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The Finance Act 2018 has received Royal Assent. 

Two days after the Chancellor delivered his Spring Statement – and a week later than expected – the Finance Act 2018 received Royal Assent.

The Act, which started life as the Finance (No 2) Bill last December, is much shorter than its recent predecessors, running to a mere 193 pages. It implements the proposals in the Autumn Budget. The key changes to note for financial advisers are:

  • The reforms to venture capital schemes (EIS, VCT and SEIS);
  • The cessation of indexation relief for corporate capital gains from January 2018;
  • The new SDLT relief for first time buyers of property valued up to £500,000;
  • The introduction of the right to claim the transfer of the marriage allowance on behalf of deceased spouses and civil partners from 29 November 2017;
  • The new higher diesel supplement for virtually all diesel cars from 2018/19;
  • New rules that align the HMRC pension scheme tax registration process for Master Trust scheme with the Pension Regulator’s authorisation and supervision regime, recently amended by the Pension Schemes Act 2017.


As this Act started life as the third Finance Bill to come before Parliament in 2017, it is as well it was short. Somehow it seems unlikely that a precedent has been set…


HMRC has now published the penalties for late filing on the trust registration service (TRS). 

On 8 December 2017, HMRC announced that while the 31 January 2018 deadline for making a TRS return would remain in place they would not charge a penalty if trustees, or an agent acting on behalf of the trustee, failed to register their trust on the TRS before 31 January 2018 but no later than 5 March 2018.

Here is the latest announcement from HMRC on the penalties for late filing which we quote verbatim as it is self-explanatory.

“HMRC will not automatically charge penalties for late TRS returns. Instead we will take a pragmatic and risk-based approach to charging penalties, particularly where it is clear that trustees or their agents have made every reasonable effort to meet their obligations under the regulations. We will also take into account that this is the first year in which trustees and agents have had to meet the registration obligations.”

While our information suggests that most TRS returns have been filed, if you have not yet completed your TRS registration(s), you should do so as soon as possible.

When penalties can be issued

Penalties can be charged for administrative offences relating to a relevant requirement.

These are:

  • a requirement to register using the TRS by the due date of 31 January after the end of the tax year in which the trustees pay tax on trust assets or income and
  • a requirement to notify any change of information by the due date of 31 January after the end of the tax year in which the trustees pay tax on trust assets or income.


The administrative offences penalty

HMRC will charge a fixed penalty to reflect the period of delay:

  • Registration made up to three months from the due date – £100 penalty
  • Registration made three to six months after the due date – £200 penalty
  • Registration more than six months late – either 5% of the tax liability or £300 penalty, whichever is the greater sum.


There is currently no facility to notify HMRC of any change of information online and, as such, we will not charge penalties for a contravention of this requirement until the online function is available.

A penalty will not be payable if we are satisfied you took reasonable steps to comply with the regulations.”

Given the above statement from HMRC that “a penalty will not be payable if we are satisfied you took reasonable steps to comply with the regulations”, any trustee or agent filing late would be well advised to keep a note of the steps taken to file on time.

ICAEW asked HMRC if an extension would be available due to the inclement weather during the week ended 4 March. Indeed, HMRC announced that in relation to its own services, that many of their offices were shut or operating on reduced staffing levels. However, HMRC have not (so far) announced any extension.


Consultation to allow individuals to elect to be treated as if they had disposed of and reacquired their shares at their market value just before a company issues new shares causing that individual’s personal holding to fall below 5%. 

As expected the Spring Statement brought no surprises in relation to tax and pensions however, a few consultations were announced as covered in our earlier bulletin. One of these is in regard to allowing entrepreneurs’ relief on gains made before dilution.

Currently if you dispose of shares or securities in your personal trading company (i.e. one where you own 5% of shares and voting rights) that disposal will attract entrepreneurs’ relief. This means that any capital gain will be taxed at 10% subject to the lifetime limit of £10 million.

However, in cases where the company issues new shares, this can cause a personal holding to fall below 5% which would mean that a later disposal won’t qualify for entrepreneurs’ relief. As a result, it was announced at Autumn Budget 2017 that an individual in this position can elect to be treated as if they had disposed of their shares and reacquired them at their market value just before the time the company issued new shares. The individual may claim entrepreneurs’ relief on that gain either at the time of election, or on a future disposal of shares.

