AMPS gets improved terms from HMRC

The Association of Member-directed Pension Schemes (AMPS) has successfully negotiated improved pension practice with HM Revenue & Customs to overcome issues made worse by the current adverse economic climate.

AMPS has secured agreement that borrowing above the 50 per cent limit can be restructured provided the amount borrowed is not increased.

Leases on commercial property held in a pension scheme can be re-negotiated, for example to allow a reduced rent to be paid, even where the property is let to a firm connected to the pension scheme members. This is provided that the re-negotiated lease is still on a commercial basis and does not provide more favourable terms than would be given to a tenant not connected to the scheme members.

HMRC has also confirmed that for loans where taxable property, such as residential property, is used as security, a tax charge based on the value of the asset will not apply. However, as an ‘interest’ in taxable property is being created, an unauthorised payment charge may arise but only based on the cost of acquiring the ‘interest’ which is likely to be minimal or even nil.

Robert Graves, chairman of AMPS says: “It is great that the industry can now move forward in the knowledge that scheme members will not fall foul of the unintended consequences of pensions legislation.”