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HMRC internal manual

Pensions Tax Manual

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HM Revenue & Customs
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Information and administration: essential principles: scheme member information requirements

 

Glossary PTM000001
   

 

 

In addition to the normal requirement for all taxpayers to report liability to unpaid tax to HMRC scheme members have the following obligations in respect of pension schemes.

 

Telling the scheme administrator that the member has lifetime allowance protection
Requirement to tell HMRC about relevant benefit accrual
Requirement to tell HMRC about loss of fixed protection, fixed protection 2014 or fixed protection 2016
Member with individual protection 2014 or 2016 to tell HMRC about a pension debit
Requirement to preserve records in respect of lifetime allowance protection
Transferring to a qualifying recognised overseas pension scheme (QROPS)
Member to provide the scheme administrator with their National Insurance number
Pension commencement lump sums
Recycling of lump sums

Telling the scheme administrator that the member has lifetime allowance protection

Regulation 11 The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567

A member who has a form of lifetime allowance protection and who wants to use that protection to reduce their liability to the lifetime allowance charge must tell their scheme administrator about their lifetime allowance protection. PTM164200 provides guidance about this member requirement.

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Requirement to tell HMRC about relevant benefit accrual

Section 263 Finance Act 2004

If a member with enhanced protection loses that protection due to relevant benefit accrual the member must tell HMRC about this. Guidance on when relevant benefit accrual occurs starts at PTM093500.

If the member fails to tell HMRC that they have lost enhanced protection due to relevant benefit accrual within 90 days of losing protection they can be liable to a penalty of up to £3,000.

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Requirement to tell HMRC about loss of fixed protection, fixed protection 2014 or fixed protection 2016

Regulation 9 The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 - SI 2011/1752

Regulation 9 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013 - SI 2013/1741

Paragraphs 17 and 20 Schedule 4 Finance Act 2016

If a member loses fixed protection they must tell HMRC about this within 90 days of the date of the event triggering loss of protection

If a member loses fixed protection 2014 or 2016 they must tell HMRC about this within 90 days of the date they could first reasonably be aware of the event triggering loss of protection.

If the member fails to do this penalties are due under section 98 Taxes Management Act 1970- see PTM160800.

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Member with individual protection 2014 or 2016 to tell HMRC about a pension debit

Regulation 9 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Paragraphs 18 and 20 Schedule 4 Finance Act 2016

If a member within individual protection 2014 or individual protection 2016 has a pension debit as a result of a pension sharing order they must within 60 days beginning with the date of the pension debit give the following information to HMRC:

  • the date of the pension debit
  • the appropriate amount of the pension debit, and
  • (if relevant) the net appropriate amount of the pension debit.

If the member fails to do this penalties are due under section 98 Taxes Management Act 1970 - see PTM160800.

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Requirement to preserve records in respect of lifetime allowance protection

A member with lifetime allowance protection is required to preserve documents relating to that protection. The rules on preserving documents vary depending on the form of protection. PTM160200 provides guidance on the rules for preserving documents and records.

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Transferring to a qualifying recognised overseas pension scheme (QROPS)

Regulation 11BA The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567

Before a scheme administrator makes a transfer to a QROPS they should get certain information from the scheme member. The member is also required to provide a declaration to the scheme administrator about the transfer - see PTM102000.

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Member to provide the scheme administrator with their National Insurance number

Regulation 11C The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567

The scheme administrator needs to supply HMRC with details of a member’s National Insurance number when they complete an Event Report or an Accounting for Tax return. If a scheme administrator asks the member for details of their National Insurance number, within 60 days of the scheme administrator’s request the member must provide the scheme administrator with either:

  • their National Insurance number, or
  • written confirmation that they don’t qualify for a National Insurance number together with their date of birth and address.

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Pension commencement lump sums

Regulation 11B The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567

There is a cap on the amount that can be paid as a pension commencement lump sum (PCLS). This limit is based on the benefits held under the paying scheme and any benefits previously paid to the member by any registered pension scheme. Because of this, when a scheme wants to pay a PCLS the scheme administrator needs to know the ‘available portion of the member’s lump sum allowance’ so as to be able to calculate the amount that they may pay as a PCLS from that scheme.

Normally the ‘available portion of the member’s lump sum allowance’ is based on the amount the member has previously crystallised. However this is not the case where a scheme pension has been provided under a money purchase arrangement.

Where:

  • a scheme intends to pay a PCLS, and
  • the member has previously crystallised a scheme pension under a money purchase arrangement

the member must provide the scheme administrator with the information they need to calculate the ‘available portion of the member’s lump sum allowance’. The scheme administrator will ask the member for the information they need.

If the member does not provide the information the scheme administrator may choose to:

  • not pay any benefits until the information is received, or
  • decide that the member’s maximum PCLS is nil and so pay all benefits in pension form. Once the pension is in payment it cannot be reduced to pay a PCLS.

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Recycling of lump sums

Regulation 11A The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567

A lump sum paid to the member that would normally be a tax free pension commencement lump sum may be treated as a taxable unauthorised payment due to recycling. See PTM133810 for an explanation of recycling and when a lump sum is treated as an unauthorised payment due to recycling.

Where a lump sum is an unauthorised payment due to recycling the member must tell the scheme administrator within 30 days of the unauthorised payment being made:

  • the date on which the unauthorised payment is treated as made, and
  • the amount of the payment.