Reclaim tax relief for pension scheme members with relief at source
How you can use relief at source to claim tax relief back on pension scheme contributions.
How relief at source works
Relief at source is a way of giving tax relief on contributions a member makes to their pension scheme. Members will get tax relief, based on their residency status, at the relevant basic rate that applies in the UK, Scotland or Wales. The amount paid to the scheme is treated as having had an amount equal to basic rate tax deducted.
The scheme administrator claims the basic rate tax relief from HMRC and adds it to the pension pot. This applies if the member pays tax or not.
For example, if the relevant basic rate was 20%, and a member wants to make a £100 contribution they’ll only need to pay £80 into their pension scheme. The scheme administrator reclaims £20 from HMRC and puts this into the scheme making up the pension contribution to £100.
Use the correct residency status of your members for relief at source
As part of your interim and annual repayments claims for relief at source, you must tell HMRC:
- the numbers of UK, Scottish and Welsh taxpayers
- as separate amounts, how much you’re reclaiming for UK, Scottish and Welsh taxpayers
For your scheme members who are Scottish taxpayers liable to Income Tax at no more than the Scottish starter rate of 19%, or who pay no tax, you’ll continue to claim relief at 20% for these individuals. HMRC does not recover the difference between the Scottish starter and Scottish basic rates and you must not give relief at 19% to these members.
Your scheme members who are Scottish taxpayers liable to Income Tax at the Scottish intermediate rate of 21%, can claim the additional 1% relief due on some or all of their contributions above the 20% tax relief paid to you. You must not give relief at 21% to these members. Instead, a member will do this by contacting HMRC if they do not already complete Self Assessment returns, or through their return if they do.
Check the residency status of your members.
Taxpayers who are above the basic rate of Income Tax
If the member is a Scottish intermediate rate taxpayer, or a higher rate taxpayer in Scotland, Wales or the UK, they can claim any extra tax relief due through their tax return or by contacting HMRC.
If the member is an additional rate UK or Welsh taxpayer or Scottish top rate taxpayer, they’ll have to claim the extra relief through their tax return.
Member’s information required by the pension scheme
Before you can claim back basic rate tax relief on a member’s contributions you’ll need the following information about the member:
- full name and address
- date of birth
- National Insurance number – or a statement that they do not have one (this information is not needed if the member is under 16 or a non-UK citizen who is not living in the UK)
You also needs details about the member’s employment status. The member will make declarations including one to tell their pension scheme if they make a contribution that does not qualify for tax relief.
Declarations the member must give to the pension scheme
Your member or their representative must make a declaration to you before they can contribute to your scheme and before you can claim the tax relief back from HMRC under relief at source.
The member (or their representative) must confirm that:
- the basic personal information they gave you is accurate and complete
- the contributions they make through relief at source will be within the total contributions limit
They must also:
- tell you if they’re no longer entitled to tax relief for an earlier contribution because of an event that has occurred
- tell you this by 5 April in the year of assessment in which the event occurred or within 30 days after the event occurred (whichever is the latest)
If your members or their representatives make these declarations in writing they must sign them.
If a member has automatically become a member of your pension scheme due to their employment, their employer may give you the member’s basic personal information and declarations. You’ll have to send your member what information you’ve been given and make a declaration on their behalf. This process is often referred to as playback.
How to claim tax relief
You need to register to claim tax relief. You can do this by completing form APSS 103. You’ll also need to send in a:
- completed form APSS 103A for those authorised to make repayment claims
- copy of the board’s resolution (or equivalent) appointing each authorised signatory
- bank statement or original paying-in slip for the relevant bank account
You should tell HMRC about any changes to your repayment details by completing a further form APSS 103. If you’re changing who can make repayment claims you should also send a further form APSS 103A.
End of year claim
Once registered to claim tax relief claims for relief on member contributions paid during tax year can be made yearly using form APSS 106. Claims for relief must be made within 6 years of the end of the relevant tax year.
Interim claim
If you do not want to wait a year to make a claim you can make an interim claim using form APSS105. These claims can cover a maximum of 3 tax months (running from the sixth day of a month to the following fifth) but all the months have to fall in the same tax year.
If you’re making interim claims you still complete an annual claim.
If HMRC gets the claim by the last working day of the month and is satisfied with the claim it will normally be paid on the 21st of the following month or the next working day.
Claimed too much relief at source
If you’ve claimed too much relief at source, you’ll need to tell HMRC and pay back the amount you’ve been overpaid.
Annual return of information
You must send HMRC a return of all member contributions paid in the previous tax year. You must submit your annual return of information through the Secure Data Exchange Service (SDES) and it must be in a set format.
Information and specifications for submitting annual returns of information and the declaration is in separate guidance.
Interim claims for the period 6 July to 5 August and any following months will not be paid until HMRC has the annual return of information and the declaration for the previous tax year.
Updates to this page
Last updated 19 April 2023 + show all updates
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Form APSS107 is no longer used for annual information returns.
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Updated to cover the information and declarations members must give to scheme administrators before receiving relief at source.
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Guidance on the current process for dealing with relief at source returns and claims has been updated.
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Updated to include information of when you do not need to complete form APSS107 under 'Information reports'.
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Links added for Scottish, Welsh and rest of UK basic rates.
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Updated to include Welsh pension scheme members.
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Removed reference and link to online service under the heading 'How to claim tax relief'. You'll now need to use form APSS 103 to register to claim tax relief.
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Clarification added that pension scheme administrators need to tell HMRC about how many repayment claims are for Scottish rate and rest of UK rate taxpayers, and the amounts for each.
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Information has been added to take account of the different rates of income tax for Scottish taxpayers and how this will affect claims for relief at source.
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A new section has been added with a link to the new guide for pension scheme administrators who've claimed too much relief at source.
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Information has been added on how to check whether a member is to be treated as resident in Scotland or in the rest of the UK for relief at source.
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Links added for Scottish and rest of UK higher and additional taxpayer rates.
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Registered pension scheme administrators and pension providers will have to make changes to their IT systems for Scottish taxpayers before April 2018.
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Any adjustments needed for Scottish taxpayers will be made by HMRC through Self Assessment or through PAYE coding.
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First published.