HMRC PENSION SCHEMES NEWSLETTER 98: TRUST REGISTRATION SERVICE UPDATE

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Contained within the Pensions Newsletter is an update on pension schemes and their TRS reporting requirements.

HMRC have published Newsletter 98 which gives an update to the somewhat lacking guidance on certain pension schemes having to register with the Trust Registration Service.

The guidance states:

HMRC introduced the Trust Registration Service (TRS) last year to help you and your scheme trustees meet your obligations under The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 when you have incurred a UK tax liability.

As we know some pension scheme trustees have had difficulty using TRS we have changed the guidance. This means that now if your registered pension scheme is a trust, your scheme trustees don’t need to register separately on TRS. They can update their details by contacting Pension Schemes Services.

Whether you’ve incurred a UK tax liability or not you must keep the information required under the Money Laundering legislation in your own written records and provide it to us if we ask for it.

If you incur a UK tax liability and choose to register on TRS, you should not register as a new trust if you already have a unique taxpayer reference (UTR) as this will create another UTR and will lead to you or your trustees receiving Self-Assessment returns to complete for previous tax years.

If you choose to register on TRS and you’ve told us the value of the trust assets on a 41G paper, SA900 or SA970 tax returns or through another channel, when you register on TRS you should complete the ‘Other Asset’ field on TRS using the term – ‘Already notified’. You should leave all other asset fields marked as ‘£1’.

Other notable content in the newsletter:

  • Reporting of non-taxable death benefits – the issue with the tax coding notices being erroneously produced. This issue should be fixed in the summer (2018).
  • The Manage and Register Pension Schemes online service has now been delayed until Monday 4th June 2018 due to service issues. The current Pensions Schemes Online will continue until 6pm Friday 1st June 2018
  • Pensions flexibility statistics:

From 1 January 2018 to 31 March 2018 HMRC processed:

  • P55 = 6,218 forms
  • P53Z = 3,448 forms
  • P50Z = 988 forms

Total value repaid = £22,514,839

  • The annual allowance calculator has been taken down from the HMRC website due to ‘issues’ with it.
  • There is relief at source and pensions flexibility information for Scottish taxpayers:

If the member takes a payment from the pension scheme that doesn’t use up the pension pot, the first payment will be treated as an ongoing PAYE source.

If the recipient has a P45 dated on or after 6 April in the current tax year, you should operate the code on the P45 on a Week 1/Month 1 basis. If the code shows that the recipient is a Scottish taxpayer, the Scottish Income Tax rates will apply.

If payments are already made to the recipient, the additional pension flexibility payment should be added to the previous pension payment made in that tax period.

The tax will then be recalculated using the existing tax code that you’ve used, in line with Scottish Income Tax rates where the code is a Scottish tax code. This prevents the individual from incorrectly getting the benefit of the tax allowances twice.

You can find guidance on additional payments in a tax period at paragraph 1.12 of CWG2.

In all other circumstances, including where individuals have a P45 from the previous tax year (and regardless of any notification of residency status for the purposes of Pensions Tax Relief at Source), you should use the emergency code on a Week 1/Month 1 basis against the first payment in line with UK tax tables.

HMRC will issue a tax code to operate against future payments. You can find information about the emergency code for the 2018 to 2019 tax year in the GOV.UK guide Tax Codes.

Where tax has been deducted using emergency code, Scottish taxpayers have 2 options. They can:

  • wait until after the end of the tax year, when HMRC will reconcile their account using their Scottish tax code and make any repayment owed as part of its normal PAYE process
  • claim tax back in year by completing form P55, P53Z or P50Z, and HMRC will calculate the overpayment based on Scottish Income Tax rates and make a refund within 30.