Guidance

Relief at source pension schemes newsletter – January 2019

Published 17 January 2019

1. Scottish Budget

On 12 December 2018, the Scottish government published their Draft Budget setting out the Scottish Income Tax rates for the 2019 to 2020 tax year. The Scottish Income Tax rates are the same as for 2018 to 2019. For 2019 to 2020 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%

For 2019 to 2020, if you’re the administrator of a pension scheme using the relief at source mechanism, you’ll continue to claim tax relief at the rate of 20% for members who are Scottish taxpayers.

For pension scheme members who are Scottish taxpayers liable to Income Tax at no more than the Scottish starter rate of 19%, or who pay no tax, current tax rules will continue to apply. This means that scheme administrators will continue to claim relief at 20% in respect of these individuals, and HMRC will not recover the difference between the Scottish starter and Scottish basic rate.

Pension scheme members who are Scottish taxpayers liable to Income Tax at the Scottish intermediate rate of 21% will be entitled to claim the additional 1% relief due on some or all of their contributions above the 20% tax relief paid to their scheme administrators. We will not be able to put this directly into your scheme on behalf of your members, but we’ll adjust their tax code so that they get this tax relief through their pay.

Pension scheme members liable to Income Tax at the Scottish intermediate rate will also be able to claim the additional relief for 2019 to 2020 through their Self Assessment return or, if they do not already complete Self Assessment returns, by contacting HMRC.

These Scottish Income Tax rates announced in the Scottish government’s Draft Budget for 2019 to 2020 will be considered by the Scottish Parliament, and an agreed Scottish Rate Resolution will set the Scottish Income Tax rates and bands for the tax year 2019 to 2020. We’ll provide an update on this in a future pension scheme newsletter.

2. Relief at source for Welsh taxpayers

The Welsh government have confirmed that for 2019 to 2020 the rates of Income Tax paid by Welsh taxpayers will continue to be the same as those paid by English and Northern Irish taxpayers. We can confirm that the Welsh Budget does not give rise to any changes for schemes operating relief at source.

3. Notification of residency status report for 2019 to 2020

On 14 January 2019 we started to release your notification of residency reports through the Secure Data Exchange Service (SDES) so that you can apply the correct rate of relief for the 2019 to 2020 tax year.

We circulated the technical specifications for the notification of residency status report in December 2018 to scheme administrators on our mailing list, to give more information about the format of your January 2019 report. We’ve included these technical specifications at Appendix 1 of this newsletter.

3.1 Time limit for downloading your January 2019 report

As we explained in the Relief at source pension schemes newsletter - December 2018, you’ll have 6 days to download your report (144 hours starting from when we make the file available to you for download). For security, if you do not download your report within the 6 days, it will automatically be deleted from your SDES account.

We’ll email when your file is available for you to download and we’ll send you a reminder by email too. If you’re expecting an email from us but do not think you’ve received one, check your junk folder in your email account. You can also log in to SDES to check if your report is available to download.

You should email us at: MDTSSETCustomerManagement@hmrc.gsi.gov.uk if you cannot open your report because the file is corrupt.

3.2 If you did not download your report in time

You can request that we make the file available to you again for download, but we can only do this once and you must request this by the 23 January 2019. You should email us at: MDTSSETCustomerManagement@hmrc.gsi.gov.uk.

Following your request, when we make the file available to you, the same time limits for downloading it apply – so you’ll have 6 days (144 hours starting from when we made the report available to you) to download your file.

If you do not make a request by the 23 January 2019 you’ll have to use the ‘rest of UK’ residency status for your members for 2019 to 2020 or use the look up service.

3.3 If you did not receive a notification of residency status report

We’re providing notification of residency status reports to all pension scheme administrators who successfully submitted a relief at source annual return of information for 2017 to 2018 before the end of November 2018. If you both successfully submitted your 2017 to 2018 annual return of information and fully enrolled onto SDES by this date but you do not get a report through SDES, email us at: reliefatsource.administration@hmrc.gsi.gov.uk and put ‘notification of residency status report 2019’ in the subject line of your email.

3.4 Members who are not on a residency status report

As we explained in the Relief at source pension schemes newsletter - December 2018 you can use the look up service to check the residency tax status for single or multiple members or default to the UK basic rate for your members, if you do not receive a report.

You must treat any member that does not have a residency status on either the residency report or look up service as having a ‘rest of UK’ residency status and use this status when you claim relief at source on their first contribution. You must not apply a tax rate based on the member’s address.

Once you’ve used a residency status to claim relief at source for a member, you must use this for the whole of the tax year.

3.5 Unmatched members on your notification of residency status report

Members that we’ve been unable to provide a residency status for will be shown with a status of ‘U’ on your notification of residency status report.

The reason for unmatched records include:

• using unstructured data on your 2017 to 2018 annual return of information
• incorrect personal information submitted for your scheme members that we could not trace
• life events such as marriage, divorce or death

You can use our service to look up the residency status of your members if:

• you submitted unstructured data on your annual return of information
• you’ve received updated information from your members

If you still have unmatched members after using the look up service, you should use the rest of UK residency status as a default for the 2019 to 2020 tax year and where possible, use corrected information for future returns.

To do this contact your scheme members and check the information you hold for them. If the scheme member can help you correct the data, you can update your records and submit their correct details on your next annual return of information.

If you’re still unable to reconcile the information with your scheme member, you should tell them to check their details on their personal tax account or contact the National Insurance general enquiries to confirm their correct National Insurance number and personal details.

3.6 Corrected National Insurance numbers

As we explained in the Relief at source pension schemes newsletter - December 2018, if the National Insurance number you submitted for an individual was incorrect on your annual information return, where we can trace a correct NI number we’ll give you the correct one in an additional column on your 2019 notification of residency status report.

You should make sure you update your records for that member with the corrected National Insurance number and make sure you use this on future annual returns of information.

We will not correct the National Insurance number if only the suffix is different.

4. Excess relief

4.1 Accounting for excess relief from previous tax years

You must provide HMRC with a schedule of excess relief that you claimed in interim claims (APSS105s) for tax months ending on or after 5 April 2018. You have 90 days from when you discover you claimed too much relief at source, to give HMRC information about excess relief claimed and repay the excess relief to HMRC. If you do not pay within 90 days of discovering you’ve claimed too much, you’ll be charged interest from the date the excess relief was paid to you.

If you discovered that you claimed too much relief at source for a tax month ending before 5 April 2018, you do not need to include details of that excess relief in an interim claim or an excess relief schedule. Instead you must submit an annual claim (APSS106) for the relevant tax year to report this excess relief. If you’ve already submitted an annual claim for the relevant tax year you should submit a new, supplementary annual claim (APSS106).

We’ll update the Pensions Tax Manual and GOV.UK guidance to clarify this in due course.

4.2 Registered pension schemes relief at source annual claims - APSS 106

We’ve made a small amendment to the APSS106 - Relief at Source: annual claim for annual claim periods 2018 to 2019 and onwards, to correct a legislative reference about excess relief before box C.