TaxPersonal Tax7 MARCH 2000 SURPLUS EMPLOYEE ADDITIONAL VOLUNTARY CONTRIBUTION FUNDS: CHANGE IN RATE OF TAX

7 MARCH 2000 SURPLUS EMPLOYEE ADDITIONAL VOLUNTARY CONTRIBUTION FUNDS: CHANGE IN RATE OF TAX

The tax charge on the repayment by occupational pension schemes of surplus employee additional voluntary contribution funds will be reduced from 33 per cent to 32 per cent with effect from 6 April 2000.

The tax charge on the repayment by occupational pension schemes of surplus employee additional voluntary contribution funds will be reduced from 33 per cent to 32 per cent with effect from 6 April 2000. (SI No.600 2000)

DETAILS

1. Additional voluntary contributions (AVCs) are a means by which members of occupational pension schemes may boost, within certain limits, the overall retirement pension they will receive. AVC payments may be made to an employer’s pension scheme or a separate AVC scheme.

2. Where, as a result of paying AVCs, the total benefits for the scheme member would exceed tax approval limits, the scheme administrator will return the surplus AVC funds, after deducting a special tax charge at the rate of 33 per cent. This charge broadly recoups the tax reliefs given on the AVC contributions and their investment return.

3. The scheme member (or their personal representatives if the surplus AVCs are being repaid after the death of the scheme member) is deemed to have received the payment net of basic rate income tax. So, as a consequence of basic rate income tax being reduced to 22 per cent from 6 April 2000, the special tax charge on surplus AVC payments is being correspondingly reduced, by Treasury Order, to 32 per cent from that date.

Related Articles

HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2w Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

4m Alia Shoaib, Reporter
Italy grants first successful non-dom status application to former UK non-dom

Personal Tax Italy grants first successful non-dom status application to former UK non-dom

4m Emma Smith, Managing Editor
Industry reaction: Taylor Review does not go far enough in addressing tax issues

Legal Industry reaction: Taylor Review does not go far enough in addressing tax issues

5m Alia Shoaib, Reporter
Does the Taylor Review sufficiently address the gig economy?

Corporate Tax Does the Taylor Review sufficiently address the gig economy?

5m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

5m Emma Smith, Managing Editor