The Pensions Levy - Signed into Law

Author:Mr Peter Fahy and Ian Devlin
Profession:Eversheds O'Donnell Sweeney

Originally published June 2011

On 22 June 2011, the President signed into law the Finance (No.2) Act 2011. We commented on the Bill as originally published in our e-brief of 20 May 2011. Significant changes have been made in the final version of the Act. The Act remains very poorly drafted and several sections are quite ambiguous or difficult to interpret. The summary below cannot fully deal with these ambiguities, and specific advice should be taken.

Annual Charge

The first major change in the final Act is that the levy will now be charged on an annual rather than a bi-annual basis. Therefore chargeable persons will be obliged to pay a stamp duty of 0.6% of the chargeable amount upon submission of their annual statement.

When will it first apply?

The first due date for submission of a statement has been pushed back to 25 September 2011. This due date will remain the same for 2012, 2013 and 2014. Who is liable for the levy? Under the Act the person responsible for payment of the levy is described as the "chargeable person". The chargeable person is the administrator of a scheme (the Trustee, for a trust board scheme) or, where the scheme assets are contracts of assurance, the insurer. If the chargeable person is not the scheme trustee, the chargeable person and the trustee are jointly and severally liable for paying the levy. An addition has been made in the final legislation in relation to what is included under the definition of a "scheme" for the purposes of the Act. A "scheme" still includes:

retirement benefit schemes approved under the Taxes Consolidation Act 1997 (the "TCA") – note this includes overseas schemes so approved PRSA contracts (except for PRSA contracts where a tax free lump sum has been paid or made available) Individual RACs or trust based RACs (retirement annuity contracts) approved under Section 784 of the TCA (except for RACs where a tax free lump sum has been paid or made available). In addition it now includes annuity contracts approved under Section 785 of the TCA. The definition of "contract of assurance" has been expanded in the final Act. The definition now includes any policy or contract of assurance made by an insurer with a person or persons having the management of a pension scheme. There remains a limited exclusion for schemes where the trustees have passed a resolution to wind up the scheme and where the employer is insolvent for the purposes of the Protection of Employees (Employers'...

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