Payments made by a registered pension scheme will be either
Any application to HMRC for a pension scheme to be a registered pension scheme on or after 6 April 2006 must be accompanied by a declaration by the scheme administrator that the instruments or agreements by which it is constituted do not entitle any person to unauthorised payments [s 153(2)].
| [s160(1) & (3), 164 & 175] |
Authorised payments are defined in Part 4 of Finance Act 2004. They fall into two categories
Most authorised payments are taxable, although some authorised payments may be paid tax free. Information on authorised payments can be found at RPSM04101000 and RPSM04102000.
| [s160(2) & (4)] |
Any payment that does not come within the definition of an authorised payment is an unauthorised payment. Again, payments are split into two categories
Unauthorised payments trigger an income tax charge at a rate of
40%. A further income tax charge of 15% - the
unauthorised payments surcharge - will be due if
the amount of unauthorised payments go above a set limit. The
person liable to the tax charge(s) is the member (for unauthorised
member payments) or employer (for unauthorised employer payments).
Where an unauthorised member payment is made after the
member’s death, the recipient of the payment is liable to the
tax charge or charges.
The scheme administrator is also liable to a scheme sanction
tax charge of up to 40% in respect of most unauthorised payments.
Further information on unauthorised payments can be found at
RPSM04104000.
| Glossary ( RPSM20000000) |
