20 July 2023

HM Revenue and Customs (HMRC) has published the ‘Pension schemes newsletter 152 — July 2023’. The newsletter is published by HMRC’s pension schemes services to update stakeholders on the latest news for pension schemes.

Here are some of the key highlights:

  • legislation Day (L-Day) 2023 - the government published draft legislation in connection with the following pension measures:
    • relief at source (RAS) – the government announced that it would digitise the RAS pension tax system, which will improve the experience for pension scheme administrators and reduce errors. New regulations will be needed to cover how pension scheme administrators, should claim tax relief on eligible contributions made to registered pension schemes from 6 April 2025. These will be published for consultation in due course and the amendments made by this revision will have effect on and after 6 April 2025. These changes will not impact on who is eligible for tax relief, or on the principle of RAS whereby relief at ‘the relevant rate’ can be deducted before the contribution is made
    • abolition of the lifetime allowance (LTA) - the draft legislation provides several places where HMRC have regulation making powers to specify how scheme benefits are to be valued or similar. HMRC would welcome views from schemes on where in the legislation they consider this detail would be best placed
  • relief at source (RAS) annual return of information for the tax year 2022/23 – the deadline has now passed, however there are still returns outstanding from scheme administrators who have submitted interim repayment claims in 2023/24. HMRC wants to remind pension scheme administrators that it’s important to use the right naming convention when submitting an annual return of information for 2022/23. Using the wrong references on either the file name or within the annual return itself will mean HMRC’s systems will reject the submission and you’ll have to resubmit the return
  • pension flexibility statistics - HMRC can now provide more information on the number of tax repayment claim forms processed for pension flexibility payments
  • qualifying recognised overseas pension schemes transfer statistics - the number of transfers in to qualified recognised overseas pension schemes has fallen
  • purpose of a registered pension scheme – HMRC reminds pension scheme administrators that pension schemes must be established and maintained wholly or mainly for the purpose of making payments falling within section 164(1)(a) or (b) (authorised payments of pensions and lump sums). Where a scheme does not allow the payment of benefits or has terms and conditions that suggest the scheme will not pay out benefits on normal retirement (for example if a customer wants to take a pension, then they have to transfer their funds to another registered pension scheme first), it is unlikely to be satisfying the wholly or mainly test. HMRC will consider de-registration of pension schemes that do not meet this requirement.

Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.