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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Records: set up taxpayer record: pension schemes

Registered Pension Schemes

SA applies to registered pension schemes from 6 April 1996. Pension scheme returns are issued to trustees of all registered pension schemes. Pension Schemes Services will have notified approval of these schemes.

Insured approved pension schemes

Pension Schemes Services will have notified you if an insured scheme is approved. These schemes are not within SA.

Unapproved pension schemes

Unapproved pension schemes are within SA. A Trust and Estate return (SA900) is issued to the trustee of unapproved pension schemes.

General

Pension schemes have two separate taxpayers, the trustee and the Administrator. An SA record is appropriate for dealing with liability on the trustee but not for dealing with liability on the Administrator.

Trustees of pension schemes may have liability on the scheme’s investment income. The liability is dealt with through SA for 1996-97 and subsequent years. The trustee is responsible for making a declaration of income on the SA970 Tax Return for the Trustees of Registered Pension Schemes and paying any tax that arises on income or gains of the scheme. If there is liability, payments on account are appropriate with a balancing payment due on 31 January following the end of the return year.

This should not be confused with liability that may arise on Administrators of pension schemes, who are responsible for notifying liability on certain payments made, to members and employers for example, by the scheme.

The trustee is responsible for claiming repayments of income tax. In-year repayment claims on form R63N will continue. Advice is available in subject ‘In-year Repayments to Pension Schemes’ (SAM110090). The SA return, where issued, will form the final repayment claim for the year.

SA record

There should only be one SA record for each pension scheme that falls within SA.

SA record type ‘Trust’ is appropriate for a registered pension scheme. The record will be in the name of the pension scheme with the trustee being shown as the main capacitor.

Pension Schemes Services (PSS) deal with the tax affairs of all registered pension schemes. The SA970 Tax Return for the Trustees of Registered Pension Schemes is only issued to schemes by PSS.

Action Guide ‘Set Up Trust record’ (SAM100261) should be followed to set up the record, subject to the following advice

  • When using function SET UP TRUST, in every registered pension scheme case you should

    • Set the Manual Return field to ‘Y’. You will need to issue a ‘Tax Return for Trustees of Registered Pension Schemes’, rather than a trust return
    • Set the Trust Type field to ‘Non-discretionary’
    • Note on the cover of the permanent notes pad in the file ‘Manual return - pension scheme’

The following points should be noted

  • The Manual Return signal should be set on the SA record using function AMEND TAXPAYER SIGNALS. The SA return SA970 (entitled ‘Tax Return for Trustees of Registered Pension Schemes’), rather than the SA return SA900 (Trust and Estate) is appropriate
  • Function CREATE RETURN CHARGE will set up payments on account for the following year. A claim to reduce may be included in the return. If so this is dealt with in the normal way

    • Use function MAINTAIN PAYMENTS ON ACCOUNT. Select the [TP Adjust] button
    • Enter the reduced payment on account details
  • Where an in-year repayment is made, the No Repayment signal should be set on the SA record using function AMEND TAXPAYER SIGNALS. This will prevent an automatic repayment, and possible over-repayment, being made when the return is received. Normally you will use function CREATE FREESTANDING CREDIT on the SA record, following the use of which the No Repayment signal is set automatically
  • Any repayment arising from the SA return should be made using function ISSUE REPAYMENT FROM OVERPAID BALANCE. This is because function CREATE RETURN CHARGE, which is used to capture charge details from the return, will not produce an automatic repayment