Refund of excess pension contribution - update
09 March 2010
As announced in the 2009 pre-budget report, the anti-forestalling legislation has been extended. This extension will be contained in the Finance Bill 2010, and will affect those individuals whose relevant income is at least £130,000, but less than £150,000, who increase their normal pattern of pension saving on or after 9 December 2009 and their total pension savings in the tax year exceeds the special annual allowance.
For those covered by this extension the definition of relevant income is as per the original legislation with the exception that salary sacrifice agreements after 9 December 2009, and not 22 April 2009, are ignored. All other aspects of the definition are the same e.g. the two previous tax years are taken into consideration, deductions for personal contributions (maximum £20,000 gross) and in respect of Gift Aid.
These changes do not affect our plans, announced on 20th November 2009, to allow a refund of any excess, subject to a charge to cover our administration costs, should our members find that the Special Annual Allowance charge applies.
As previously confirmed, the refund will be paid during the tax year following the relevant tax year when the contributions were made. Affected members must notify James Hay after the end of the relevant tax year, providing such evidence as James Hay may require in accordance with HMRC guidance to be published.
James Hay as scheme administrator will be liable for a tax charge in respect of the refund (40% for contributions made in 2009/2010 and refunded in 2010/2011) the amount being deducted from the refund.
Any associated costs for implementing a refund must be paid for by the member's SIPP plan. In due course we shall issue an associated schedule of costs for our members.