For pension tax relief, contributions to a SIPP must be money, not in-specie

For pension tax relief, contributions to a SIPP must be money, not in-specie

Fri 22 May 2020

The Upper Tribunal (UT) has overturned the First tier Tribunal’s (FTT’s) decision concerning the availability of pension contribution tax relief for a contribution of shares to a self-invested personal pension plan (SIPP) in the case of SIPPChoice. 

The FTT held that this could count as a contribution paid for the purposes of pension contribution tax relief.  The UT considered that if the FTT had been correct, that would have made a nonsense of the requirement for contributing certain shares (SAYE or share incentive plan shares) within 90 days of acquisition in FA 2004 s195.  They also considered that, while FA 2004 s161 defined ‘payment’ as including “…a transfer of assets and any other transfer of money’s worth”, that definition of payment only applied for the purpose of chapter 3 of the FA 2004 pension scheme rules (payments by registered pension schemes), and not for tax reliefs and exemptions in chapter 4.

The UT decision also commented that current HMRC guidance at PTM042100 on giving effect to a cash contribution is wrong.

For further advice on the tax issues relating to pension contributions, please get in touch with a member of the Mazars personal tax or financial planning team.

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