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HMRC internal manual

Pensions Tax Manual

HM Revenue & Customs
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Unauthorised payments: deemed or specific situations that are unauthorised payments: benefits in kind: wasting assets

Glossary PTM000001

Section 241(2)(a) Finance Act 2004

Although there are no restrictions on registered pension schemes buying assets which can be used by members, schemes should not use funds for the sole purpose of providing assets for use by members.

Where a registered pension scheme makes an asset available which is utilised for personal use by a person who is, or has been, a member, and the asset is a “wasting asset”, in addition to the unauthorised payments charge, a scheme sanction charge will also apply to the scheme which is equivalent to the amount of the unauthorised payment to the person who is, or has been, a member. See PTM134100


Alan is provided with the use of a car mainly for personal use. The calculation of the unauthorised payment assessable on him is £4000.

Alan is liable to pay tax at the higher rate of 40%. The tax he pays is £1600.

As the asset is a wasting asset, the scheme is also liable to a sanction charge of

£4000 x 40% = £1600. (Although a deduction can be made for some of the tax which has been paid by the member - see PTM135100).

Providing Alan has paid his tax of £1600, a deduction of £4000 x 25% = £1000 can be made, leaving the scheme to pay £600.

A “wasting asset” has the meaning given by section 44 Taxation of Chargeable Gains Act 1992 and means an asset with a predictable life span not exceeding 50 years. Plant or machinery will always be deemed to have a life of under 50 years - therefore all cars (even veteran or classic cars) are wasting assets.