Guidance

Pension schemes newsletter 105 - November 2018

Published 23 November 2018

1. Double Taxation – bulk requests for certificates of residence

You can now submit bulk requests for 2019 Certificates of Residence for up to 10 schemes to Pension Schemes Services. If you’re requesting multiple certificates send these as soon as possible so that we can start producing them in time to send out in January 2019.

You can send these by spreadsheet so you do not need to complete separate APSS146E forms but you must still complete APSS146C and APSS146D forms before we can issue the certificates of residence to you as a third party.

We can only accept a maximum of 10 schemes on a spreadsheet but you can send more than one spreadsheet on an email. However we’ll reject any requests where there are more than 10 schemes on a spreadsheet.

You can email your requests to pensionschemes.doubletaxation@hmrc.gsi.gov.uk. We’ll send most certificates by email, unless your certificates require a wet signature. If this is the case we’ll post these to you after 1 January 2019.

2. Relief at Source Newsletter

We’re planning to publish another newsletter on relief at source in early December 2018 to update you on our work and progress.

3. Overseas transfer charge - draft regulations

We’ve published draft regulations about the information requirements and process for claiming a repayment of the overseas transfer charge.

You can email your comments on these draft regulations to pensions.policy@hmrc.gsi.gov.uk by 7 December 2018 or write to:

Pensions Policy Team
Room 3C/07
100 Parliament Street
London
SW1A 2BQ

4. Manage and Register Pension Schemes service - newsletter

We’re planning to publish another newsletter on the Manage and Register Pension Schemes service in mid December 2018 to update you on our work and progress.

5. Reporting of non-taxable death benefits

In Pension Schemes Newsletter 104 we published guidance on how to report non-taxable death benefits through Real Time Information and explained that the guidance in Pension Schemes Newsletter 104 supersedes any earlier guidance that we’ve given on how to report these benefits.

We’ve received some questions about how the guidance in Pension Schemes Newsletter 104 aligns with guidance in section 2.2.7 of the 2018 to 2019: Employer further guide to PAYE and National Insurance contributions.

We’re currently working to review and update the guidance in 2018 to 2019: Employer further guide to PAYE and National Insurance contributions and we’ll provide you with an update on this in a future newsletter.

However to help clarify how you should report these non-taxable death benefits, we’ve included the table from section 2.2.7 of the 2018 to 2019: Employer further guide to PAYE and National Insurance contributions with updates to the fields for ‘Taxable pay in period’ and ‘Tax code operated on this payment’.

5.1 Non-taxable lump sum death benefits

Field	What to enter
Starting date	Enter the time of reporting the first payment to the recipient. Do not include the starting date if it has already been reported in an earlier submission
Annual amount of the occupational pension	Enter the annual amount of the occupational pension with the first pension payment and do not pro-rata it from the start date. If the payment is all ‘non-taxable’ enter 0.00 into the annual amount of occupational pension field and only where this occurs. Remove the start date previously entered
Taxable pay to date in this employment	Enter the total taxable element of the pension paid to date within the tax year, including this payment
Total tax to date in this employment	Enter the total tax to date in this pension within the tax year
Taxable pay in this period	Enter the taxable pension in this pay period. Where the lump sum is entirely non-taxable you should enter 0.00 in this field
Value of payments not subject to tax and National Insurance contributions in pay period	Enter any non-taxable element of the pension payment for payments made by BACS
Tax code operated on this payment	Enter ‘0T’ for payments where the taxable amount reported is 0.00 and enter ‘Yes’ in the ‘Tax Code Basis is non-cumulative’ field
Occupational pension indicator	Enter ‘Yes’ in the field on the first and every payment
Pay frequency	Select ‘Irregular’
Irregular employment payment pattern indicator	Enter ‘Yes’ only where the whole fund has not been withdrawn. This avoids a record being closed where further payments may be made
Flexibly accessing pension rights	Enter ‘Yes’ where applicable
Pension death benefit	Enter ‘Yes’
Flexible drawdown taxable payment	Enter the taxable element of any payment in the field
Flexible drawdown non-taxable payment	Enter the non-taxable element of any payment