HMRC has now launched a consultation which focuses on the mechanism which will achieve this extension of the relief. The new rules will apply to gains latent in shares and securities held at the time of fundraising events which take place on or after 6 April 2019.

This consultation will be of interest to individuals, companies, advisers, representative bodies and all others who would be affected by the changes.

The consultation will run until 15 May 2018.

This change in the rules will no doubt be very welcomed especially for those who were losing out on entrepreneurs’ relief and as a result finding themselves in a position whereby gains were taxed at the higher rate of 20%.


The Government is exploring what role platforms could play in tax administration, in a similar way to other intermediaries, such as employers. 

As mentioned previously the Spring Statement brought no surprises in relation to tax and pensions. However, a few consultations were announced – one of these is a call for evidence to help inform the Government in exploring what role platforms could play in ensuring tax compliance by their users.

This is not a formal consultation, but more of an information gathering exercise.

The Government is interested principally in platforms:

  • that facilitate the sharing economy (e.g. by allowing people to earn money from resources they are not constantly using, such as cars or spare rooms);
  • that facilitate the gig economy (e.g. by allowing people to use their time and resources to generate income); or
  • that connect buyers with individuals or businesses offering services or goods for sale.


The Government acknowledges there are multiple situations, some of which may not attract any tax liability – for example simply selling unwanted possessions – and some of which may be covered in whole or in part by different reliefs and allowances – such as the new Trading and Property Income Allowances – and that users’ knowledge will range from those who fully understand and comply to those who simply don’t appreciate that they are trading or otherwise generating taxable income.

The Government accepts that simple guidance won’t be able to cover the full range of transactions possible through online platforms and they are keen to understand what steps platforms currently undertake to support their users in understanding their tax obligations. They also want to review the effectiveness of actions taken by other jurisdictions to make it easier for users of these platforms to report their liabilities. The Government is, of course, also keen to limit dishonest behaviour by users who are knowingly evading tax.

This review will be of interest to online platforms, their users (both individuals and businesses), tax and other representative bodies, as well as anyone with views on the role online platforms could play in supporting the compliance of their users.

It will run until 8 June 2018.

References in this review to tax administration akin to that undertaken by employers and other intermediaries may cause some alarm amongst platforms and their users alike.

As might a suggested connection between this consultation and the Government’s recent response to the Taylor Review of modern employment practices. We covered the Government’s recent response to the Taylor Review in our bulletin of 20 February 2018.

Whatever transpires, it clearly isn’t going to be easy to find an overarching solution that suits everyone. We will follow any progress and update you as it evolves.


 The planned abolition of the childcare vouchers scheme for new claimants has been deferred for 6 months. 

One of the measures announced in George Osborne’s last Budget two years ago was the replacement of Childcare Vouchers scheme with Tax-Free Childcare. The two have similar goals, but radically different structures which have created winners and losers. The then Chancellor said that the new scheme would replace the voucher system (technically “Employer-supported Childcare”) from April 2018, although pre-existing claims would continue to be met.

HMRC started to roll out the new scheme in April 2017 and immediately ran into complaints about its Childcare website, eventually forcing the government to make nearly £1m of payments in lieu to parents. After this somewhat inauspicious start, the scheme was gradually put in place, with all working parents with a youngest child under the age of 12 becoming eligible on 14 February 2018. With that point reached, it looked as if the closure of the voucher scheme was on course for the end of the tax year.

It was therefore something of a surprise that in a debate on Universal Credit on 13 March (Spring Statement day), the education secretary, Damian Hinds, revealed that “we will be able to keep the voucher scheme open to new entrants for a further six months”.  The news came in a response to a question from a DUP MP, following a cross-party letter to the Chancellor asking for the voucher scheme to be kept open.

The HMRC childcare choices website now says that the voucher scheme will “remain open to new joiners until October 2018”. However, as many employers have been working to a 5 April deadline for closure, there may be problems for employees making fresh claims in 2018/19, only to find the scheme has closed, as planned.

