Today the Finance Bill 2009, which enacts many of the Budget measures (see previous Aries article), was published on the web following its formal presentation to Parliament.

Lobby Notes, also published today, briefly describe the clauses and schedules in the Bill; more detailed Explanatory Notes on clauses are available from the same web page. Of particular interest to the pensions industry are clause 4 (reduction in personal allowance for those with income exceeding £100,000), Part 3 (Pensions: clauses 71 - 74) and Schedule 35 (Pensions: Special Annual Allowance Charge).

Further details on the Bill will be published on the Parliament website and HM Treasury and HM Revenue & Customs websites as the Bill progresses through Parliament. The Second Reading will be held on Wednesday 6 May, followed by the Committee Stage a week later. The Parliamentary process is expected to culminate in Royal Assent towards the end of July.

In the meantime HMRC is offering technical presentations to industry bodies on the anti-forestalling legislation in Sch 35, as part of its consultation process. Aries will be participating.

Registered Pension Schemes Manual (RPSM)

It will be some considerable time before guidance appears in the RPSM on the changes to pensions legislation in the emergent Finance Act. The Manual is currently updated on a quarterly basis, but owing to the lengthy internal approval and publication process at HMRC, we do not expect it to cover FA 2009 changes before January 2010.

The latest tranche of amendments to the RPSM appeared last week. Over 60% (29 of the 47 pages listed) cover reform of HMRC's appeals system. A further seven pages have been changed to clarify that only benefits crystallised after reaching age 50 before 6 April 2010 can continue as authorised payments after 5 April 2010 where the member is not yet 55. The remaining amendments are mostly not dramatic. Curiously, one page which has been significantly extended (RPSM 051.02.035), on in specie transfers, does not appear on the list.

This page is of interest to SSAS members and administrators, who have been encouraged, together with the SIPP community, by three easements recently agreed by HMRC with the Association of Member-Directed Pension Schemes (AMPS). An announcement by AMPS, agreed with HMRC, has been made in advance of expected publication in an HMRC Newsletter*, and eventual coverage in the RPSM, we may hope. Here is a summary:

Restructuring borrowing / Remortgaging

A significant number of member-directed pension schemes (ie SSASs and SIPPs) have borrowing in excess of the 50% of net asset value (which was permissible under pre-A-Day rules). They have been prevented from taking advantage of much lower mortgage and interest rates to restructure or remortgage because it appeared that under FA 2004 this would be deemed to be a new loan, triggering an unauthorised payment charge. HMRC has agreed that provided the amount of loan is not increased, restructuring or remortgaging will not be deemed to be a new loan and therefore would not be penalised.

Security / charging orders

Another concern of many AMPS members was the likelihood of an unauthorised payment charge if the scheme acquired an interest in taxable property, where such property has been used in respect of security for a loan or charging order taken out against a defaulting tenant, eg to force the sale of a director's house. HMRC has now said that although an interest in taxable property is created at the point a charging order is put in place, giving rise to an unauthorised payment, that payment would be minimal as it is likely that any consideration and fees associated with the charging order itself, on which the unauthorised payment is based, would be low.

Renegotiating leases

Another consequence of the economic downturn has been the pressure to renegotiate commercial property leases. The question was, would HMRC allow a rent reduction or revised terms where the tenant is a connected party, as it normally expects that they are dealt with on an arms length, fully commercial basis? HMRC has agreed to allow this, provided that there is evidence that the renegotiation has been conducted in the same way as it would have been for an unconnected tenant, and that the scheme administrator has acted in the best interests of the scheme members.