Explanatory note

This Order increases, from £100,000 to £105,600, the permitted maximum used as part of the calculation of benefits payable to a class of employees from a retirement benefit scheme approved under Chapter 1 of Part 14 of the Income and Corporation Taxes Act 1988 (c. 1: “the Act”). It applies in the case of a scheme which was approved by the Board of Inland Revenue before the coming into force of the Finance Act 1989. It also applies in the case of an employee who, before 1st June 1989 joined a scheme which was in existence before 14th March 1989 and which was approved on or after 27th July 1989.

The permitted maximum referred to in this Order is different from that applying to most retirement benefit schemes. The permitted maximum (commonly known as the earnings cap) which is applicable to most schemes is contained in section 590C of the Act. The earnings cap in that section applies to retirement benefit schemes which were approved after 26th July 1989, except where the scheme was in existence before 14th March 1989, where it applies to members joining on or after 1st June 1989.

This Order does not impose new costs on business.