Claire Carey comments on GMP equalisation tax guidance

Partner, Claire Carey, considers HMRC’s guidance on tax issues covering GMP equalisation.

Claire said that because the guidance makes clear that an increase to benefits solely for GMP equalisation purposes will not count as ‘benefit accrual’, and so should not result in the loss of fixed protection, those who enjoy fixed protection in respect of the LTA should see this as “good news”.

“But the guidance stops short of looking at some trickier areas, such as lump sum and death benefit payments. Crucially, it also fails to address the pensions tax implications of reshaping benefits as part of a GMP conversion exercise. As the legislation allowing GMP conversion has been in force since April 2009, and the government issued guidance back in April 2019 on using this facility for achieving equalisation, this is disappointing.

“Hopefully, further guidance will follow swiftly so that schemes are given the clarity needed to crack on where conversion is their preferred option for achieving equalisation,” she continued.

Read the full article in Professional Pensions.