5.2 Non-taxable death benefits that are regular payments

Field	What to enter
Starting date	Enter the time of reporting the first payment to your pensioner. Do not include the starting date if it has already been reported in an earlier submission
Taxable pay to date in this employment	Enter the total taxable element of the pension paid to date within the tax year, including this payment
Taxable pay in this period	Enter the taxable pension in this pay period. Where the payment is entirely non-taxable you should enter 0.00 in this field
Value of payments not subject to tax and National Insurance contributions in pay period	Enter any non-taxable element of the pension payment for payments made by BACS
Occupational pension indicator	Enter ‘Yes’ in the field on the first and every payment
Pay frequency	Use the appropriate entry, for example M1 for Calendar Monthly or W1 for Weekly
Tax code	Use the Emergency Code on a ‘Week 1’ or ‘Month 1’ basis, or where you have a current year P45, use that code on a ‘Week 1/Month 1’ basis. Where the payment is entirely non-taxable and 0.00 has been entered in the “Taxable pay in this period” field HMRC will treat this as a non-taxable payment and will not issue a revised code
Flexibly accessing pension rights	Enter ‘Yes’ where applicable
Pension death benefit	Enter ‘Yes’
Flexible drawdown taxable payment	Enter the taxable element of any payment in the field
Flexible drawdown non-taxable payment	Enter the non-taxable element of any payment

We’ve also been asked about when you need to provide a start date and what start date you should use. We provided guidance on this in Pension Schemes Newsletter 104. To help clarify this further, you should only use the default date of 6 April 2018 if you started to pay after we issued the guidance in Pension Schemes Newsletter 78 in May 2016 up to 17 October 2018, never reported these to us as per the guidance and you now want to do so.

Real Time Information will link payments made to a beneficiary under the same payroll ID and start date, so that we can tell if this is a further payment under an existing pension source.

As these regular payments are entirely non-taxable you should always enter 0 in the ‘taxable pay to date in this employment’ field.

For all payments you start to make from 17 October 2018 you should use the date you made (or started to make) the payment to the beneficiary.

6. Joint article from HMRC and The Pensions Regulator

6.1 Pensions tax relief

We’re aware of issues with giving tax relief to scheme members on their pension contributions. As a result, some scheme members are receiving tax relief twice and others are not getting the tax relief they’re due.

There are two main ways that pension scheme members can get tax relief on contributions to their registered pension schemes: through the relief at source method or by the net pay arrangement. In schemes that operate relief at source, members make their contributions from their pay after Income Tax has been deducted and the scheme administrator claims the basic rate relief back from HMRC and pays this into their pension scheme on the member’s behalf.

In schemes that operate the net pay arrangement, members get tax relief by making their contributions before their pay is taxed so the member gets the tax relief straightaway.

Where schemes give tax relief through the net pay arrangement, some member contributions have been made after tax and National Insurance has been deducted. This means the member will not have received the right amount of tax relief.

Additionally where schemes give tax relief through relief at source, in some cases member contributions are being paid from their salary before tax and national insurance have been deducted. Under relief at source, basic rate tax relief on these contributions is then being claimed from HMRC. This results in the member getting too much tax relief.

You can find guidance on giving tax relief in the Pensions Tax Manual – PTM044200 provides guidance on the ways to give tax relief for members.

If you think any of your pension scheme members have been given the wrong amount of tax relief for the reasons above, email us at: pensions.businessdelivery@hmrc.gsi.gov.uk and put ‘Newsletter 105 - Pensions tax relief’ in the subject line of your email. We’ll then work with you to help correct the tax position and make sure the member gets the tax relief they’re due.

This includes working with The Pensions Regulator so that you have sufficient systems and processes to monitor and report scheme contributions in line with The Pensions Regulator’s Codes of Practice and Guidance. You can find more information in The Pension Regulator’s Codes of Practice 5 and 6.

Having sufficient checks and monitoring in place means you can discharge your legal duties relating to contributions, for both Occupational and Personal Pension schemes and can identify any incorrect payments in line with The Pensions Regulator’s Codes of Practice and Guidance.