HMRC has stated that it will not insist adviser fees are taken from tax free lump sums post RDR as this could cause complications for those using an open market option.

 

Under current rules the adviser fees must come from the entire fund after RDR is implemented. This will cause potential problems as the tax free cash will be paid by the original provider and the annuity by another provider. If the fee must come from the entire fund then the new provider would need to contact the original provider to provide it’s share of the fees.

 

HMRC have now stated that they will allow the fee to come solely from the remaining fund only after the tax free cash has been taken.

 

HMRC stated, ‘the amount of tax free lump sum is not reduced as a result of these adviser charges whether they are paid by the pension scheme or the insurer providing the annuity.’

 

For more information please contact Annuity Arrow.