Finance Bill 2011: Tax charge linked to Nest costs to be removed

Legislation will be introduced in the Finance Bill 2011 that will remove the tax charge on borrowing linked to the cost of setting up, managing or administering the national employment savings trust (Nest), subject to conditions.

Those affected include employer, employees, Nest and its members, as well as other qualifying pension schemes when auto-enrolment is introduced in 2012.

The legislation will also remove the tax liability on any interest payments on late pension contributions made by an employer to qualifying pension schemes and provide a regulation-making power to deal with any unintended tax consequences that may emerge as a result of the implementation of Nest and the employer duty provisions as set out in the Pensions Act 2008.

The measure was first announced at the March 2010 Budget and confirmed in the June budget.

It will take effect on 6 April 2011, apart from the removal of the tax liability on any interest payments on late-paid pension contributions which will have effect on the date the Finance Bill 2011 receives Royal Assent.

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