Pension scheme administrators operating relief at source
08 June 2016
Guidance has been updated to reflect the two year easement for claiming relief at source at the rest of the UK basic rate and not the Scottish Rate of Income Tax until April 2018.
As a pension scheme administrator you don’t need to do anything differently at the moment for Scottish taxpayers. You should continue to claim relief at source at the UK basic rate for all members. Until April 2018, any adjustments that might be needed will be made by HMRC through Self Assessment or through PAYE coding.
Registered pension scheme administrators and pension providers will have to make changes to their IT systems before April 2018, to enable them to claim relief at source at the correct rate from April 2018 onwards."
As a refresher an article from HMRC Employer Bulletin 56 provided this update in October 2015:
"Pension schemes operating relief at source
The Government has agreed that from April 2016 until April 2018, Registered Pension Scheme Administrators (RPSAs) can continue to claim relief at source (RAS) at the rest of the UK basic rate for all scheme members, irrespective of any difference between the Scottish and the rest of the UK basic rates. This is to allow time to prepare your systems. However we would expect you to inform your members about the implications of the Scottish Rate of Income Tax and its impact on RAS.
If the Scottish Government choose to vary the Scottish Rate of Income Tax for the tax years beginning 6 April 2016 or 6 April 2017, HMRC will reconcile any difference in RAS for Scottish taxpayers by adjusting their tax liability through the Self-Assessment process or through PAYE coding.
For the tax year beginning 6 April 2018 onwards, HMRC will notify RPSAs of the rate of RAS to apply for both Scottish scheme members and those in the rest of the UK, enabling RPSAs to claim RAS at the correct rate."
See HMRC’s Scottish Rate of Income Tax news page for all information relating to the implementation of the Scottish Rate of Income Tax.