RPSM05203040 - Member Pages: Contributions and tax relief: Miscellaneous issues: Methods of making payments

I have a pension arrangement and wish to make payments. What are the ways I can do so?

As well as possible deductions from your salary (see RPSM05200050) most registered pension schemes will accept payments in the form of cheques, bankers drafts, direct debits, standing orders and debit cards.

It may also be possible for some registered pension schemes to accept an asset as a contribution. There are specific rules on the transfer of certain shares by a member. These shares must be shares,

• which you acquired on exercising a right under a SAYE option scheme (as defined in section 516 ITEPA 2003) or
• which were appropriated to you under the provisions of a share incentive plan (as defined by section 488 ITEPA 2003).

See RPSM05203030 for further details.

Some schemes may also accept shares, property and other assets as payment. If you wish to pay such a contribution you cannot do this by merely saying 'take this asset and whatever it is worth that is my contribution'. What you must do is to say that I wish to pay a contribution of, say, £10,000. If the scheme agrees, you may pay this debt through a transfer of an asset of that value. If the asset is of a lower value the balance will be paid in cash. Please see RPSM05101045 for full details.

If the contribution is being made to a registered pension scheme that operates relief at source (RAS) the amount of cash contribution specified should, if applicable, be the net amount after you exercise your right to deduct from the payment the basic rate RAS relief (see RPSM05201040). The basic rate relief will be recoverable by the scheme administrator in the normal way from HMRC and if appropriate you can claim higher rate relief via your self-assessment return.

However some schemes may be willing to receive payments using only some of these methods. You should contact your scheme administrator for further information.

You should also be aware that certain payments have a number of conditions attached and extra care must be taken when you first make a contribution to a scheme and also if you make a contribution close to the end of the tax year or the pension input period.