Pensions
Tax Simplification newsletter 16
June 30 2006
Contents
- Introduction
- Things you no longer need to tell us
- Who we can talk to about a registered pension scheme
- Trivial commutation lump sums - Taxation through the PAYE system
- How do you know that your scheme has been registered?
- New Forms for Overseas Schemes
- Draft Forms – Event Report and Pension Scheme Return
- Amend Scheme Details Form APSS 152 – advice on completion
- Legislation
- APSS and Joint Working Group Minutes
- Addendum to Newsletter 14
- Pensions Simplification - Pipeline Lump Sum Death Benefits
- Reporting Form1SF -reminder
- Newsletter 15
- Pensions Industry Working Group Minutes for 4 May meeting
- Contact us
Introduction
Welcome to the sixteenth edition of the Newsletter that includes a number of articles on a range of subjects relevant to pension scheme administration.
Please pass this Newsletter on to anyone else in your organisation who you think may find it useful.
Things you no longer need to tell us
We (Audit and Pension Schemes Services) are still receiving information about transactions that we no longer need to be told about. In order to save you time please do not tell us about:
A change of insurer
Transfer requests (on the Form PS7050)
Who we can talk to about a registered pension scheme
We are receiving a steady flow of requests from third parties requesting information about schemes, such as whether a particular scheme is registered. Because of confidentiality rules we cannot divulge information to anyone that asks. HMRC will only discuss scheme matters with the Scheme Administrator, or the Practitioner the Scheme Administrator has authorised HMRC to deal with, or a third party who provides an authority signed by the Scheme Administrator(s). The Scheme Administrator must be one included on HMRC’s record for the scheme.
Trivial commutation lump sums - Taxation through the PAYE system
We have received of a number of queries about the operation of PAYE on trivial commutation lump sum payments, see Newsletter no 9.
The requirement to use emergency code non-cumulative is set out in the PAYE regulations (SI 2003/2682) at regulation 58(2). The trivial commutation payment is a payment of PAYE pension income. Basic rate cannot be used as an alternative to the statutory requirement.
However, you can if you wish deduct tax using the emergency code on a Month 1 basis rather than a Week 1 basis. The Employer's Guide to PAYE (CWG2 (2006)) at section 23 will be amended in due course to reflect this.
How do you know that your scheme has been registered?
Please remember that your scheme has not been registered until you receive an acknowledgement of registration from HMRC. If you want to obtain tax relief on contributions you must have that acknowledgement first.
New forms for Overseas Pension Schemes
At the beginning of July we will publish final versions of two new forms and guidance notes for reporting certain events from Overseas Pension Schemes.
APSS 252 – Report of Benefit Crystallisation Events
This form should be used if you are the scheme manager of a Qualifying Overseas Pension Scheme (QOPS) to report details of benefit crystallisation events in relation to:
- relevant migrant members, or
- members receiving corresponding relief under the provisions of Paragraph 51 Schedule 36 Finance Act 2004.
APSS 253 – Payments in respect of relevant members
This form should be used if you are the scheme manager of a Qualifying Recognised Overseas Pension Scheme (QROPS) to report information relating to payments made or treated as made in respect of relevant members.
The information for both these forms should be provided by 31 January following
the
end of the next tax year in which the event occurred, although it can be
provided any time before that, in other words you don’t have to wait
until the end of the tax year to submit the report. Completed forms should
be sent to APSS in Nottingham.
Further information can be found in Chapters 13 and 14 of the Registered Pension Schemes Manual.
Draft Forms
A revised draft version of the Pension Scheme Return (PDF 270K) together with completion notes (PDF 134K) has been published to incorporate the amendments proposed by Finance Bill 2006.
We have also published a draft revised version of the Event
report (PDF 507K)and completion notes (PDF
169K) that incorporates the Finance Bill 2006 proposals. You should
continue to use the current version until we advise you otherwise.
Both of these draft forms are subject to the legislation being enacted so
it is possible that their content may change.
