HMRC SDLT: SDLTM31750 – Application – Trusts and powers: Transfers between pension funds
Principles and Concepts of SDLTM31750
This section of the HMRC internal manual discusses the application of trusts and powers concerning transfers between pension funds. It provides guidance on the legal and tax implications of such transfers, ensuring compliance with relevant regulations.
- Explains the legal framework governing pension fund transfers.
- Details the tax implications for trustees and beneficiaries.
- Outlines the responsibilities of trustees in managing transfers.
- Provides examples of compliant transfer scenarios.
- Emphasises the importance of adhering to HMRC guidelines.
Read the original guidance here:
HMRC SDLT: SDLTM31750 – Application – Trusts and powers: Transfers between pension funds
The information on this page is about transferring assets and responsibilities from one pension fund to another, like when an individual receives a cash equivalent transfer or when pension funds combine.
Understanding the Transfer of Land
When trustees of one pension fund transfer land to trustees of another pension fund, this transaction is seen as acquiring a chargeable interest under FA03/S48. This means that it falls under the rules of Stamp Duty Land Tax (SDLT).
When is SDLT Charged?
SDLT is typically charged based on the amount of money exchanged for the land during the transaction.
No Special Rules for Pension Funds
- Pension funds do not have unique rules regarding SDLT.
- SDLT is only applicable if there is chargeable consideration related to the transaction.
Chargeable Consideration Explained
The assumption of obligations to provide benefits by the new fund or its trustees does not count as chargeable consideration. However, if any payment or goods of value are given by the transferee fund or its trustees, that will be considered chargeable.
Examples of Chargeable Consideration
- If the new fund takes on obligations in exchange for a specific sum of money and releases those obligations from the former trustees, that would be chargeable consideration.
Borrowing and Mortgages
Pension funds have the ability to borrow money and may use land as security for mortgages or other financial agreements.
Borrowing Considerations
- If the new fund, or its trustees, takes on the responsibility of repaying a loan from the previous fund as part of the transfer, this does not create chargeable consideration under FA03/SCH4/PARA8.
Mortgage Considerations
Mortgages and legal charges are seen as security interests. Transactions involving these, including creating or releasing them, are exempt from SDLT.
Notification Requirements
A land transaction that has no associated payment is exempt from needing to be reported as per FA03/S77. If transactions are linked and one part is liable for SDLT (even if it’s not required to be reported), but others need reporting, HMRC expects the non-reportable tax to be included in the SDLT return for the reportable part.
Pension Fund Trustees Acquiring Land
When pension fund trustees acquire land outside of the previous transfer situation, whether from another pension fund or not, they must pay SDLT based on the standard amount exchanged.
Further Guidance
For more general information on how pension funds acquire land, you can refer to SDLTM31800 and the following sections.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM31750 – Application – Trusts and powers: Transfers between pension funds
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