EIM15210 - Non-approved and employer-financed retirement benefits schemes: payer's responsibilities: operation of PAYE

The PAYE Regulations do not apply to payments chargeable under Section 386 ITEPA 2003 (see EIM15040).

Where a payer makes a lump sum payment that is chargeable under Section 394 ITEPA 2003 (whether under a non-approved or an employer-financed scheme – see EIM15020 for definitions) there is an obligation to deduct and account for tax under the PAYE Regulations on the chargeable payment.

PAYE does not apply to the provision of non-cash benefits under a non-approved or employer- financed scheme.

If an employer indicates that an application has been made to Audit & Pension Scheme Services (APSS) for approval of a payment from a non-approved scheme under Statement of Practice 13\91 (see EIM15170 and following guidance), PAYE should still be operated. Only those lump sums that APSS has approved prior to actual payment, or that are approved as small payments under EIM15172, are excluded from the PAYE system.