Guidance

Newsletter 160 — May 2024

Published 30 May 2024

Lifetime allowance (LTA) abolition

Transitional tax-free amount certificates

We have published a tool for members to check if they can apply for a transitional tax-free amount certificate from their scheme.

As scheme administrators who will now be issuing and receiving certificates, we wanted to remind you of the information that a transitional tax-free amount certificate must contain. A certificate must contain the:

• individual’s name, address and National Insurance number 
• individual’s lifetime allowance previously used amount expressed as a percentage of the standard lifetime allowance 
• amount that the scheme administrator is satisfied is the individual’s lump sum transitional tax-free amount 
• amount that the scheme administrator is satisfied is the individual’s lump sum and death benefit transitional tax-free amount

If any of this information is missing, then the document issued would not qualify as a transitional tax-free amount certificate. Certificates should not have been issued or dated before 6 April 2024. 

The certificate may be in any form that the scheme administrator deems appropriate, including being incorporated into any other document issued to the applicant. 

You can find explanations and definitions of terms used in the Pensions Tax Manual (PTM174300).

Payroll reporting for tax year 2024 to 2025

In the lifetime allowance guidance newsletter — December 2023 we provided details on how pension scheme administrators should report the tax deducted from the excess amount over an individual’s lump sum allowance or lump sum and death benefit allowance, for the following authorised lump sums:

• uncrystallised funds pension lump sum
• serious ill health lump sum
• pension commencement excess lump sum

We can now provide further clarity on the following authorised lump sums.

Serious ill health lump sum

For a member under 75, you will only need to report the lump sum through Real Time Information (RTI) where the lump sum exceeds the permitted maximum. Where the lump sum is below the permitted maximum there is no requirement to report the lump sum through RTI.

Stand alone lump sums

Where the lump sum is below the permitted maximum there is no requirement to report the payment through RTI.

If the lump sum exceeds the permitted maximum, the excess is taxable and you must report this payment through payroll through RTI. You should report both the taxable and non-taxable elements of the payment.

You should follow the guidance published in lifetime allowance guidance newsletter — March 2023 when reporting these payments.

Lump sum death benefits paid to or in respect of members under 75

In lifetime allowance guidance newsletter — December 2023 we confirmed that the process for taxation of the defined benefits lump sum death benefits or uncrystallised funds lump sum death benefit is now a permanent process and has been extended to the following lump sum death benefits:

• pension protection lump sum death benefit
• annuity protection lump sum death benefit
• drawdown pension fund lump sum death benefit
• flexi-access drawdown lump sum death benefit

Although pension scheme administrators will not be responsible for determining any tax liability on these payments, you should still report these lump sum death benefit payments through RTI, with the exception of:

• defined benefits lump sum death benefit
• uncrystallised funds lump sum death benefit

You should follow the guidance in paragraph 2.2.7 of the 2024 to 2025 CWG2: further guide to PAYE and National Insurance contributions for reporting lump sum death benefits and report the full amount of the lump sum paid as wholly non-taxable.

Lump sum reporting workshop

In pensions schemes newsletter 159 — April 2024 we invited pension scheme administrators to register their interest in a workshop to look at the RTI changes and impacts on systems and processes. Thank you to those of you who have already contacted us.

If you have not contacted us yet and would like to be involved, email: ltaadministration@hmrc.gov.uk and put ‘lifetime allowance (LTA) lump sum reporting workshop’ in the subject heading.

Relief at source

Annual return of information for 2023 to 2024

We want to remind you that the deadline for submitting the 2023 to 2024 annual return of information is 5 July 2024. If you do not submit this on time, it may delay: 

• payment of interim claims for the tax month ending 5 July 2024 
• payment of any claims for subsequent months until we receive your annual return of information 

You must make sure you submit the APSS590 annual return of information declaration with your annual return of information, as this forms part of your return. If you do not submit this declaration, your return will fail processing.

