Guidance

Pension schemes newsletter 94 - December 2017

Published 28 December 2017

1. Relief at source for Scottish Income Tax

a. Scottish Budget

As you may know, new Scottish Income Tax rates and thresholds were announced in the Scottish Budget on 14 December 2017.

Her Majesty’s Government and HM Revenue and Customs (HMRC) will be working closely with the Scottish Government and with pension providers, on the implications of that change for pension tax relief, and to clarify how the mechanisms for providing relief will operate in respect of Scottish pension savers.

b. Scottish Income Tax newsletter

Earlier this month we published another newsletter on relief at source for Scottish Income Tax to update you on our work and progress to date.

c. Annual return of individual information

We explained in Pension Schemes Newsletter 90, that from April 2018 HMRC will no longer accept paper versions of the annual return of individual information, also known as the RPSCOM100(Z).

We’ve received queries asking us if this applies for the return 2017 to 2018 tax year onwards. We can confirm that if you’re submitting your annual return of individual information for 2017 to 2018 onwards, you must not use paper.

We would encourage you to submit your annual return of individual information electronically using Secure Data Exchange Service (SDES) as this improves the security of the data and is easy to use.

However, between April 2018 and April 2019 you can continue to submit your return by USB, CD or DVD. If you use any of these methods please ensure the media is securely packaged, password protected and sent by tracked post. You can find more information in Pension administrators: Relief at Source annual information returns.

From April 2019 you’ll only be able to submit your annual return of individual information through SDES.

d. Information notices for annual return of individual information for 2017 to 2018 onwards

As you may be aware from the draft Registered Pension Schemes (Relief at Source)(Amendment) Regulations 2018 that we published in November 2017, the annual return of individual information will be a statutory return from 6 April 2018 for pension scheme administrators operating relief at source.

HMRC will no longer need to issue information notices requiring you to submit this information, so we won’t be issuing information notices for this return from January 2018 onwards.

e. Notification of residency status report

As part of our work around sending the notification of residency status report to pension scheme administrators operating relief at source, we may contact you to make sure that we hold the correct details for your relief at source scheme. We’ll either contact you by email or telephone and if you’re unavailable we may leave you a message. If this is the case, please get back in touch with us so we can confirm the details we hold.

If we don’t hear from you we may be unable to send you your notification of residency status report in January 2018.

f. Applying the residency tax status in cases of transfer

In Pension Schemes Newsletter 90 we explained how you should use the residency tax status as provided by HMRC to give the right amount of relief at source in cases of transfer.

If one (or more) of your scheme members transfers from one scheme that you’re the scheme administrator of into a different scheme that you’re also the scheme administrator of and you already hold details of their residency tax status, you may use this to provide the correct level of relief at source for that member in the new scheme. Alternatively, you may choose to check the residency tax status of these members using the residency status look up service.

We also said that if you take over as scheme administrator of an existing scheme and the scheme and members stay the same, we’d expect that all the information about the scheme and its members would be passed over to you as the new scheme administrator. We told you that if this is the case, you may use the residency tax statuses given to you by the ceasing scheme administrator. We also said that in this second scenario you may choose to check the residency tax status of these members using the residency status look up service. This is not the case.

Instead, you should continue to use the residency tax statuses given to you by the ceasing scheme administrator to give the correct level of relief at source for all members for the current tax year. You must not use the look up service to change a member’s status in year as we previously advised. We’re sorry for any confusion caused by the earlier newsletter article.

For the period of the annual return of individual information you can only report one residency status for the member per scheme, so that residency status must be applied for the whole tax year.

2. Annual allowance

Please remind your members that it is really important that those who have exceeded the annual allowance for 2016 to 2017 to declare this on their Self Assessment tax return (the deadline for submitting this is 31 January 2018). They’ll also have to pay a tax charge. Your members can find more information on paying tax charges in the guide Tax on your private pension contributions.

Your members can use our calculator to help check whether they need to declare and pay an annual allowance tax charge, even if they haven’t received a pension savings statement. Your members can find the calculator at https://www.tax.service.gov.uk/paac.

3. Reporting multiple small pots payments through Real Time Information (RTI)

We’re aware that some pension scheme administrators continue to have problems when reporting multiple small pots payments because RTI matches on the first part of the payroll ID reference and can treat some reports of multiple small pots payments as duplicates.

This affects the reporting of:

• multiple payments on the same Full Payment Submission (FPS)
• multiple payments with the same end date
• payments where the scheme administrator payroll ID reference only differs in the last couple of digits

We’ve carried out a scan to correct all affected records for tax years 2015 to 2016, 2016 to 2017 and 2017 to 2018. The guidance in paragraph 2.2.5 of the CWG2 has been amended to say that if you’re reporting these types of payments you should enter a different end date for each payment. However we’re aware that this is still causing problems for some pension scheme administrators.

We’re working with stakeholders to explore options to resolve this issue and we’ll provide guidance in future newsletters, however if you’re having problems reporting these types of payments, please email: pensions.businessdelivery@hmrc.gsi.gov.uk and put ‘Reporting multiple small pots payments’ in the subject line of your email.

4. Simplifying pension language

In the past we’ve supported other government departments and industry representative bodies on work to simplify pension language that may be complicated or confusing for pension savers. Following on from this we’re looking at the terms we use in legislation and guidance to get a better understanding of what our customers find hard to understand and how we might make our language more user friendly.

We need your help with this. In the next few months we’d like to speak to pension scheme administrators and industry representative bodies. If you would like to help with this you can contact us at pensions.policy@hmrc.gsi.gov.uk.

5. New pensions online service - updating your scheme administrator details

As we explained in Pension Schemes Newsletter 93 we’ve 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.

We know that some pension scheme administrators have tried to log on but have had to reset their user ID and password and are waiting for this information from us through the post. As such they’ve been unable to log onto the Pension Schemes Online service and update their details on time.

If this is the case and you’re waiting for information from us, please update your details as soon as you receive this information, even if this is outside the time limits we’ve already set.

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.