided they were registered with HMRC and payments were authorised.
Principles broadly unchanged from 1916 and 1921 acts.
Recognition of need for flexible retirement - e.g. allowing pension to be drawn while still working.
“Freedom and Choice” Finance Act 2011 and Taxation of Pensions Act 2014
Introduced flexible drawdown. Could take uncapped drawdown, subject to satisfying a minimum income requirement. MIR includes state pension, scheme pensions, and lifetime annuities. Initially set at £20k pa.
Finance Act 2004
DC schemes could provide income through capped income drawdown. Allowed member to take varying amounts each year, subject to a maximum to ensure funds were not run down too quickly. No minimum amount.