This is not HMRC’s finest hour and, given the timing of the announcement, the phrase “a good day for burying bad news” does spring (sic) to mind.


HMRC loses first tier tribunal about unpaid tax relief on In-specie pension contributions 

SIPPchoice Ltd took HMRC to First-Tier Tribunal over a dispute on unpaid tax relief for four of their clients. HMRC lost the case and have been told to pay the tax relief.

The case involved the issue of what is meant by “contribution paid” in legislation, with HMRC arguing that this didn’t cover the use of assets in lieu of cash. Judge Gething didn’t agree with this argument, stating “the meaning of ‘contribution paid’ is wide enough to cover a transfer of assets in satisfaction of a debt as occurred in this case.”

Judge Gething, commenting more widely on the changes to legislation in 2006, said: “It seems to me the purpose of the post A day pension legislation was to enable and encourage taxpayers to provide for their retirement and to protect them from (i) the tyranny of interest rates prevailing at the date of retirement which directly affects the value of an annuity which had to be purchased within a limited period of time following retirement, and (ii) the loss of the capital value of the pension pool upon the death of the taxpayer which has nothing to do with contribution in cash or kind.

“Preventing contributions in kind does not seem to be the mischief at which the legislation was aimed.”

This is the first of these cases to be heard and it gives providers comfort that they haven’t mis-read the legislation. In specie contributions have been common practice since 2006 following a convoluted process of creating a debt that is then settled with an asset. The recent change of stance by HMRC has seen many clients not receive the tax relief they were expecting and in most cases providers have ceased to accept them.

HMRC do have the option to appeal but it isn’t clear if they will at this point in time.

What this means to those who have had their tax relief denied is yet to be determined and will, I suspect, depend if HMRC appeal.


DWP policy paper explaining how the government intends to increase the protections for defined benefit scheme members and make improvements to the system. 

The DWP has issued a policy paper, Protecting Defined Benefit Pension Schemes. The government believes the system is working well for the majority of Defined Benefit schemes, trustees and sponsoring employers but accepts that we need a tougher approach for those few whose irresponsible decisions impact on their pension scheme. The paper looks at the background and makes proposed changes and then goes on to explain how and when each will be implements. The changes fall into 3 categories:

Protecting private pensions – a stronger Pensions Regulator

  1. Strengthen the regulatory framework and the Regulator’s powers, as set out in the Government’s 2017 manifesto, to:


  • give the Regulator powers to punish those who deliberately put their pension scheme at risk by introducing punitive fines;
  • legislate to introduce a criminal offence to punish those found to have committed wilful or grossly reckless behaviour in relation to a pension scheme and build on the existing process to support the disqualification of company directors; and
  • work with the Regulator to strengthen the existing notifiable events framework and voluntary clearance regime so that employers have appropriate regard to pension considerations in any relevant corporate transactions. This includes improving the effectiveness and efficiency of the Regulator’s existing anti-avoidance powers. We will work with the relevant parties to ensure that these measures do not have an adverse effect on legitimate business activity and the wider economy. Protecting Defined Benefit Pension Schemes 7


  1. The Regulator with the right tools to do their job, by:


  • ensuring that they receive the information required to conduct investigations effectively and efficiently. These powers will be supported by penalties to drive co-operation. 


Improving the way the system works – scheme funding

  1. Strengthen the Regulator’s ability to enforce Defined Benefit scheme funding standards, through a revised Code, focusing on:


  • how prudence is demonstrated when assessing scheme liabilities;
  • what factors are appropriate when considering recovery plans; and
  • ensuring a long-term view is considered when setting the statutory funding objective.


  1. Require the trustees of Defined Benefit pension schemes to appoint a Chair and for that Chair to report to the Regulator in the form of a Chair’s Statement, submitted with the scheme’s triennial valuation. 


Improving the way the system works – consolidation


  1. Consult this year on proposals for a legislative framework and authorisation regime within which new forms of consolidation vehicles could operate;
  2. Consult this year on a new accreditation regime which could help build confidence and encourage existing forms of consolidation;
  3. Work with the Regulator to raise awareness of the benefits of consolidation with trustees and sponsoring employers, though, for example, the Regulator’s Trustees Toolkit and updating guidance; and
  4. Consider some minor changes to guaranteed minimum pensions (GMP) conversion legislation to support benefit simplification, which will help reduce complexities in existing benefit structures.


