RPSM14301150 - Scheme Administrator Pages: Transfers: Making a transfer from a registered pension scheme: Transfer is to a non-registered pension scheme, or an overseas pension scheme which is not "qualifying"

Transfer is to a non-registered pension scheme, or an overseas pension scheme which is not "qualifying"

A transfer to a non-registered pension scheme or pension scheme abroad which is not a qualifying recognised overseas pension scheme is an unauthorised payment.

Scheme sanction charge

As scheme administrator, you are liable to a tax charge where an unauthorised payment is made from your registered pension scheme. This is called a scheme sanction charge. It is chargeable at 40% of the amount of the payment. The charge may be reduced in certain circumstances (see below).

Unauthorised payment charge

The member on whose behalf the transfer was made is also liable to a tax charge, called an unauthorised payments charge. This tax charge is at the rate of 40% of the amount of the unauthorised payment. As scheme administrator, you may deduct this from the transfer payment before making the transfer payment, and pay the tax to HMRC on behalf of the member.

If you do make a deduction from the transfer payment and pay it to HMRC,

• you may reduce the amount of scheme sanction charge (see above) by the lower of the amount deducted, or 25% of the unauthorised payment,
• the member is still liable for any balance of the unauthorised payment charge due, if you did not deduct the full 40% on the member's behalf.

Unauthorised payment surcharge

The member may also be liable for a further tax charge of 15% of the amount of the unauthorised payment, if the total of unauthorised payments to him or for his benefit from a scheme in a 12 month period exceed 25% of his rights under that scheme at the beginning of that period. You do not have to take any action regarding this tax charge.

De-registration charge

If the amounts transferred equate to 25% or more of the scheme fund value, HMRC may de- register the transferring scheme. You, as the scheme administrator, would be liable for a de- registration charge of 40% of the fund value.

Event report

The scheme administrator must report any transfer to a non-registered pension scheme, or to a pension scheme abroad which is neither a registered pension scheme nor a qualifying recognised overseas pension scheme to HMRC on an Event Report.

You can do this using Pension Schemes Online, through the HMRC website. See page RPSM1230800 .