RPSM02103010 - Technical pages: Registering a pension scheme with HMRC: why register your pension scheme?

Why register a pension scheme?

A registered pension scheme qualifies for relief and exemption from various taxes.

Checklist of tax relief and exemptions for registered pension schemes

• contributions by members and payments made on behalf of members (except employer payments) up to the higher of £3,600 and 100% of earnings are tax-relieved
• increase in pension benefits promised in defined benefit arrangements within the annual allowance
• employer contributions
• investment income - free of income tax
• investment gains - free of capital gains tax
• lump sum benefits, in specified circumstances are paid free of income tax
• pension business - such of a company's life assurance business as is referable to contracts entered into for the purposes of a registered pension scheme, or is the re- insurance of such business.

The tax relief in respect of member contributions could be subject to the annual allowance (see RPSM06100000). The lifetime allowance can have a bearing on certain lump sum payments. See Chapters 9, 10 and 11.