Can I turn back the clock on pension cap?

Can I turn back the clock
on pension cap?

In 2004 I read an article in the FT Money section (July 31) dealing with situations where retired people who had lost access to some of their pension funds because of Inland Revenue rules on maximum payments, might be able to claim some back under the new pension regulations.

At that time, Ruth Kelly, then secretary
to the Treasury, confirmed that pensioners would be able to recover surplus funds
in full, subject to not exceeding the lifetime allowance of £1.5m providing
they were still living at April 6 2006
and had the agreement of the annuity provider.

I am a member of a final salary scheme and in 2004 my intended pension was capped because of the maximum payment rules. Now, post-A-day, my funds do not exceed £1.5m and the scheme trustees have given written consent to Equitable Life for my pension to be put in the same position as if the cap had not existed when I retired.

The Equitable has replied that their “understanding of the new legislation that came into place with effect from April 6 2006 is that it affects retirement benefits which commence from that date and they are unable to revise the pensions benefits set up in 2004, as the Inland Revenue rules that were in place at that time applied to that particular event and remain unchanged.” Who is right?

Robin Ellison, partner at Pinsent Masons, says HM Revenue & Customs has issued a newsletter that covers your problem. (Pensions Tax Simplification Newsletter 14, issued May 31 2006). You should show it to Equitable Life.

Ellison says: “It is probable that any surpluses belong to the insurance company but HMRC are now relaxed about whether and how such funds are paid to the policyholder – if the insurance company is prepared to do so.

“The bad news is the way that HMRC explains this involves impenetrable prose. However, the plain English upshot is that HMRC does not object to the insurer paying it out provided it is taxed as an unauthorised payment or (better) used to increase the annuity. In the last case, HMRC simply treat it as an increasing annuity and it just carries the usual Paye deductions.”

In summary, getting your money out is not forbidden, but it is at the discretion of the insurer. “The government’s attempt to increase tax simplification seems to have created a lot of murky new rules,” says Ellison.

Couple seek home ownership change to tenants in common

My wife and I are joint owners of our house but I would like to change this to tenants in common. Can we write a joint letter to the Land Registry stating that from now on the property is owned by us as tenants in common, with each owning a half share?

Henry Stuart, head of the residential property team at solicitors Withers, outlines the background to your query. “Jointly-owned property can be held either as joint tenants or as tenants in common. If held as joint tenants, each party has an undivided interest in the property, and this passes to the survivor when the other dies. As tenants in common, you own a particular share in the property that you can deal with in your will and pass to someone other than the surviving owner or owners.”

On the matter of the Land Registry records, Stuart says: “Owners’ names appear in the ‘proprietorship register’. If only the names appear then it is likely (but not certain) that you hold your home as joint tenants. A ‘restriction’ in the register saying the survivor of joint tenants cannot deal with the property alone is evidence that a tenancy in common may exist. Since the Land Registration Act 2002, the Land Registry will treat joint-owned property as being held as tenants in common unless it is given evidence that a joint tenancy exists.”

To sever the joint tenancy, one of you can give notice to the other and then one or both owners apply to the Land Registry. “The application, whether jointly or by one owner should be on Land Registry form RX1 asking for a standard restriction (Form A) to be noted in the proprietorship register.

The Land Registry has a helpful website www.landreg.gov.uk which gives access to detailed guidance notes.”

Once you are tenants in common you should prepare a simple declaration of trust to set out the proportions in which you hold your respective shares in the property.