ARTICLE · 11 APRIL 2022

HMRC Issues Further Guidance On GMP Equalisation And Conversion

Herbert Smith Freehills Kramer LLP

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HMRC has issued further guidance on the tax implications of implementing GMP equalisation. The guidance is helpful and pragmatic. It outlines several options for making a top-up payment to correct historic transfer values.

United KingdomEmployment and HR

Background

HMRC has previously issued two guidance notes, in February 2020 and July 2020, in which it set out its views on the tax issues associated with implementing GMP equalisation. The latest guidance builds on these and sets out HMRC's views on a number of the outstanding tax issues that arise in the context of topping-up historic transfer values and when implementing GMP conversion.

Top-up payments

The guidance confirms that, in most instances, where a top-up payment is made to the original receiving scheme to correct an undervalued transfer payment (or to an alternative registered pension scheme or qualifying recognised overseas scheme) it should be possible to pay this as an authorised payment for tax purposes in the form of a "recognised transfer".

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