RPSM02303020 - Scheme administrator pages: Registering a pension scheme with HMRC: Why register a pension scheme? What happens if the scheme is not registered?

What happens if the scheme is not registered?

If a pension scheme is set up on or after 6 April 2006, you do not have to register it with HMRC. But any pension scheme which is not registered will be unable to benefit from the tax privileges conferred on registered pension schemes.

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 (see the National Insurance Manual (NIM) at page NIM02757)
• not deductible in the employer's accounts until benefits start to be paid to the employee in question.

Non-registered schemes set up under trust are liable to tax on income and capital gains 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

• subject to inheritance tax.

Further information about taxation of non-registered pension schemes set up under trust is in the Employment Income Manual at EIM15000.

Employer-financed retirement benefit schemes must be notified to HMRC. Please see RPSM02308020.