RPSM02306090 - Scheme administrator pages: Registering a pension scheme with HMRC: scheme administrator's role in the registration process: Registering a scheme on or after 6 April 2006: what if I decide not to register the pension scheme with HMRC?

Registering a scheme on or after 6 April 2006: what if I decide not to register the pension scheme with HMRC?

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

If a 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
• not deductible in the employer's accounts until benefits start to be paid to the employee in question.

Non-registered schemes under trust are liable to tax on income and capital gains at the rate applicable to trusts (40% in tax year 2005/06).

Benefits paid 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 the benefits paid are consistent with general benefit rules for registered pension schemes (see Chapters 9 and 10)
• subject to inheritance tax.

More information about taxation of non-registered trust-based pension schemes is in the Employment Income Manual at EIM15000.