RPSM02308030 - Scheme Administrator Pages: Registering a pension scheme with HMRC: I have decided not to register the pension scheme: Consequences of not registering

Consequences of not registering

If you set up a pension scheme on or after 6 April 2006 you do not have to register it with HMRC, but you should be aware that such schemes are not governed by the tax regime for registered pension schemes described in this manual.

If the non-registered scheme is an occupational pension scheme, it is treated as an “employer-financed retirement benefits scheme” for tax purposes.

In an employer-financed retirement benefits scheme, employer contributions are

• not taxable on the employee
• not liable to National Insurance contributions as they are made
• not deductible in the employer's accounts until benefits start to be paid to the employee in question.

Non-registered schemes under trust are liable to income tax and capital gains tax at the rate applicable to trusts (40% in tax year 2005/06).

Benefits from such schemes are

• subject to income tax (there is no entitlement to a tax-free lump sum)
• not subject to National Insurance contributions, if the benefits paid are consistent with general benefit rules for registered pension schemes (see Chapters 9 and 10)
• subject to inheritance tax.

More information about taxation of non-registered pension schemes which are under trust is in the Employment Income Manual at EIM15000.