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HMRC internal manual

Pensions Tax Manual

HM Revenue & Customs
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Registration: essential principles: overview

Glossary PTM000001


Definition of a registered pension scheme
Tax advantages of registering a pension scheme
Who can be a member of a registered pension scheme
Applying to register a pension scheme
Schemes that are not registered pension schemes


Definition of a registered pension scheme

Section 150(2) Finance Act 2004

A registered pension scheme is a pension scheme (see PTM021000) that is registered under part 4 Finance Act 2004. This will be because either:

  • An application for registration has been made and HMRC have decided to register the scheme, or
  • The scheme is treated as automatically registered under the provisions of Finance Act 2004 - see PTM031300.

Each pension scheme is split into one or more arrangements for its members. PTM023000 gives more information about what an arrangement is and the different types of arrangement.

Tax advantages of registering a pension scheme

Sections 186, 188 and 196 Finance Act 2004

Section 308 Income Tax (Earnings and Pensions) Act 2003

Section 271(1A) Taxation of Chargeable Gains Act 1992

Registration of a pension scheme gives the following tax reliefs and exemptions:

  • tax relief on member contributions up to certain limits - see PTM044000,
  • relief on employer contributions - see PTM043000,
  • a contribution paid by an employer in respect of their employee scheme is not taxable as earnings for the employee concerned,
  • certain lump sums paid to the member (such as the pension commencement lump sum) or following the member’s death will not be liable to income tax as long as they are within the member’s lifetime allowance. PTM141000 provides detailed guidance of the various types of authorised payments and their respective tax treatments,
  • most investment income is exempt from income tax, and
  • gains from the disposal of scheme investment are exempt from capital gains tax.

Tax relief on a member’s pension savings is subject to the annual allowance (see PTM051000).

Tax relief or exemption can only start from the date that a pension scheme is registered. HMRC cannot backdate the registration date for a pension scheme.

Note that the last two exemptions do not mean that scheme tax charges cannot arise in respect of scheme investments. Where certain types of pension scheme invest in ‘taxable property’ tax charges arise on the acquisition, holding and disposal of that property - see PTM125000.

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Who can be a member of a registered pension scheme

The rules of each pension scheme will specify who can join that scheme.

The tax rules set no restrictions on who can be a member of a registered pension scheme. Under the tax rules a registered pension scheme can be open to employees or non-employees; there is no minimum or maximum age for scheme members and non-UK residents may also join a registered pension scheme. However, to obtain tax relief on personal contributions to a registered pension scheme, a member must be a relevant UK individual. This means that tax relief is not available to anyone who:

  • is not resident in the UK, and
  • has not been resident in any of the past 5 tax years, and
  • does not have any earnings chargeable to UK tax.

Although the tax rules set no restriction on who may join a scheme, individual pension schemes can restrict membership. The rules of each pension scheme will specify who can join that scheme.

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Applying to register a pension scheme

An application to register a pension scheme can be made if the scheme satisfies certain conditions. PTM031200 gives more information about these conditions, but broadly the pension scheme must:

  • be set up by someone with permission from the Financial Conduct Authority to set up either a personal or stakeholder pension scheme, unless the scheme is an occupational pension scheme or a public service pension scheme
  • have a scheme administrator that is resident in an EU member state or in a European Economic Area (EEA) state which is not a member of the EU, and is a fit and proper person to be a scheme administrator, and
  • be set up and maintained for the sole or main purpose of providing authorised pension and lump sum benefits.

The application to register a scheme must be made by the scheme administrator using the Pension Schemes Online (PSO) Service. The application to register the scheme cannot be made in paper form.

Once the application has been made HMRC will consider whether or not to register the scheme.

Registration cannot be backdated to a date earlier than the date on which HMRC makes the decision to register the scheme.

Full details of the process for registering a pension scheme are at PTM032000.

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Schemes that are not registered pension schemes

Tax treatment

If the non-registered scheme is an occupational pension scheme, it is treated as an employer-financed retirement benefits scheme (EFRBS) for tax purposes.

The tax treatment of payments into or out of a non-registered scheme depends on whether or not Part 7A Income Tax (Earnings and Pensions) Act 2003 applies to the scheme. EIM15010 outlines the various tax charges due.

Detailed information about the tax treatment of non-registered pension schemes is in the Employment Income Manual starting at EIM15000 .

Benefits paid from non-registered pension schemes may be subject to inheritance tax and to National Insurance contributions.

Further information about National Insurance contributions due in respect of an employer-financed retirement benefits scheme can be found in the National Insurance manual from NIM02760.

Non-registered schemes set up under trust are liable to tax on income and capital gains at the rate applicable to trusts.

Requirement to notify new EFRBS to HMRC

The Employer-Financed Retirement Benefits Schemes (Provision of Information) Regulations 2005 - SI 2005/3453

The ‘responsible person’ in relation to the scheme must tell HMRC about the scheme by 31 January following the end of the tax year in which the scheme came into operation.

EIM15056 explains who is ‘the responsible person’.

The responsible person must provide the following details to HMRC in their notification:

  • the name of the scheme
  • the address of the responsible person and
  • the date the scheme came into operation.

For these purposes, a scheme comes into operation on the earlier of the following dates:

  • the date on which an employer makes a contribution to that scheme, and
  • the date on which relevant benefits are provided.

If the scheme is set up under a trust, the trustees (as the ‘responsible person’) can make the notification in the Self Assessment return for the tax year in which the scheme was established.

If the scheme isn’t set up under trust the ‘responsible person’ should send the notification to:

Pension Schemes Services
HM Revenue & Customs
Ferrers House
Castle Meadow Road