Pensions and employment taxation
Personal pension term assurance
Individuals will not be entitled to tax relief for
their contributions to fund pension-related personal term assurance. The change
will not affect relief for contributions paid by employers.
The change will affect all contributions made after
31 July 2007 under occupational registered pension schemes, unless the insurer
received the application for the policy before 29 March 2007 and the policy was
taken out as part of the pension scheme before 1 August 2007.
For contributions under other registered pension
schemes, the change will take effect for all contributions made after 5 April
2007, unless the insurer received the application for the policy before 14
December 2006 and the policy was taken out as part of the pension scheme before
6 April 2007. The relief may be lost if such a policy is varied.
Alternatively secured pensions
The rules for alternatively secured pensions (ASPs)
will be amended from 6 April 2007 to require that a minimum income level is
drawn. There will also be an unauthorised payment tax charge where ASP funds
remaining on a member’s death are transferred to the pension funds of
another scheme member.
When a person with an ASP dies, the inheritance tax
nil rate band will be allocated first to the residual (non-ASP) estate where
the ASP death benefits are subject to both an inheritance tax charge and an
unauthorised payments charge. Special rules will apply to residual estates
which do not attract an IHT liability.
Company car and fuel benefit
Employees provided with a company car who receive
free fuel for private travel are subject to a tax charge. This is based on a
percentage rate related to the car’s CO2 emissions. The
multiplier used with this rate is £14,400 and remains unchanged for
2007/08. From 2008/09 a 2% discount will apply to the company car benefit
scales for cars which are capable of running on E85 fuel (ie fuel which is 85%
ethyl alcohol (ethanol) and 15% petroleum).
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Tax Tip
Choose the right company car and reduce your tax. You can set
the full cost of buying a new company car against your company’s profits
this year, if you choose one from over 20 models with an official
CO2 emissions rating of 120 g/km or less. And as the car driver, you
will also benefit from a lower income tax charge. |
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