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HMRC internal manual

Trusts, Settlements and Estates Manual

Trusts for particular purposes: employment related trusts - retirement benefits schemes and registered pension schemes

Registered pension schemes 

  • If the registered pension scheme is set up as an express trust, the trustee(s) are required to notify HMRC of the trust using the Trusts Registration Service (TSEM1402) where : it is a UK trust, or is a non-UK trust with UK source of income or UK assets; and
  • from 2016/17 onwards, the trustees have incurred a liability to UK tax in relation to the income or assets of the trust. That includes a liability to Stamp Duty Land Tax or Stamp Duty Reserve Tax incurred when purchasing trust assets.

Registered pension scheme trusts will not need to register if the scheme administrator has to pay UK income tax solely because they are liable for:

  • all or part of a member’s annual allowance charge or lifetime allowance charge
  • special lump sum death benefits charge
  • short service refund lump sum charge
  • authorised surplus payments charge
  • de-registration charge
  • unauthorised payments charge
  • unauthorised payments surcharge
  • scheme sanction charge
  • overseas transfer charge or
  • tax under PAYE on a member’s pension or lump sum benefits or on the benefits of the recipient after the member dies.

 HMRC Trusts Nottingham do not need to manage the tax returns process. Pension Schemes Services will issue any Registered Pension Schemes Self-assessment Tax Returns that are required. Business tax-Pension scheme administration

The returns instructions can be found in the SA Manual at ‘Returns/return issue/pension scheme returns’. SAM120080.

Guidance on what is a Registered Pension Scheme is within the Pensions Tax Manual.

Registered pension scheme has been deregistered

All cases are proper to HMRC Trusts Nottingham.

Where all or part of the scheme relates to employment, the pension scheme is treated as an employer-financed retirement benefit scheme, as below.

Employer-financed retirement benefits schemes 

Sections 393-399, 569,574A and Part7A ITEPA 2003

From 2017, trustees are required to notify HMRC of the existence of the trust using the Trusts Registration Service. TSEM1402

HMRC Trusts Nottingham deals with both resident and non-resident employer-financed retirement benefits schemes (EFRBS).

EFRBS trusts are taxable at the special rates for trusts ITA/S479.

EFRBS income tax provisions for employers and employees are explained in the Employment Income Manual. This could include an employer`s scheme to provide pensions and lumps sums on retirement, or a more informal relevant benefits arrangement such as a lump sum death benefit into trust for relatives of a deceased employee or former employee.

EFRBS payments

The relevant Employer tax office considers what relief is due to the employer for contributions, see Business Income Manual. In general, the employer`s relief matches the employee`s income tax charge as to both time and amount. Further advice can be obtained from CT&VAT (Trading and Property Income Team).

Pensions that the trustees pay are chargeable as the recipient`s pension income. Guidance on pension income is from EIM74000. Certain ‘relevant lump sums’ are also chargeable as pension income.

Other lump sum benefits or earmarking by the EFRBS may be relevant steps for Part7A ITEPA 2003 disguised remuneration rules, see from EIM45000. Fall back charges, usually for older schemes, are under S394 ITEPA 2003.

National Insurance Contributions

Guidance on contributions and payments for Class 1 NICs is from NIM02750.