Finance Bill 2011 provides more certainty for reward and pensions

 

Published on 31 March 2011, the most relevant comments from an HR perspective were mainly around disguised remuneration and pensions. HM Revenue & Customs (HMRC) has also issued new frequently asked questions that have been taken into account in the bulletin. We’ve provided some detail on the main headlines below, but for more information and our thoughts on the main areas affected, download the full bulletin.

 

Disguised remuneration

 

The disguised remuneration legislation has more than doubled in size to 60 pages and is complex. It now contains many more exemptions for day-to-day transactions, including those announced in HMRC's frequently asked questions of 21 February 2011.

 

Companies will want to make sure that their remuneration arrangements do not fall foul of these new rules. Key areas to look at are likely to include all arrangements involving trusts and loans and hedging arrangements for share plans and deferred bonus plans.

 

Pensions

 

The pension changes are very much in line with those previously announced, Now that we have certainty on pensions, companies can create a coherent and competitive means of providing pension benefits for their employees. The main points to note are:

  • The reduced £50,000 annual allowance from April 2011 and the £1.5m lifetime allowance from next year.
  • Individuals will be able to ask the pension scheme to pay their annual allowance tax charge if it exceeds £2,000,
  • Once individuals have total pensions of £20,000 per year and are at least 55, they will be able to take benefits from their defined contribution schemes as and when they like.
  • Making additional payments into or setting up new funded unregistered pension schemes is now less attractive.