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HMRC has today issued its long-awaited guidance on some of the tax issues associated with implementing GMP equalisation.

The guidance is limited in scope as it only relates to benefit adjustments where the reason for the adjustment is solely GMP equalisation. In addition, it only relates to equalisation methods where a dual record keeping (or year-by-year) approach is adopted and crucially it does not:

  • apply to GMP conversion exercises (many of which are on hold pending guidance from HMRC), or
  • cover issues such as the tax treatment of lump sum and death benefit payments.

Despite its limitations, the guidance does set out HMRC's views on how adjustments made as part of a GMP equalisation process:

  • should be treated for annual allowances purposes (in relation to deferred and active members)
  • should be treated for the purposes of testing an individual's benefits against the lifetime allowance, and
  • will impact individuals who have registered for some form of transitional protection against the lifetime allowance charge.

We will provide our analysis of the views set out in the guidance in due course.

 

 

 

 

 

 

 

 


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