HMRC has released Pension Schemes Newsletter 155, offering insights into various updates, notably the elimination of the lifetime allowance (LTA) and details on the operation of the pension commencement excess lump sum (PCELS).
The Finance Bill 2023-24 contains the legislation for scrapping the LTA, prompting queries about the functioning of PCELS. HMRC is addressing potential unintended consequences in the current legislation, exploring solutions through legislative amendments or alternative means.
The newsletter outlines three areas requiring legislative changes, including scheme-specific lump sum protection, the newly established ‘event 24′ related to lump sum payments, and the calculation of tax on lump sum death benefits. To address common queries, HMRC has provided answers to 10 frequently asked questions in the newsletter.
Effective from April 6th, 2024, the pension changes necessitate technical and operational adjustments for pension providers. HMRC plans to issue updates bi-weekly through LTA guidance newsletters or the primary monthly pensions schemes newsletter. Administrators of pension schemes operating relief at source must be aware of members’ residency status, and HMRC has initiated the issuance of January 2024 residency status reports.
Pension scheme administrators have six days to download the residency status report following an email alert from HMRC. The look-up service for relief at source is available to check a member’s residency status. Moreover, HMRC extends acceptance of scanned relief at source forms until March 31st, 2025.
Retained firefighters, following a House of Lords decision in 2006, can convert their pension membership to join the Fire Authorities Schemes for the 2000 to 2016 period. Fire Authorities must submit comprehensive information to HMRC by April 5th, 2024, for processing.
HMRC notes the deletion of Government Gateway credentials after three years of inactivity on the Business Tax Account. The newsletter provides guidelines on recovering access.
While HMRC initially planned to introduce a new function for submitting pension scheme returns on the Managing Pension Schemes service from April 2024, this introduction has been deferred without a specified date. Scheme administrators can still choose to migrate pension schemes to the new service in anticipation of its eventual launch. Lastly, updated statistics on tax repayment claim forms for pension flexibility payments have been recently published.