Some of the changes are already taking place but some will require secondary and primary legislation. Primary legislative changes won’t be likely to be in force until 2019-20 parliamentary session.

The Government have stated the below policies will be implemented.

Strengthening the powers of the Pensions Regulator

  • The introduction of new powers for the Pensions Regulator will enable it to undertake a tougher and more proactive role.
  • To support the ambition to be a tougher Regulator, they will legislate to introduce a penalty regime to work alongside the existing contribution notice framework, which is both proportionate and sufficiently robust to make misconduct as far as possible a risk not worth taking. They will also consider whether further legislative changes are required to improve the effectiveness and efficiency of the Regulator’s current anti-avoidance powers (contribution notices and financial support directions) to further strengthen the regime.
  • To ensure the Regulator has the right powers to intervene in certain corporate transactions, They will also legislate to strengthen the existing corporate clearance framework, and, where necessary, introduce new measures to ensure sponsoring employers give due consideration to their Defined Benefit scheme. Further consultation will shape the specific design of this strengthened framework.
  • They will also legislate to bring in a criminal offence to punish reckless behaviour in relation to a pension scheme.
  • And to enable the Regulator to be a more proactive body, we will legislate to bring forward measures including the power to require attendance at interview, civil sanctions for non-compliance with section 72 notices (in addition to existing criminal sanctions) and inspection powers, harmonising powers the Regulator already have for automatic enrolment and Master Trust schemes that would apply at the discretion of the Regulator to drive compliance with requests for information. 


Scheme funding measures

  • Starting this year, the Regulator will carry out a programme of further research, initial testing and information consultation with the industry with the objective of informing a revised Defined Benefit Funding Code of Practice, which will then be consulted on. the Regulator’s ongoing engagement will provide DWP with a clear view as to whether further legislative change (via primary or secondary legislation) is needed to complement and support the Regulator’s Defined Benefit funding code and will help determine what information should be reported in a Defined Benefit Chair’s Statement. 48 Protecting Defined Benefit Pension Schemes
  • The new Defined Benefit code will continue to set an expectation that trustees should document their decisions and their approach to funding integrated risk management. We will consult on what good practice looks like. This will help inform the forthcoming legislation on the Chairs Statement and help industry prepare for the change ahead.
  • Many of these measures will need primary legislation in order to make them mandatory, widely complied with and enforceable (i.e. to give the regulator the power to require trustees to deliver these improvements). 



  • Towards the end of 2018 the Government will consult with the pensions industry and stakeholders to develop the design of a legislative framework and authorisation regime applicable to all forms of commercial consolidation. They will continue to work closely with the industry to design a framework which meets the needs of potential investors, operators and provides an appropriate level of protection for members.
  • They will also consult on proposals for a new accreditation regime which will apply to existing forms of consolidation, so that members, trustees and sponsors can be confident that these vehicles meet or exceed a set of clearly defined standards.



PPF publishes March 2018 updates to estimated funding position of schemes. 

Since July 2007 the Pension Protection Fund has published the latest estimated funding position, on a s179 basis, for the defined benefit schemes in its eligible universe.

March 2018 Update Highlights

  • The aggregate deficit of the 5,588 schemes in the PPF 7800 Index is estimated to have increased over the month to £72.1 billion at the end of February 2018, from a deficit of £51.0 billion at the end of January 2018.
  • The funding level decreased from 96.9 per cent at end of January 2018 to 95.6 per cent.
  • Total assets were £1,567.5 billion and total liabilities were £1,639.6 billion.
  • There were 3,608 schemes in deficit and 1,980 schemes in surplus.

The PPF 7800 index is published on the second Tuesday of every month, and the PPF publishes The Purple Book each year.


‘The content of this newsletter is for information only. It does not represent personal advice or a personal recommendation and should not be interpreted as such.  Please do not act upon any part of it without first having consulted an Independent Financial Adviser’.



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