Recycling rule is 'mind-numbingly complex'

The 11-page guidance, which will be incorporated into the Registered Pension Scheme Manual and will form part of the Finance Bill 2006, claims to explain how the recycling rule will work in practice, while setting out circumstances where it would and would not apply. Under the new recycling rule, a pension commencement lump sum (tax-free cash) used as part of a recycling device will be treated as an unauthorised member payment, and will be subject to a tax charge of between 40% and 55%, along with a charge on the scheme of between 15% and 40%. The new rule applies when a member receives...