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HMRC internal manual

Pensions Tax Manual

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Protection from the lifetime allowance charge: lifetime allowance enhancement factors: Notifications procedure for the non-residence factor

Glossary PTM000001
   

 

Notification procedure
Example of notifying HMRC of entitlement to a non-residence factor
When separate notifications of a non-residence factor are needed
Example of when separate notification to HMRC of a non-residence factor is required
Notifying HMRC of non-residence factor for a hybrid arrangement

Notification procedure

Regulation 7 The Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006 - SI 2006/131

An individual has to notify HMRC of their entitlement to a non-residence factor lifetime allowance enhancement factor. Notification should be made on form APSS 202 and received by HMRC no later than five years after 31 January following the end of the tax year in which the “accrual period” ends. That happens when the earliest of the following events occurs:

  • immediately before a benefit crystallisation event in relation to the individual’s arrangement
  • the individual ceases to be a relevant overseas individual (see PTM095310), and
  • benefits cease to accrue to or in respect of the individual under the arrangement.

The form APSS 202 should be used to notify HMRC of an entitlement to a non-residence factor for part of an active membership period relating to a pension arrangement during which the individual was a relevant overseas individual.

Separate APSS 202 notification forms should be submitted to HMRC in the certain circumstances - see When separate notifications of a non-residence factor are needed below.

A single APSS 202 form can be submitted where an individual has been accruing benefits under different types of arrangement within a single registered pension scheme that has multiple arrangements. Such an individual can notify HMRC of a non-residence factor relating to all of their arrangements under the scheme. They will need to fill in all of the sections of the form that apply to those arrangements.

Special consideration needs to be given to an individual who is a member of a hybrid arrangement - see Notifying HMRC of non-residence factor for a hybrid arrangement below.

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Example of notifying HMRC of entitlement to a non-residence factor

Phillip returned from an overseas secondment with an overseas resident employer on 1 June 2007. He was a relevant UK individual in the 2007-2008 tax year so he ceased to be a relevant overseas individual with effect from 5 April 2007. At that time he was still accruing benefits under the arrangement and had not been paid benefits from it.

To claim an enhancement Phillip must submit a completed form APSS 202 to HMRC no later than five years after 31 January 2008, i.e. by 31 January 2013.

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When separate notifications of a non-residence factor are needed

Separate APSS 202 notification forms should be submitted to HMRC in the following circumstances.

Relevant overseas individual during more than one part of an active membership period

Where an individual is a relevant overseas individual during more than one part of an active membership period relating to the same pension arrangement a separate notification should be made for each part-period.

Relevant overseas individual in more than one pension scheme

Where an individual is a relevant overseas individual during part of an active membership period relating to more than one pension scheme a separate notification should be made for each pension scheme.

Benefit crystallisation event occurs in an arrangement whilst the individual is a relevant overseas individual and is still accruing benefits under the arrangement

One APSS 202 form should relate to the part of the active membership period during which the individual was a relevant overseas individual up to the date of that benefit crystallisation event. Another APSS 202 form should relate to the part-period from the same start date to the date of the following benefit crystallisation event. The individual should tick box 1.6 on the second form, to show that it is amending the first notification, and should enter on that form the reference number shown on the certificate issued in response to the first notification. Any figures entered at box 4.1 or box 6.1 on the second form should be calculated by adding the rights or benefit entitlement used up on the first benefit crystallisation event to the rights or benefit entitlement as at the date of the second benefit crystallisation event.

However, if the second benefit crystallisation event occurs before the end of the notification time limit relating to the first benefit crystallisation event, and before the individual has submitted a form APSS 202 in respect of the part-period up to the date of the first benefit crystallisation event, the individual can submit one form instead of two. That form should relate to the same part-period as would be covered by the second form referred to above. Any figures entered at box 4.1 or box 6.1 on the form should be calculated by adding the rights or benefit entitlement used up on the first benefit crystallisation event to the rights or benefit entitlement as at the date of the second benefit crystallisation event. Box 1.6 should not be ticked as this form is not amending an earlier notification. The form must be submitted within the notification time limit relating to the first benefit crystallisation event.

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Example of when separate notification to HMRC of a non-residence factor is required

On 6 April 2006, Tom was a member of a defined benefits arrangement under a registered pension scheme and was working abroad. His first benefit crystallisation event from the scheme occurred on 19 July 2007 whilst he was still accruing benefits under the scheme and working abroad. His second benefit crystallisation event occurred on 16 October 2012 when he retired.

Following his first benefit crystallisation event Tom should submit a form APSS 202 showing the value of his benefit entitlement as at 6 April 2006 and as at 19 July 2007. He will then receive a certificate giving him a non-residence factor based on the increase in the value of his benefit entitlement from 6 April 2006 to 19 July 2007.

After his second benefit crystallisation event, Tom should submit a second form APSS 202 showing the value of his benefit entitlement as at 6 April 2006 and as at 16 October 2012, and should tick box 1.5 to show that this form is amending the earlier notification. He will then receive a certificate giving him a non-residence factor based on the increase in the value of his benefit entitlement from 6 April 2006 to 16 October 2012 which replaces his earlier certificate.

However, if Tom had not submitted a form APSS 202 relating to the part-period up to his first benefit crystallisation event before the occurrence of his second benefit crystallisation event, he could then have submitted instead a form APSS 202 showing the value of his benefit entitlement as at 6 April 2006 and as at 16 October 2012. He would have received a certificate giving him a non-residence factor based on the increase in the value of his benefit entitlement from 6 April 2006 to 16 October 2012.

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Notifying HMRC of non-residence factor for a hybrid arrangement

If an individual has a hybrid arrangement within a scheme, and also has one or more other arrangements under that scheme, total figures for the hybrid arrangement and for the other arrangements may have to be shown in section 4, 5 or 6 of the APSS 202 form.

This is because the hybrid arrangement is treated as if it were a cash balance arrangement, other money purchase arrangement, or defined benefits arrangement when calculating a non-residence factor (see PTM095350).

For example, if the highest amount available under the hybrid arrangement was that calculated on a cash balance basis, and the individual was also claiming in respect of a cash balance arrangement, the total closing values for both the hybrid arrangement and the cash balance arrangement should be shown in box 4.1, and the total opening values for both arrangements should be shown in box 4.2.