Guidance

Pension schemes newsletter 82 - November 2016

Published 4 November 2016

1. Bridging pensions

Following the introduction of the new state pension in April 2016 we have introduced legislation The Registered Pension Schemes (Bridging Pensions) and Appointed Day Regulations 2016 to align the pension tax rules on bridging pensions with Department for Work and Pensions legislation.

We had hoped to share draft regulations with industry representatives but this wasn’t possible in the time available. However we’d like to thank those industry representatives for providing us with feedback about what the new state pension means for their pension schemes and the bridging pensions offered.

2. Registration statistics

For the period 6 April 2016 to 30 September 2016 HM Revenue and Customs (HMRC) received in total 1,400 applications to register new pension schemes. This is a 42% reduction compared to applications received in the same period last year.

Of these applications, 82% have been registered and HMRC has currently refused registration for about 7% of applications. No decision has yet been made on the remainder.

3. Sale of lifetime annuities

Following extensive engagement with stakeholders, the government announced on 18 October 2016 that they would not be proceeding with plans to introduce a secondary annuities market.

The government has taken this decision as it has become clear that the necessary conditions for a competitive market could not be balanced with sufficient consumer protections. HMRC would like to thank stakeholders for their very helpful contributions to the consultation on the proposed tax framework.

4. Pension flexibility statistics

The quarterly release of official statistics on Flexible Payments from Pensions was published on 26 October 2016. Further to this 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 July to 30 September 2016 we processed:

• P55 = 4,910 forms
• P53Z = 5,558 forms
• P50Z = 1,514 forms

Total value repaid: £29,652,033.

Figures for the period 1 October to 31 December 2016 will be published in January 2017.

5. Relief at source

5.1 Annual returns of individual information for 2015 to 2016

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

The deadline for submitting the 2015 to 2016 annual return of individual information has passed but there are still a number of these returns outstanding.

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.

In Pension Schemes Newsletter 80 and Pension Schemes Newsletter 81 we reminded scheme administrators 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, we still deem this to be outstanding and will stop any subsequent interim repayment claims pending successful 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 worked 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 need relating to relief at source in the GOV.UK guide called Pension administrators: Relief at Source annual information returns.

5.2 Annual returns of individual information – user research

As you know in readiness for the introduction of the Scottish rate of Income Tax (SRIT) we have been working to help scheme administrators of relief at source pension schemes to submit their annual return of individual information (also known as RPSCOM100(Z)) on time.

This is really important because when SRIT is introduced HMRC will use the data submitted on these returns to:

• identify Scottish taxpayers
• notify pension scheme administrators of the correct relief at source rates to apply to their scheme members in the following tax year

You can find more information about the work we have been doing in Pension Schemes Newsletter 72 and subsequent newsletters.

To shape the development of the digital solution for submission of the annual return of individual information we are carrying out further user research into relief at source processes that scheme administrators currently use to understand how the proposed solutions will impact their organisation and IT so that we can develop the best workable solution for both pension scheme administrators and HMRC. So far we have issued questionnaires and carried out telephone and face to face interviews with pension scheme administrators. This work is ongoing and is feeding into the requirements development.

We are now looking to contact scheme administrators who currently submit their annual return of individual information in paper format and we are particularly interested in understanding what these scheme administrators need from an online service.

If you are a pension scheme administrator who submits the annual return of individual information in paper format and would be interested in helping us with our user research please contact our user researcher Pep Lopez Font by email at josep.font@digital.hmrc.gov.uk or by Telephone: 03000 520 017 or 07423 226 749.

6. Overseas pension schemes - GOV.UK content

As part of our ongoing work to make it easier for customers to find the information they need we have created a new overseas pension schemes page on our GOV.UK website. This new page has lots of useful information and links to help overseas scheme managers and members of overseas pension schemes keep up to date with the UK pension tax rules.

Our new overseas pension scheme web page includes links to:

• latest overseas pension schemes news
• overseas pension schemes updates
• guidance for members of overseas pension schemes
• guidance for overseas pension scheme managers
• forms needed to make reports to HMRC

7. Lifetime allowance

We have been asked to provide some clarification on the date a member is protected for lifetime allowance purposes.

For individual protection 2016 (IP2016) and fixed protection 2016 (FP2016) the date a member’s protection is effective from is:

• 6 April 2016
• the date the IP2016 or FP2016 became active (if previously dormant) following the loss of an earlier form of lifetime allowance protection

For individual protection 2014 (IP2014) the date a member’s protection is effective from is:

• 6 April 2014
• the date the IP2014 became active (if previously dormant) following the loss of an earlier form of lifetime allowance protection

8. Annual allowance

In Pension Schemes Newsletter 81 we explained that we had launched a beta version of the annual allowance calculator and asked for your feedback on this.

We want to thank everyone who provided us with feedback on this version of the calculator. Your feedback has been invaluable and as a result of the feedback we received, we will be adding the 2012 to 2013 tax year into the calculator as a priority. We aim to deliver this in mid-November 2016.

We continue to review all feedback we receive on the calculator and ask that you continue to encourage your members to provide feedback. We are grateful of your help with this.