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HMRC internal manual

Employment Income Manual

Non-approved schemes: periods when a scheme was not approved

A retirement benefits scheme may have been outside the non-approved scheme rules from the outset. For example it may have been approved by Audit & Pension Scheme Services (APSS), now Pension Schemes Services, before any contribution or payment was made, or it may have been a statutory scheme (see EIM15407).

The situation may however be less clear. For example:

  • an application for approval of a scheme may have been under consideration by (APSS) when a payment was made. Only those lump sums that APSS approved before or after payment, or that were approved as small payments (see EIM15429), are excluded from charge.
  • a scheme may be approved with effect from a date after a payment was made to the scheme. For example, an employer made a contribution on 1 January 2003 but approval, when given, was backdated only to 1 July 2003. The contribution is chargeable under Section 386 ITEPA 2003 (see EIM15401).
  • a scheme’s approval may have been subsequently withdrawn. Payments outside the period covered by approval are treated as to or from a non-approved scheme.

Note that if for any reason an employer’s contribution to a non-approved scheme has not been assessed on the employee under Section 386 ITEPA 2003, any lump sum from the scheme that is derived from that contribution can be assessed under Section 394 ITEPA 2003 when paid (see EIM15401).