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The financial result at the end of a financial accounting period expressing the excess funds available after accounting for movement in the liabilities within a fund and therefore potentially available for distribution by way of a bonus declaration, or withheld via the process of smoothing to bolster the estate of a with-profits fund.
It occurs where the actuarial value of a scheme's assets is greater than the actuarial value of its liabilities. The surplus is the difference between the two and is known as an actuarial surplus
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Choice of business vehicle—tax comparison table This table compares the tax treatment of: • sole traders • partnerships (which in this table includes general partnerships, limited liability partnerships and limited partnerships), and • companies This table does not consider any reliefs or exemptions which may be available to particular taxpayers or any anti-avoidance provisions which might apply to particular circumstances. For the rates and thresholds applicable in the current tax year, see Practice Note: Key UK tax rates, thresholds and allowances. For further details about the tax treatment of each type of business vehicle, see Practice Note: Forms of business vehicle—tax summary. For further details on the choice between the types of business vehicle, see Practice Note: Tax influences on choice of business vehicle. Point of comparison Sole trader Partnership Company Tax treatment No separate taxable entity—sole trader taxed as individual with trading activity No separate taxable entity—partner taxed as individual on a notional trade representing his share of the partnership Separate taxable entity—company taxed on all...
Checklist for approval of Part 26 schemes and Part 26A restructuring plans involving HMRC HMRC frequently ranks as a secondary preferential and/or unsecured creditor in a company’s formal insolvency (see Practice Note: Waterfall of payments—a comparative guide), which is often the relevant comparator/alternative to a Part 26 scheme/Part 26A restructuring plan. On 1 November 2023, HMRC published guidance on compromises using Part 26 schemes (see: Schemes of arrangement—overview) and Part 26A restructuring plans (see: Restructuring plan—overview) (see: HMRC publishes guidance on using debt management schemes to restructure finances—LNB News 15/11/2023 13). Practitioners will need to take note of the guidance where the proposed scheme/plan involves HMRC as creditor. The guidance states that HMRC will only offer support to companies to restructure where HMRC believes there is a realistic chance of success. If HMRC does not believe there is a realistic chance of succeeding, they will work with the scheme/plan proponent to try and find other ways to repay the debt owed to HMRC. They warn that this could include going...
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THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT AND HYBRID OCCUPATIONAL PENSION SCHEMESPayments to employers from trust schemes that are defined benefit schemes or earmarked schemes are highly regulated. Trust schemes are defined as any occupational pension scheme established under a trust. Employers for these purposes are the employers of persons in the description of employment to which the scheme in question relates.This Practice Note concerns any payments of surplus made when the scheme is not winding up. There is a separate statutory regime under section 76 of the Pensions Act 1995 (PA 1995) for the payment of surplus to the employer where a scheme is being wound up (for further information, see Practice Note: Payment of surplus to the employer—pension schemes in winding-up).The relevant statutory provisions relating to payments of surplus from an ongoing scheme are:•the section 251 of the Pensions Act 2004 (PeA 2004) (Section 251). This section determines whether a power in the scheme’s trust deed or rules is valid. It also enabled trustees to alter by...
THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT AND HYBRID OCCUPATIONAL PENSION SCHEMESA payment to the sponsoring employer(s) of a pension scheme must be an authorised employer payment for the purposes of section 175 of the Finance Act 2004 (FA 2004). The list of authorised employer payments includes an authorised surplus payment under the FA 2004, s 177.For further information on authorised payments, see Practice Note: The Finance Act 2004, A-day and the pensions tax regime—Authorised and unauthorised payments.A payment to an employer will be an authorised surplus payment if:•the scheme making the payment complies with the requirements of section 76 of the Pensions Act 1995 ('section 76') (for further information, see Requirements of section 76 below), and•the payment is made in connection with the winding-up of the schemeAn authorised surplus payment attracts a tax charge of 25% payable by the employer (the charge having been reduced from 35% to 25% with effect from 6 April 2024).There is a separate statutory regime under the Pensions Act 2004, s 251 and...
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Class rights provisions—articles Add new definitions to ‘definitions’ article: A director • means any director appointed by holders of the A ordinary shares; B director • means any director appointed by holders of the B ordinary shares; A ordinary shares • means the A ordinary shares of [insert amount] each in the capital of the Company; B ordinary shares • means the B ordinary shares of [insert amount] each in the capital of the Company; eligible director • means a director who would be entitled to vote on the matter if proposed as a resolution at a meeting of directors; Add the following new clauses as required and renumber document accordingly: 1 Number of directors 1.1 The number of directors (excluding alternate directors) shall not be less than [two] in number[ nor more than [insert maximum number]] [ and shall be made up of [insert number] A directors and [insert number] B directors]. 2 Proceedings of directors 2.1 Subject to the provisions of these articles, the directors...
Deed of priority: single company borrower—single senior secured lender—single junior secured lender This Deed is made [insert day and month] 20[insert year] Parties 1 [insert name of Senior Lender] of [insert address] (the Senior Lender); 2 [insert name of Junior Lender] of [insert address] (the Junior Lender); and 3 [insert name of Borrower], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address] (the Borrower). Background (A) The Senior Lender has [agreed to provide OR provided] the Borrower with a loan facility on the terms of the Senior Facility Agreement (as defined below). (B) The Junior Lender has [agreed to provide OR provided] the Borrower with a loan facility on the terms of the Junior Facility Agreement (as defined below). (C) [It is a condition precedent to the provision of [each of] the Senior Facility(as defined below) [and the Junior Facility (as defined below)] that the parties enter into this...
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Where a counterclaiming defendant has paid security for costs into court and the costs have been paid, can any excess funds remaining in court be used to satisfy an unpaid judgment debt for damages against the counterclaiming defendant? Security for costs A claimant can take a commercial decision that it was not financially viable to bring a claim against the defendant, but a defendant does not have any choice about whether it was sued. Security for costs is a mechanism which is aimed at protecting a defendant when the court considers that there is a significant risk that the defendant will have no real prospect of recovering its costs if it is ultimately successful in its defence. This is to ensure protection and fairness for defendants. When considering whether to make an order for security for costs, the court will need to consider whether the conditions in CPR 25.13 have been satisfied. The order for security for costs is specific that the court is ordering the claimant to...
Can a CIC be a partner in a general partnership? The principal legislation governing Community Interest Companies (CICs) is contained in: • Companies Act 2006 • Companies (Audit, Investigations and Community Enterprise) Act 2004 (C(AICE)A 2004) • Community Interest Company Regulations 2005, SI 2005/1788 (the CIC Regulations) • Community Interest Company (Amendment) Regulations 2014, SI 2014/2483 C(AICE)A 2004, s 26 provides that a CIC can be: • a company limited by guarantee (with or without a share capital) • a private company limited by shares, or • a public company limited by shares A general partnership is defined in section 1 of the Partnership Act 1890 (PA 1890) as being ‘the relation which subsists between persons carrying on a business in common with a view to profit’. As such the partners in a partnership can be individuals, corporations, other partnerships or a combination of these (section 5 of Schedule 1 to the Interpretation Act 1978 (IA 1978)). It is therefore possible to have a partnership where some...
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Law360: The UK must act swiftly in developing a new regime to allow businesses to tap into well-funded pension plans to invest in themselves or the wider economy, the Association of Consulting Actuaries (ACA) urged on 6 May 2025.
This week's edition of Pensions weekly highlights includes a review of key news stories, as well as dates for your diary and trackers.
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