Guidance

Newsletter 154 — November 2023

Published 30 November 2023

Autumn Statement 2023

The following is a summary of all the announcements in the Autumn Statement on 22 November 2023 in connection with tax relieved pension savings. View the Autumn Statement policy paper for full details.

Abolition of the lifetime allowance from 6 April 2024

The government confirmed it will implement the abolition of the lifetime allowance from 6 April 2024.

These new provisions clarify the tax treatment of:

• pension income
• the taxation of lump sums and lump sum death benefits
• the application of protections

Under the new regime they also set out the tax treatment for:

• overseas pensions
• transitional arrangements
• reporting requirements 

We can confirm that, following consultation with stakeholders over the summer, there will be no change to the tax treatment of inherited pensions where the member dies before age 75.

Payments which were Benefit Crystallisation Event (BCE) 5C or 5D will remain available and their tax treatment is not amended by this legislation. We have also amended the approach to lump sums and altered the planned approach to reporting in response to feedback from industry.

We would like to thank members of the Lifetime Allowance Working Group for their help and support following the consultation in the summer. We will continue to work closely with industry to enable the delivery of these changes from April 2024.

HMRC are ready to support schemes through this implementation period. We will provide further details to schemes through a future lifetime allowance newsletter after introduction of the Autumn Finance Bill 2023.

Surplus extraction arrangements for defined benefit pension schemes

The government confirmed it will introduce secondary legislation to reduce the free-standing tax charge that applies when a sponsoring employer receives an authorised surplus payment.

From 6 April 2024, the rate that applies to these payments will be 25%.

Update on digitisation of relief at source

On 18 July 2023 the government published draft legislation to support the digitisation of relief at source from April 2025.  Since then, we have been working through the plans with representatives of the pensions industry, and this engagement has identified some concerns about the timelines and proposed approach to delivery in April 2025.

To address these concerns, we will work with stakeholders to explore how and when it’s  best to digitise pension tax relief at source.

As a result, the government did not introduce legislation in this Autumn’s Finance Bill and delivery of the digital relief at source service will be postponed until at least April 2027.

More information can be found in the Autumn Statement 2023 — Overview of tax legislation and rates.

If you would like to receive updates directly from us about digitisation of relief at source, or you are interested in participating in our collaboration forum, email  pensionsprogramme@hmrc.gov.uk.

Annual allowance

We’d like to ask you as scheme administrators to remind your members who have exceeded their annual allowance for tax year 2022 to 2023, and who do not have sufficient unused annual allowance to carry forward to cover the excess, to declare this on their Self Assessment tax return — even if your scheme is paying the tax charge.

The Pension savings — tax charges self assessment helpsheet HS345 has specific information on declaring the annual allowance charge on Self Assessment tax returns.

As explained in public service pensions remedy newsletter — August 2023, certain members impacted by the public service pensions remedy should not report any annual allowance charge through self assessment for the 2022 to 2023 tax year.

Instead, impacted members should report any annual allowance charges incurred for the 2022 to 2023 tax year through the Calculate your public service pension scheme adjustment service.

Your members can also find information and guidance about:

• their annual allowance
• changes in annual allowance following the public service pensions remedy
• carrying forward unused annual allowance
• paying and declaring the annual allowance charge

They can also use our pension annual allowance calculator.

Paying pension scheme charges

If you need to make a payment, where possible, you must use the relevant charge reference so that your payment is allocated correctly.

If you do not have a specific charge reference to make payment against, you can make payment using a pension scheme tax reference (PSTR). All payments received with a PSTR as the reference will automatically be allocated to any outstanding charges on your account on the managing pension schemes service. If there is an overall credit balance on your account once outstanding charges are cleared, you’ll be able to view this on the service.

If payments made using a PSTR are automatically allocated to the wrong charges, you’ll need to complete a reallocation request.

You’ll need to complete a separate request for each payment allocated incorrectly. You can either send the completed request:

• in an email with ‘Reallocation request’ in the subject line to pensionschemes@hmrc.gov.uk
• by printing it off and posting it

The address you’ll need to send it to is:

Pension Schemes Service
HM Revenue and Customs
BX9 1GH

Scheme administrator  identifications that are no longer in use

If you’re registered as a pension scheme administrator on the Pension Schemes Online service and are not acting for any pension schemes and do not intend to in the future, you’ll need to contact us so that we can delete your identification from the service.

Email migration.mps@hmrc.gov.uk using ‘Scheme administrator identification deletion’ in the subject line. You’ll need to provide your scheme administrator name and identification.

Relief at Source — Residency status reports

Notification of residency status report for 2024 to 2025

Scheme administrators of a relief at source pension scheme should now have successfully submitted their annual return of information for 2022 to 2023.

If you have not successfully submitted your annual return of information for 2022 to 2023, we will not be able to provide you with a residency report in January 2024. However, it’s still important that you submit your 2022 to 2023 annual return as soon as possible, otherwise we may stop your subsequent interim repayment claims.

Receiving your notification of residency status report

If you’ve successfully submitted your annual return of information for tax year 2022 to 2023, in January 2024, we’ll tell you the residency tax status of your scheme members, so that you can apply the correct rate of relief at source to your scheme members in the tax year 2024 to 2025.

From mid-January 2024, you’ll be able to download your notification of residency status report from the Secure Data Exchange Service (SDES). Your report will be based on data from your 2022 to 2023 annual return of information.

We’ll send you an email when we start to release the notification of residency status reports. If you want to be added to our mailing list, email reliefatsource.administration@hmrc.gov.uk, using ‘Relief at source — mailing list’ in the subject line.

You’ll also receive an email through SDES when your file is available for you to download. You’ll have 6 days (144 hours) to download this, starting from when we make the file available to you.

You should check that your email address is up to date on SDES and if not, you should update this to avoid delay in accessing your report. If you’re expecting an email from us but do not think you’ve received one, check your junk folder in your email account.

We’ll provide further guidance on what you’ll need to do if you do not receive your report, or there are issues with your report, in a future newsletter.

If you do not receive a notification of residency status report

If you do not receive a residency report in January 2024, you can check your members’ residency status for relief at source by using our look up service. You can check the residency tax status for single or multiple members, or default to the UK basic rate for your members.

If you do not have a residency status for a member by the time you claim relief at source on their first contribution in a tax year, you must treat them as having a ‘rest of UK’ residency status. You must not apply a tax rate based on the member’s address.

Once you’ve used a residency status to claim relief at source for a member, you must use this for the whole of the tax year.