Revenue Note for Guidance

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Revenue Note for Guidance

779A Transactions deemed to be pensions in payment

This section ensures that investment transactions of small self-administered pensions schemes (SSAS’s – generally one member occupational pension schemes) are carried out on an “arm’s length basis”. It does this by effectively rendering transactions which are not arms length, tax inefficient by deeming the amount or value of the scheme assets used in the transaction to be a pension payment and, therefore, subject to tax.

(1) Where the assets of a retirement benefits scheme are used in connection with a transaction which would, if the assets in question were those of an approved retirement fund (ARF), be regarded as giving rise to a distribution under the legislation governing ARF’s, then the use of those assets will be treated as a pension paid under the scheme and therefore subject to tax. The amount to be regarded as a pension payment is to be calculated in accordance with the ARF provisions (section 784A(1B)).

Examples of the type of transactions concerned are where scheme assets are —

  • used to make or secure a loan to the scheme member or a connected person.
  • used in the acquisition of property from the scheme member or a connected person.
  • used in the acquisition of holiday property or of property to be used as a private residence by the scheme member or a connected person.

(2) Insofar as assets of the scheme are treated as being a pension paid under the scheme, they are no longer regarded as scheme assets.

(3) Where the acquisition of assets by the scheme is treated as being a pension paid, the assets so acquired will not be regarded as assets of the scheme.

Relevant Date: Finance Act 2019