Amend Scheme Details Form APSS 152 – advice on completion
The Amend Scheme Details form (PDF 67K) APSS 152 was introduced on 6th April 2006. It is used to notify HMRC of any changes to the registration information for a registered pension scheme other than those changes that have to be notified on the Event Report.
When completing this form the user should indicate at question 2 all the changes that are needed to the record held by HMRC. This does not appear to be happening in every case.
For example in cases where there is a new scheme establisher/sponsor taking over from another establisher/sponsor the user should tick 2.2, 2.2b and 2.2c and complete 2.9 with details of the new establisher/sponsor and 2.12 with details of the establisher/sponsor who is ceasing. However users have only been ticking 2.2b and completing 2.9. If the user does not indicate an establisher/sponsor is being replaced by ticking 2.2c and completing 2.12 HMRC will assume that the new establisher/sponsor is an additional establisher/sponsor. This will mean the record held by HMRC does not reflect the correct position.
When Form APSS152 is reviewed we will see what help can be given to make this even clearer.
In July it will be possible to ‘Amend Scheme Details’ online by going to our home page and selecting ‘Pension Schemes’ under ‘do it online’. It is recommended the user does it online because they ensure the correct changes are made to the record.
Legislation
In June we published the following legislation
This is a revised version to the published draft. The only changes are added definitions of "market value" and "connected persons".
This is a revised version to the published draft. It adds a new regulation 10 which ensures that where a UK registered pension scheme which is resident overseas holds property which is situated overseas the charges on income and gains on the property held is taxed on the UK resident member.
It also provides that where the UK resident member goes non resident for a short period of time, to ensure there is a charge on the capital gain on the disposal of an asset, the charge is levied at the time the member resumes UK residence.
This is a slightly revised version to the published draft and there are no substantive changes.
This new draft Order contains a further transitional provision in relation to the provisions for pension schemes which came into force on 6th April 2006. It modifies section 216 so that benefit crystallisation event 5A which will be inserted by paragraph 29 of Schedule 23 to the Finance Act 2006, is not triggered where the individual had a drawdown fund in payment at A day.
These new draft Regulations amend the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567, the “Principal Regulations”) and the Pension Schemes (Information Requirements – Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006 (S.I. 2006/208) which make provision for the provision of information in connection with registered pension schemes and overseas pension schemes under Part 4 of the Finance Act 2004 (c. 12).
APSS and Joint Working Group (JWG) Meeting notes
At the JWG/APSS Technical liaison meeting held at the ABI offices in London
on 16 May 2006, the agenda took the form of a number of questions on the
new tax rules applying to pensions from 6 April 2006. HMRC provided responses
to these questions and it was agreed that it would be extremely helpful
to publish these questions and answers to a wider audience within the pensions
industry.
We are most grateful to the JWG for kindly giving this agreement which we
believe will be mutually beneficial. You can view
the questions supplied by the JWG and the answers given by HMRC.
Addendum to Newsletter 14 which relates to lump sums paid in connection with scheme pensions from money purchase arrangements.
Pensions Simplification: Pipeline Lump Sum Death Benefits
An announcement (Link now removed 26/7/2006) of the proposed amendment to the transitional regulations is now available
Reporting Form 1SF (applicable until 5 April 2006) -reminder
Update 157 (PDF 27K) offered scheme administrators the chance to bring all 1SF matters up to date for all years prior to 6 April 2006.
Newsletter 15
This newsletter was published on 16 June 2006 and includes details of the next release in July of Pension Schemes Online.
Pensions Industry Working Group Minutes for 4 May meeting
The minutes of the working group are now available.
Contact Us
If you have any questions about anything to do with new tax rules and you can’t find the answer in the Registered Pension Schemes Manual, please contact our helpline number 0115 974 1600 (9.00 to 17.00 Monday to Friday) or write to us at
Audit & Pension Schemes Services (APSS)
Yorke House
Castle Meadow Road
Nottingham
NG2 1BG
