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HMRC internal manual

Pensions Tax Manual

Unauthorised payments: deemed or specific situations that are unauthorised payments: overview

Glossary PTM000001

Deemed or specific unauthorised payments

Sections 160(2), 161 and 172 to 174 Finance Act 2004

Paragraphs 37 and 38 of Schedule 10 Finance Act 2005

The tax rules specify the conditions that need to be met for payments by a registered pension scheme to be authorised payments for the purpose of the tax rules. Any payment that doesn’t meet these conditions is an unauthorised payment.

An unauthorised payment may also be deemed to have been made by a registered pension scheme in certain circumstances, as set out in the legislation.

The circumstances where an unauthorised member payment arises or might arise include:

  • where value shifting involving pension scheme assets occurs (see PTM133700)
  • investment in taxable property (see PTM125000)
  • benefits or rights under a registered pension scheme are assigned, surrendered or re-allocated (except within specifically defined circumstances) (see PTM133200 and PTM133300)
  • an asset held for the purposes of a registered pension scheme is used to provide a benefit other than a payment to a member, or to a member of the member’s family or household (again, except within certain narrowly defined circumstances) (see PTM133910)
  • a payment is made to a connected party of the member (see PTM027000)
  • loans to the member or a connected person (see PTM123300)
  • unallocated employer contributions are allocated to a member beyond a certain level (see PTM133500)
  • if a member’s benefits under an occupational pension scheme increase by more than a specified amount and the member and sponsoring employer are connected (see PTM133600)
  • following the death of a member the pension rights of another scheme member are increased and that increase is directly attributable to that member’s death (see PTM133400)
  • recycling of pension commencement lump sum (see PTM133810).

Circumstances where an unauthorised employer payment may arise include:

  • value shifting involving pension scheme assets ( see PTM133700)
  • investments with a sponsoring employer which are not scheme administration employer payments (see PTM144000)
  • employer loans which don’t meet the tax rules (see PTM123200).