RPSM11105320 - Technical Pages: Lifetime allowance: Where the lifetime allowance used up: Liability in the member’s lifetime: accounting for the lifetime allowance charge

How the scheme administrator accounts for the lifetime allowance charge

[s254][Reg 3 The Registered Pension Schemes (Accounting and Assessment) Regulations 2005 - SI 2005/3454] 

The scheme administrator is obliged to pay over and account to HMRC any lifetime allowance charge due following a BCE occurring in a member’s lifetime. They do this after the event through quarterly scheme reports called the accounting for tax (AFT) return. So the tax due is accounted for after the payment or commencement of any benefit, or payment of a transfer value where the fund is being transferred to a qualifying recognised overseas pension scheme.

The quarterly returns cover the three-month periods ending on 31 March, 30 June, 30 September and 31 December for each year. The tax arising in each quarter is due 45 days after the end of the quarter and the scheme administrator should submit the return, with the income tax due, by that date.

RPSM12301300 gives further details on the form to use, what information must be provided on the form and when and how an amended AFT return should be made.

Penalties and interest

[s260][Reg 5 ‘case 3’,The Registered Pension Schemes (Accounting and Assessment) Regulations 2005 - SI 2005/3454 

The scheme administrator will become liable to a penalty if the AFT return is submitted late, see RPSM12301340.

Interest is also charged on the lifetime allowance charge due where paid after the due filing date. Interest will accrue from that date onwards.