Indexation allowance meaning

Original news Mr H (CAS-83901-H1T3)—23 October 2023 Summary The Deputy PPFO has dismissed a complaint alleging the PPF’s reconsideration committee erred by declining to apply increases to pensions earned before 1997. Statutory PPF compensation parameters, as prescribed, are unequivocal and make no allowance for such uprating. The complaint did not fall within the Equality Act 2010 (EqA 2010) because any purported discrimination arose under the Pensions Act 2004 (PA 2004). Moreover, no cause of action existed under retained EU law, given that the complaint was brought after the conclusion of the EU withdrawal transition period. Consequently, the challenge failed and the refusal to apply pre-1997 increases stood as decided under the legislation...

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Accrual rate The speed at which pension entitlement builds as pensionable service is completed within a final salary arrangement, e.g. 1/60 for each year of pensionable service. Accrued benefits Benefits relating to service built up to a given date, measured with reference to current earnings or projected future pay. A-day ‘A-day’ is the widely used term for the broad pension tax ‘simplification’ reforms that came into force on 6 April 2006. These changes followed a 2004 government policy to rationalise the British tax system as it applied to pension schemes. The objective was to cut the volume of legislation accumulated under successive administrations, folding the previous eight tax regimes into a single regime for all personal and occupational pensions. Key areas covered included: how much pension contribution was allowed; the range of schemes an individual could invest in; how much an individual could withdraw (and when); and what could be done with the remaining fund. A-Day...

Although the Taxation of Chargeable Gains Act 1992 (TCGA 1992) does not prescribe a method for calculating a capital gain (termed in the statute a chargeable gain), the commonly followed method is to: take the consideration received on disposing of an asset deduct specified costs (called allowable expenditure or ‘base cost’), notably the original acquisition price of the asset, and where the taxpayer is a company and it obtained the asset on or before 31 December 2017, deduct any indexation allowance The outcome of this computation is the chargeable gain. This Practice Note offers a brief overview of consideration, allowable expenditure and (where relevant) indexation only. For the meanings of disposals and assets for capital gains tax (CGT) purposes, see the separate Practice Note: What is a capital gain? In this Practice Note CGT is used throughout as a shorthand for both CGT and corporation tax on chargeable gains. Consideration Usually the consideration is the actual sum received for the...

What are guaranteed minimum pensions? Guaranteed minimum pensions (GMPs) came into being on 6 April 1978, arriving at the very moment the State Earnings-Related Pension Scheme (SERPS) was launched. The legislation in force at the time — namely the Social Security Act 1975 and the Social Security Pensions Act 1975 — allowed an employee’s employment to be contracted out of SERPS provided particular conditions were met. In essence, those conditions required the employee to be enrolled in a pension scheme that promised to pay a pension of at least a guaranteed minimum amount. That guaranteed minimum was intended to match the pension the employee would otherwise have received under SERPS. Generally, it was expected that the benefits actually payable from the relevant scheme would exceed the GMP. The principal appeal of contracting-out was that, because the state would not be required to pay SERPS as well as the individual’s basic state pension (except where, in a specific case, the GMP proved lower than the SERPS entitlement would have been),...