You can either: 

• send the APSS590 annual return of information declaration by post to the address given on the form
• email the APSS590 annual return of information to reliefatsource.administration@hmrc.gov.uk and put ‘APSS590 Annual return of information declaration’ in the subject line 

If you submit your annual return of information but it fails processing, we will: 

• still consider this to be outstanding 
• stop any subsequent interim repayment claims until we receive a resubmission 

If failure occurs on the third submission, we will stop all future interim claims until we receive a further resubmission that is considered successful. 

You can only submit your 2023 to 2024 annual return of information through the Secure Data Exchange Service.

Managing pension schemes service

Pension scheme return

If you have received a notice to file a pension scheme return on the Pension Schemes Online service for the tax year 2023 to 2024, this is the last year that you will submit the return on that service. From April 2025, you will need to submit any pension scheme returns for the tax year 2024 to 2025 onwards, on the Managing pension schemes service. We’ve published guidance on the changes to the pension scheme return to help you prepare for this.

2 steps to migrating your schemes ― enrol and migrate

Take action to migrate your pension schemes. 

As a scheme administrator, if you have not already, you must first enrol on the Managing pension schemes service, using the Government Gateway username and password for your existing ‘A0’ administrator ID.

If you have multiple scheme administrator IDs, you must enrol on the Managing pension schemes service using the username and password for your ‘Master’ ID. You can find more information on using ‘Master’ and ‘Ancillary’ IDs to migrate your pension schemes.

To migrate your pension schemes, you’ll need to:

1. Sign in to the Managing pension schemes service.

2. Select ‘Add a pension scheme from the Pension Schemes Online service’.

Authenticated look up service to confirm protections and enhancements ― how you can help us

In lifetime allowance guidance newsletter — December 2023 we told you that in 2025 we will moving the lifetime allowance protection look-up service onto the Managing pension schemes service.

This will allow us to provide additional information to registered pension scheme administrators and practitioners, when checking whether the protection that a member has informed them they are relying on, for a higher lump sum, is valid. We will also update the service to include if a member holds an enhancement as well as protections. We’re looking for scheme administrators and practitioners to help us develop this feature.

You can take part in this user research and give us feedback by joining the Managing pension schemes user panel. To sign up or for more information email: pensionsuserresearchrecruitment@hmrc.gov.uk.

As a member of the panel, we’ll only contact you about the Managing pension schemes service and you can get involved in testing new features and providing feedback on the service.

Your input will be invaluable to helping influence the future design and development of the service.

Contacting HMRC Pension Schemes Services

We want to remind pension scheme administrators and practitioners of the correct routes for raising queries with Pension Schemes Services.

If you have a question about the pension tax rules you should first refer to our published guidance on GOV.UK and the Pensions Tax Manual.

Pension scheme administration pages provides guidance for pension scheme administrators, pension scheme practitioners, trustees and members.

The Pensions Tax Manual provides in-depth guidance on the pension tax rules. It helps you to deal with the most common questions about the rules and legislation.

If you still have questions on pensions tax rules

After reading our guidance, if you still have questions about the pension tax rules that are not answered in our published guidance we can help clarify pension legislation. You will need to tell us:

• which guidance pages you have considered
• which part of this area of the guidance is unclear

What we cannot do

We are unable to discuss individual or scheme specific information if we do not have the appropriate authority. We cannot provide financial or tax planning advice or answer hypothetical questions.

How you should contact us

If your question relates to:

• migration of pension schemes to the Managing pension schemes service — you should email us at migration.mps@hmrc.gov.uk
• feedback on the Pensions Tax Manual — you should email us at ptm.consultation@hmrc.gov.uk
• the Public Service Pensions Remedy — you should email us at publicservicepensionsremedy@hmrc.go.uk
• relief at source annual return of information — you should email us at reliefatsource.administration@hmrc.gov.uk

Do not email more than one mailbox with the same request.

If you have a general question not covered by guidance you should contact Pension Schemes Services.

If your question relates to a specific scheme or transaction, and after reading the guidance you are still not clear, you should go through the clearance process. The clearance process we will only answer enquiries:

• in cases of genuine uncertainty
• where you have provided all the information required under the clearance service