Guidance

Pension schemes newsletter 80 - July 2016

Published 28 July 2016

1. Pension flexibility statistics

The quarterly release of official statistics on flexible payments from pensions has now been published.

Further to this announcement we can now provide more information on the number of tax repayment claim forms (P55s, P53Zs and P50Zs) processed in respect of pension flexibility payments.

From 1 April to 30 June 2016 we processed:

P55 = 5,938 forms
P53Z = 5,194 forms
P50Z = 1,503 forms

Total value repaid: £30,261,528

Figures for the period 1 July to 30 September will be published in October 2016.

2. Lifetime allowance

a. Launch of the lifetime allowance online service

We have now launched our new online service for pension scheme members to apply to protect their pension savings from the lifetime allowance tax charge.

This service replaces the interim paper process for applying for fixed protection 2016 (FP2016) and individual protection 2016 (IP2016) and replaces the online form for applying for individual protection 2014 (IP2014).

From now on, members who want to apply for lifetime allowance protection will have to do so online.

Members who want to apply for protection can access the online service through the guide Protect your lifetime allowance.

To apply members will need an HM Revenue and Customs (HMRC) Online Services account. To create an account, or to login to an existing one, they should go to HMRC services: sign in or register.

As this is an online service, members will no longer receive paper certificates with their lifetime allowance protection details. Instead they will be able to view their protection details online and they will be able to print their protection details as necessary.

Alongside the new service we have published more guidance to help members who want to apply for lifetime allowance protection, including a new guide for members on valuing their pensions for IP2014 and IP2016.

Members who are unable to use the online service can contact our pensions helpline for help with applying for protection.

b. Withdrawal of the interim application process

With the launch of the online service, we will no longer process applications for lifetime allowance protection made using the interim process. Any applications made after the 31 July 2016 using the interim paper process will be returned and we will direct the member to the online service to make their application.

We will process any interim protection applications on hand at 31 July 2016 and if the application is successful we will issue these members with a permanent protection notification number. Members with permanent protection notification numbers will not need to reapply online and will be able to view details of their protection in their HMRC Online Services account. To create an account, or to log in to an existing one, they should go to HMRC services: sign in or register.

c. Temporary reference numbers

In Pension Schemes Newsletter 78 we explained that if members have applied for IP2016 or FP2016 protection using the interim application process but fail to follow this up with an online application, providing these individuals have not lost their protection, their pension savings will continue to be protected and there will be no tax consequences.

However, from August 2016 onwards, only permanent reference numbers will be recognised by HMRC. In addition, when the pension scheme administrator look up service becomes available, it will only validate permanent reference numbers.

When an individual applies for a permanent protection notification number, details of their IP2016 or FP2016 (and any previous lifetime allowance protections) will show in their personal tax account. Going forward, the personal tax account will be populated with more details for members to access at any time. So we would be grateful if scheme administrators would promote the benefits of applying online and obtaining a permanent protection notification number.

d. Pension scheme administrator look up service

In Pension Schemes Newsletter 78, we referred to the lifetime allowance look up service for pension scheme administrators to check the protection status of their members. We are continuing to develop this service and this will be available later in the year for pension scheme administrators to use.

In the meantime scheme administrators should continue to check the protection status of their members before making payments. Members who protected their pension savings before the April 2016 reduction in lifetime allowance will have a paper certificate confirming their protection status.

Most members applying for IP2014 will have received a paper certificate, however please note that some members who have applied more recently may have received a letter from HMRC instead confirming their protection details. If this is the case, the IP2014 protection details will be available to view online.

Members who applied for IP2016 or FP2016 using the interim process will have received a letter from HMRC confirming their protection details.

From 28 July 2016 everyone applying for IP2016, FP2016 or IP2014 will do so online and if their application is successful, will receive a permanent protection notification number and pension scheme administrator reference number at the end of their online application. Members will also be able to print details of their protection status.

3. Relief at source - annual returns of individual information for 2015 to 2016

Earlier this year, HMRC issued notices requiring pension schemes operating relief at source to submit the annual return of individual information for 2015 to 2016 (also known as the RPSCOM100(Z)) to HMRC by 5 October 2016.

If you are a pension scheme administrator operating a relief at source pension scheme but have yet to receive a notice requiring you to submit this information, please email: pensions.businessdelivery@hmrc.gsi.gov.uk and put ‘Relief at Source’ in the subject line of your email.

This is a reminder that failure to submit this information by the deadline will hold up any subsequent interim repayments pending receipt of the outstanding information. Where a submission is made, but fails processing, this is still deemed to be outstanding and any subsequent interim repayment claims will be stopped pending re-submission.

If failure occurs on the third submission we will stop all future interim repayments until a further re-submission is received and is deemed successful.

Since October 2014 we have stopped a number of interim repayment claims for non-submission or submission failure and where possible, have been working closely with pension scheme administrators to help them meet their obligations.

You can find more information on relief at source repayments and the member information we ask for relating to relief at source on the guide Pension administrators: Relief at Source annual information returns.