Guidance

Pension schemes newsletter 128 – March 2021

Published 4 March 2021

1. Spring Budget 2021

At the Spring Budget on 3 March 2021, the government announced several measures in connection with pensions:

a. Annual allowance

The government announced that there are no changes to any of the annual allowance limits.

b. Lifetime allowance

The government announced that legislation will be introduced in Finance Bill 2021 to remove uprating in line with the consumer price index for tax years 2021 to 2022 up to and including 2025 to 2026.

The amount of the pension lifetime allowance for tax years 2021 to 2022 up to and including 2025 to 2026 will remain at £1,073,100.

2. Extension to the temporary changes to pension processes as a result of coronavirus

In recent newsletters we’ve told you about temporary changes to some pension processes to help scheme administrators during the coronavirus pandemic. We’ve reviewed the following temporary changes and are extending them until 30 June 2021.

We provided guidance on:

• rent and loan payment holidays
• R63N repayment requests for registered pension schemes
• AFT return submission and payment delays
• APSS262 – reporting transfers to qualifying recognised overseas pension schemes
• pension scheme returns for 2019 to 2020
• benefits crystallisation event 1 and valuing sums and assets held within a registered pension scheme
• other scheme valuations
• APSS105 relief at source repayment claims
• APSS106 relief at source repayment claims
• submitting the APSS107 registered pension schemes annual statistical return without a signature
• APSS590 relief at source declaration
• relief at source – excess relief

You can find more information on these temporary changes in Pension schemes newsletters 118, 119, 120, 121 and 124.

We’ll continue to keep you updated on any further changes in future pension schemes newsletters.

3. Managing Pension Schemes – practitioners

We mentioned in Pension schemes newsletter 127 that the next release for the Managing Pension Schemes service will deliver practitioner registration and authorisation features. These features will be available on 16 March 2021 and updated guidance will be available on GOV.UK.

We will also be publishing a Managing Pension Schemes newsletter on the same day giving further details on these new features and information on our plans for upcoming releases.

4. Relief at source

a. Scottish Income Tax rates

On 28 January 2021, the Scottish Government published its budget setting out the Scottish Income Tax rates for the 2021 to 2022 tax year. The Scottish Income Tax rates are the same as for 2020 to 2021.

For 2021 to 2022 the Scottish rates are as follows:

• the starter rate will be 19%
• the basic rate will be 20%
• the intermediate rate will be 21%
• the higher rate will be 41%
• the top rate will be 46%

You can find more information about Scottish Income Tax in our guide Income Tax in Scotland.

b. Welsh Income Tax rates

The Welsh Government has made a commitment not to raise Welsh rates of Income Tax, as outlined in the draft budget announcement in December 2020. This will mean that the rates of Income Tax paid by Welsh taxpayers will continue to be the same as those for 2020 to 2021.

For 2021 to 2022 the Welsh rates are as follows:

• the basic rate will be 20%
• the higher rate will be 40%
• the additional rate will be 45%

You can find more information about Welsh Income Tax in our guide Income Tax in Wales.

c. Member’s residency status for relief at source – 2021 to 2022

You should now have received your annual notification of residency status report.

You should use the look up residency status for relief at source service to check a member’s residency status if they:

• do not appear on your notification of residency status report
• are unmatched

Use the rest of UK residency status if:

• you cannot check a member’s status before you apply for relief at source for them
• they do not appear on either the annual report or the look up service

You must apply the same tax rate for a member for the whole of the tax year, even if their residency status changes.

d. Annual return of information for the tax year 2020 to 2021

To make sure that we can process your annual return of information, you should always use the versions of the spreadsheet and electronic flat text file specifications that are currently on GOV.UK and not a version that you’ve saved from a previous year.

If you’re submitting an annual return of information for the tax year 2020 to 2021 you should use the:

• 2019 version of the relief at source spreadsheet
• 2019 version of the electronic flat text file specifications

It’s important that you also make sure that you use the correct naming convention when you submit your annual return through the Secure Data Exchange Service and that the file name reference matches the sub reference included in the return.

You can find details of how you should name your files in the links above.

e. APSS590 annual return of information declaration

You must also submit the APSS590 – Annual return of information declaration as part of your return. Without the APSS590, we will consider your return to be outstanding and this could lead to future relief at source interim repayments being stopped.

You can send the APSS590 annual return of information declaration either by post or email to us at reliefatsource.administration@hmrc.gov.uk and put ‘APSS590 – Annual return of information declaration’ in the subject line of your email.

5. Increasing the normal minimum pension age – consultation on implementation

On 11 February 2021, the government launched its consultation Increasing the normal minimum pension age: consultation on implementation.

This consultation reconfirms the government’s intention to increase the normal minimum pension age to 57 on 6 April 2028, and to seek views on the implementation of the rise and protections for pension scheme members. The consultation will run until 22 April 2021 and responses should be sent by email to nmpaconsultation@hmtreasury.gov.uk.

6. Public service pension schemes – changes to the transitional arrangements to the 2015 schemes

On 4 February 2021 the government published its response to the consultation on proposals relating to the 2015 public service pension reforms. Public service pension schemes consultation: changes to the transitional arrangements to the 2015 schemes.

The response provides details of next steps and confirmation that after 31 March 2022, the pension provision of all public servants who continue in service will be as members of reformed pension schemes.