RPSM05101020 - Technical Pages: Contributions and tax relief: Member contributions: Overview: Form of contributions

Form of contributions

Tax relief is given on contributions “paid” during a tax year. This means that contributions to a registered pension scheme must be a monetary amount, for example, in cash, cheque, direct debit and bank transfers.

Notwithstanding this there are specific rules that provide that the transfer of certain shares to a registered pension scheme by a member will count as a tax relievable contribution.

Payments that are contributions

The following payments are treated as a contribution paid by or on behalf of the member.

• Pension credit rights from a non registered pension scheme – (see RPSM05101030 for more information).
• Any amount recovered from a member by their employer in respect of minimum payments made to a registered pension scheme (in accordance with section 8(3) Pension Schemes Act 1993 or section 4(3) Pension Schemes (Northern Ireland) Act 1993).
• Transfers of certain shares in a SAYE option scheme or share incentive plan – (see RPSM05101040 for more information).

Payments not regarded as contributions

The following payments are not treated as contributions paid by or on behalf of the member.

• Transfers from pension schemes

A transfer of funds from any other pension scheme into a registered pension scheme is not a contribution to a registered pension scheme. ‘Transfer’ means a direct payment or transfer of assets representing the individual’s accrued rights or funds.

• Transfer lump sum death benefit

A transfer lump sum death benefit received by a registered pension scheme is not a contribution

• Pension credit rights from a registered pension scheme

A pension credit received from another registered pension scheme is not a contribution. The pension credit will already have benefited from tax relief in the registered pension scheme from which the rights have been transferred.