National Insurance numbers and pensions tax relief

16 April 2015

A number of members and software providers have challenged pension providers, specifically NEST, who advised that unless a National Insurance number (NINO) was present for the pension member, they couldn't have tax relief at source.

Due to the fact payroll cannot withhold pay or in fact do anything even when a NINO isn’t present we felt this was rather unfair, given the automatic enrolment obligations, where we cannot delay our duties because of a lack of NINO.

We challenged NEST and HMRC to provide the legislation to which the rules dictate we must provide a NINO for the member to benefit from tax relief.

HMRC published their latest Pension Schemes Newsletter (no.68) in early April highlighting the legislative information below which unfortunately means that if there is no NINO, then there is no entitlement to tax relief at source.

National Insurance number statements

We are aware that some schemes may be accepting statements from members who have a national insurance number but who have not provided this to the scheme administrator.

Under Reg 4(2), The Registered Pension Schemes (Relief at Source) Regulations 2005 - SI 2005/3348 it states that when members join a scheme and before they make their first RAS contribution they, or a representative will have to provide the scheme administrator with some basic personal information such as full name, permanent residential address (including postcode if resident in the UK), date of birth and National Insurance number.

If the member does not have a National Insurance number, they can provide a statement giving reasons why they do not hold such a number, for example because they are under the age of 16 or a citizen of a country outside the United Kingdom who is not resident in the United Kingdom.

A pension scheme should not accept contributions as relievable contributions without the relevant declarations/statements as set out above and a member has no entitlement to relief at source. If a scheme makes relief at source claims for members in these circumstances, HMRC is entitled to ask for the relief at source to be repaid.

If a member doesn’t know if they have a National Insurance number or has lost their National Insurance number, they can find more information about how to trace this on GOV.UK.

Find a lost National Insurance number - GOV.UK

We will update our guidance on GOV.UK shortly to cover this.