The measure
The Government will legislate to ensure that arrangements where
an employer pays a pension contribution into a registered pension
scheme for an employee's spouse or family member, as part of
their employee's flexible remuneration package, cannot be used
to obtain tax and NIC advantages for the employee or the
employer.
The Government has also confirmed that the annual allowance will
remain at £50,000 for the 2012/13 tax year.
Who will be affected?
This will affect employees, and their employers, who seek to maximise the pension tax relief allowances available to family members of employees.
When?
Family pensions will cease to be tax and National Insurance Contributions (NIC) effective from 6 April 2013.
Our view
Family pensions remain an attractive opportunity for 2012/13,
particularly where the maximum allowance carry forward is still
available, which can mean that the contributions qualifying for tax
and NIC relief in 2012/13 can be up to £250,000.
Those affected may wish to explore alternatives including unfunded
pension arrangements and other wealth creation plans. However, they
will need to bear in mind that the Government has stated that it
intends to monitor the growing use of unfunded pension arrangements
and remains ready to act to prevent new and extensive use of these
arrangements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.