RPSM05101350 - Technical Pages: Contributions and tax relief: Member contributions: Methods of claiming tax relief: Individuals who can use net pay arrangements

Which individuals can make contributions under net pay arrangements?

Only an individual entitled to tax relief who is

• both a member of an occupational pension scheme and an employee of a sponsoring employer for that scheme, or
• an employee member of a public service pension scheme, or
• an employee member of the marine pilot’s benefit fund
• may have their relievable pension contributions relieved through the net pay arrangement.

If a third party makes a relievable pension contribution in respect of a member the contribution cannot be paid via the net pay arrangement. Tax relief will be available to the member but by way of a claim – generally through the Self Assessment system.

Where relief is given on relievable pension contributions through the net pay arrangement, relief may not be given by any other method.

A scheme member can only pay contributions to an occupational pension scheme under the net pay arrangement if all the other members who are employees of their employer are also making contributions under the net pay arrangement. An employer can not choose to let one group of employees in a scheme pay contributions under net pay and another group pay contributions under relief at source.