Pension administrators: reclaim tax relief using relief at source
Relief at source is a way of giving tax relief on contributions a member makes to their pension scheme.
How relief at source works
A member making a contribution to their pension scheme will automatically get tax relief at the basic rate of 20%. The amount paid to the scheme is treated as having had an amount equivalent to basic rate tax deducted.
The scheme administrator claims the basic rate tax relief from HM Revenue and Customs (HMRC) and adds it to the pension pot. This applies whether or not the member pays tax.
For example if a member wants to make a £100 contribution they’ll only need to pay £80 into their pension scheme. The scheme administrator reclaims £20 from HMRC and puts this into the scheme making up the pension contribution to £100.
As a pension scheme administrator you don’t need to do anything differently at the moment for Scottish taxpayers. You should continue to claim relief at source at the UK basic rate for all members. Until April 2018, any adjustments that might be needed will be made by HMRC through Self Assessment or through PAYE coding.
Registered pension scheme administrators and pension providers will have to make changes to their IT systems before April 2018, to enable them to claim relief at source at the correct rate from April 2018 onwards.
Higher or additional rate taxpayers
If the member is a higher rate taxpayer they can claim any extra tax relief due through their tax return or by contacting HMRC.
There may be a difference in the tax rate or income thresholds depending on if the member is a Scottish taxpayer or rest of UK taxpayer. If the member is an additional rate taxpayer they’ll have to claim the extra relief through their tax return.
Members information required by the pension scheme
Before you can claim back basic rate tax relief on a member’s contributions you’ll need the following information about the member:
- full name and address
- date of birth
- National Insurance number - or a statement that they don’t have one (this information isn’t needed if the member is under 16 or a non-UK citizen who isn’t living in the UK)
You also needs details about the member’s employment status. The member will make declarations including one to tell their pension scheme if they make a contribution that doesn’t qualify for tax relief.
Pension schemes normally collect all the required information and member declarations as part of the application form to join the scheme.
How to claim tax relief
You need to register to claim tax relief. You can do this either online when you’re registering the scheme or later by completing form APSS 103 ‘relief at source details’. You’ll also need to send in:
- a completed form APSS 103A ‘relief at source details - specimen signatures’ for those authorised to make repayment claims
- a copy of the board’s resolution (or equivalent) appointing each authorised signatory
- a bank statement or original paying-in slip for the relevant bank account
You should tell HMRC about any changes to your repayment details by completing a further form APSS 103. If you’re changing who can make repayment claims you should also send a further form APSS 103A.
Once registered to claim tax relief claims for relief on member contributions paid during tax year can be made yearly using form APSS 106. Claims for relief must be made within six years of the end of the relevant tax year.
If you don’t want to wait a year to make a claim you can make an interim claim using form APSS105. These claims can cover a maximum of 6 tax months (running from the 6th day of a month to the following 5th) but all the months have to fall in the same tax year.
If you’re making interim claims you still complete an annual claim. Interim claims for the period 6 September to 5 October and any following months won’t be paid until HMRC has the annual claim for the previous tax year.
If HMRC gets the claim by the last working day of the month and is satisfied with the claim it will normally be paid on the 21st of the following month or the next working day.
Every year you must complete form APSS107 ‘registered pension schemes: annual statistical return’. This must be sent to HMRC by 5 June following the end of the relevant tax year.
At the start of each tax year HMRC will issue a notice to scheme administrators requiring them to give a report of all member contributions paid in the previous tax year. This annual information return can be provided either electronically or on paper - but it must be in a set format. Guidance and specifications for making annual information returns is covered under separate guidance.
Interim claims for the period 6 September to 5 October and any following months won’t be paid until the HMRC has the annual information return for the previous tax year.
Published: 16 September 2014
Updated: 6 April 2017
- Links added for Scottish and rest of UK higher and additional taxpayer rates.
- Registered pension scheme administrators and pension providers will have to make changes to their IT systems for Scottish taxpayers before April 2018.
- Any adjustments needed for Scottish taxpayers will be made by HMRC through Self Assessment or through PAYE coding.
- First published.