Guidance

Pension schemes newsletter 93 – November 2017

Published 30 November 2017

1. Autumn Budget 2017

a. Lifetime allowance

At the Autumn Budget on 22 November 2017, the government confirmed that as previously announced the lifetime allowance will be increased in line with the consumer prices index for the 12 months to September 2017.

The lifetime allowance will therefore rise to £1,030,000 for the 2018 to 2019 tax year onwards.

b. Changes to tax registration for Master Trusts

Finance Bill 2017 to 2018 will be published on 1 December 2017 and includes legislation in connection with pensions.

Legislation, originally published for consultation on 13 September 2017 will introduce changes to tax registration for pension schemes that are Master Trusts, or have a sponsoring employer that is a dormant company.

From April 2018 HM Revenue and Customs (HMRC) can refuse to register a pension scheme that is a Master Trust and does not hold authorisation by the Pensions Regulator (tPR), or where one of the sponsoring employers is a dormant company.

We’ll also be able to withdraw registration from a scheme which is a Master Trust and loses its tPR authorisation, or where a scheme is found to have a dormant company as a sponsoring employer.

2. Reporting of non-taxable death benefits

In Pension Schemes Newsletter 89 we explained that we continued to work to resolve the problem of P6 tax coding notices being issued in error for death benefit payments that are entirely non-taxable.

We referred back to our guidance in Pension Schemes Newsletter 78 on how to report these non-taxable death benefits.

Our work on a solution to this is ongoing and we’ll provide details about how to report these payments online as soon as we can. In the meantime, you should continue to follow the guidance we gave you in Pension Schemes Newsletter 78.

We’ll keep you updated in future newsletters.

3. Relief at source for Scottish Income Tax

a. Annual return of individual information

This is to remind you that from April 2018 you’ll no longer be able to submit your annual return of individual information (also known as the RPSCOM100(Z)) by paper.

As we explained in Pension Schemes Newsletter 90 you’ll still be able to submit your annual return of individual information by email, USB, CD or DVD until April 2019.

However from April 2019 you’ll only be able to submit your annual return of individual information electronically through the new Secure Data Exchange Service.

b. Scottish Income Tax newsletter

We’re planning to publish another newsletter on relief at source for Scottish Income Tax to update you on our work and progress to date. We aim to publish this newsletter in December 2017.

c. Relief at source draft regulations

We’ve published the Draft legislation: The Registered Pension Schemes (Relief at Source)(Amendment) Regulations 2018 for a short consultation.

The draft regulations make changes to The Registered Pension Schemes (Relief at Source) Regulations 2005 to make scheme administrators submit the annual return of individual information within 3 months of the end of the year of assessment.

The draft regulations also need administrators to submit the APSS106 annual claim within 3 months of the end of the tax year of assessment. They also introduce a process change and interest charge in respect of excess relief claims.

You should send any comments you have on these draft regulations by email to: pensions.policy@hmrc.gsi.gov.uk by 31 December 2017.

4. New Pensions Online Service

a. Administrators with multiple scheme administrator IDs

In Pension Schemes Newsletter 91 we asked you to check your records and tell us of any scheme administrator IDs or schemes that you no longer need.

We’ve been contacted by a number of scheme administrators who have multiple scheme administrator IDs that they want to keep.

We’d like to hear from you if you’re a scheme administrator who has and uses multiple IDs to manage your schemes, so we can understand how you use these in day to day scheme administration.

If you can help with this please email: pensions.businessdelivery@hmrc.gsi.gov.uk and put ‘PODS – multiple admin IDs’ in the subject line of your email.

b. Moving existing scheme administrator details to the new service

Following our articles in Pension Schemes Newsletter 90 and Pension Schemes Newsletter 92 we’ve now written to all pension scheme administrators who haven’t logged onto the Pensions Schemes Online service since April 2015, to remind them to go online and update their details.

Thanks to those who have now logged into the Pension Schemes Online service and updated their details.

We also explained that you can ask us for details of your pension scheme administrator IDs and the registered pensions schemes for which you’re the pension scheme administrator. We’ve received a number of requests for these details.

If you’ve contacted us for your pension scheme administrator or registered pension scheme details but haven’t heard back yet, you should note that it’s taking up to 10 working days for us to respond. However we’ve logged your response.

We’ll soon be writing to all pension scheme administrators who still haven’t updated their details to remind them that they must do so.

c. Practitioners acting on behalf of pension scheme administrators

In Pension Schemes Newsletter 89 explained that from April 2018 we would be delivering Phase One of the new service for pension scheme registration and registering as a scheme administrator and that this would include registering as a new practitioner.

New practitioners will need to register to use the new online service to send reports to us, and this reporting facility will be delivered from April 2019. We’ve now aligned the delivery of new practitioner registration so that it will also be delivered from April 2019.

If you’re an existing practitioner of existing schemes, you should continue to use the current Pension Schemes Online Service to manage these schemes and submit online reports in 2018 to 2019.

We’ll provide guidance for practitioners wishing to act on behalf of a new scheme registered from April 2018 in future pension schemes newsletters.

5. Pension payments to trustees in bankruptcy or third parties

We’re aware that a number of former bankrupts are being advised to contact HMRC and tell us that they are not in receipt of pension payments, when a scheme makes payments to certain third parties from their arrangement.

Members of registered pension schemes who are former bankrupts and have lost rights under pension schemes following bankruptcy remain members, regardless of who the payment is made to.

If we’re told that a payment from a registered pension scheme is not a payment of pension or any other kind of authorised payment, we’ll treat the payment as unauthorised. As you know this will result in:

• an unauthorised payments charge of 40%
• potentially the unauthorised payments surcharge of a further 15%
• potentially the scheme sanction charge of 40%

If however, the payment is a payment of pension:

• normal income tax rules apply, including any requirement to pay higher rate
• contributing into other schemes may be subject to the money purchase annual allowance (MPAA)
• if you receive questions from your members in relation to third party payments, bear this in mind

6. Lifetime allowance service

The lifetime allowance online service is still unavailable through the personal tax account. This means that scheme members who log onto their personal tax account to apply for lifetime allowance protection won’t be able to do this.

If you get any questions from members about this, explain that they can still apply to protect their pension savings using the link to the lifetime allowance online service in the guide Pension schemes: protect your lifetime allowance - GOV.UK.

Members can also still view details of their protection using the link on the Pension schemes: protect your lifetime allowance - GOV.UK. The lifetime allowance scheme administrator look-up service is unaffected.

7. Annual allowance

a. Annual allowance calculator

In Pension Schemes Newsletter 91 we explained that we were working to fix an error in carrying forward unused annual allowance from 2012 to 2013 beyond 2015 to 2016.

This error has now been fixed.

b. Reduction of the MPAA

Legislation within Finance (No.2) Act 2017 to reflect the reduction in the MPAA within Part 4 of Finance Act 2004 received Royal Assent on 16 November 2017.

The MPAA applies in certain cases to members who flexibly access or have already flexibly accessed their defined contribution pension savings. The MPAA has reduced from £10,000 to £4,000 from 6 April 2017.

There are no other changes to how the MPAA operates or the formulae used in applying the allowance. We plan to make the consequential changes to the relevant information regulations to reflect the reduced MPAA as soon as possible.