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Standard Life windfall shares to pension savers

dogshome
Posts: 3,878 Forumite


Did you, between Jan & July 8th 2006, retire on or cash-in a small Stand. Life pension arranged by an employer, and were you given windfall shares?
My wife had a small frozen fund in a previous employers Stan. Life Group Pension scheme which she was able to cash in on A day - April 6 2006.
In August she got some windfall shares which she immediately sold, but was charged 55% tax, on the grounds that the money had come out of a pension scheme that she had left 3 months before the shares could have even been issued.
I'm challangeing the Revenue on the 3 month gap, plus that the Pension Scheme had no mandate over any of her assets, other than a % of her salary when she was working for the employer.
I'll post my progress, but welcome comment from anyone who has been mugged by the Revenue in the same way.
My wife had a small frozen fund in a previous employers Stan. Life Group Pension scheme which she was able to cash in on A day - April 6 2006.
In August she got some windfall shares which she immediately sold, but was charged 55% tax, on the grounds that the money had come out of a pension scheme that she had left 3 months before the shares could have even been issued.
I'm challangeing the Revenue on the 3 month gap, plus that the Pension Scheme had no mandate over any of her assets, other than a % of her salary when she was working for the employer.
I'll post my progress, but welcome comment from anyone who has been mugged by the Revenue in the same way.
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Comments
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The pension should have been taxed under the triviality rules. These would give her 25% tax free and the rest at her highest rate.However, I've heard that the Revenue imposes an emergency tax code on triviality payments, and thus you have to claim back the excess. Was that the case?
The windfall shares should be subject to capital gains tax (and would usually be covered by the annual 9,200 allowance). The shares were never in the pension scheme, obviously, so you are right to complain if the revenue is lumping them together.Trying to keep it simple...0 -
Sounds like the tax on trivial commutation which is not something new but known about prior to 6th April 2006.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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Hi Dunstonh & Maverick, thanks for the interest. Oddly enough, probably because my wife was very fast off the mark with her triviality pensions on A day, she paid tax at only 22% after the 25% tax free and didn't get into this 40% and claim it back later game the revenue now play. The problem is the 55% tax on the sale of windfall shares that did not even exist when she cashed out of the pension scheme, plus, the pension scheme had no authority over any of her assets other than a % of her salary when she worked for this employer.
I think this could be a very big problem - Over a period of app 7 months, how many other Stand. Life pensioners triviality money after A day, and how many actually retired and left the fund to buy an annuity?
Have written to the revenue and will post the reply0 -
Isn't the distinction here that your wife was entitled to free shares (a benefit) because of the proprietary nature of the product held - a with-profits linked pension scheme rather than the product itself - a personal pension plan?
In other words, benefit was not received because it was a PP. And as you point out, the pension was drawn (under triviality) out entirely - there was no residual benefit to come from it - by the time shares were issued. No tax relief was claimed in the process and the transfer from SL was not conditioned on the benefit going into a pension - it was nothing to do with the pension. Besides that she got the the shares direct from SL.....under construction.... COVID is a [discontinued] scam0
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