Where a
registered pension scheme makes an unauthorised
payment to a member or
sponsoring employerRPSM07108010 explains that the
member or sponsoring employer is liable to a tax charge at 40%.
In addition the
scheme administrator will be liable to a scheme
sanction charge on all charges except benefit in kind charges on
non wasting assets.
The amount of the scheme sanction charge is 40% of the scheme
chargeable payment (see
RPSM04104820 )
However where the member or sponsoring employer has been
subject to an unauthorised payments charge and has paid the tax
due, a deduction will be made to the amount of the scheme sanction
charge.
The amount of the deduction is the lesser of
Bob has been provided with use of a scheme asset from SS Ltd
Registered Pension Scheme for private use - a set of golf clubs
worth £2,500. The value of the unauthorised payment (the
annual value) is £2,500 x 20% = £500 for the year.
Bob declares the £500 on his Self Assessment Return and
the tax due on the unauthorised payment is £500 x 40% =
£200, which Bob pays in full.
SS Ltd are also liable to a scheme sanction charge of
£500 x 40% = £200.
A deduction is available of the lower of
The scheme has to pay a scheme sanction charge of £200 - £125 = £75
CC Ltd RBS makes an unauthorised payment to the sponsoring
employer, CC Ltd, of £10,000.
CC Ltd are subject to an unauthorised payments tax charge of
£10,000 x 40% = £4,000. But they have only paid
£2,000.
CC Ltd RBS are subject to a scheme sanction charge of
£10000 x 40% = £4,000
A deduction is available of the lower of
The scheme has to pay a scheme sanction charge of £4,000 - £2,000 = £2,000.
Further information on the scheme sanction charge can be found at RPSM04104800
| Glossary ( RPSM20000000) |
