Scheme Pays

Scheme Pays Page V1

Scheme Pays is a process that allows your Annual Allowance charge to be paid by the pension scheme.
This means we pay the Annual Allowance charge directly to HM Revenue and Customs (HMRC) on your behalf. This is in exchange for a reduction in your pension benefits.

There are two types of Scheme Pays: Mandatory and Voluntary.

Mandatory Scheme Pays can be used if:

  • your tax charge is over £2,000; and
  • your tax charge has resulted from an increase in benefits from a single Civil Service Pension Scheme; and
  • your Scheme Pays deduction is applied to the benefits within that Scheme.

Voluntary Scheme Pays can be used if:

  • you do not meet the Mandatory Scheme Pays criteria but you still wish to pay your tax charge by Scheme Pays.

Key dates

If you choose to use Scheme Pays, you will need to advise HMRC that you are doing so.

In the table below, we have listed the key actions and deadlines to note:

Action

Deadline date

Members receive a Pension Savings Statement

By 6 October 2017

Members request a Scheme Pays quote

By 10 November 2017

We will issue a Scheme Pays quote

By 30 November 2017

Members return Scheme Pays form accepting the quote

By 15 December 2017

We will process Scheme Pays deductions

By 29 December 2017

Members notify HMRC of a tax charge and their intention to pay it via Scheme Pays

By 31 January 2018

The pension scheme pays the tax charge by Voluntary Scheme Pays

By 31 January 2018

The pension scheme pays the tax charge by Mandatory Scheme Pays

By 14 February 2019

Please note that once your acceptance form has been received, it cannot be withdrawn.

Further information

For more information about Annual Allowance and Scheme Pays  please see the HMRC website:

www.hmrc.gov.uk 

There you will find further information, a calculator and answers to frequently asked questions.

Tax is your responsibility. If you are liable to pay any Annual Allowance tax charge, you should follow HMRC guidelines for calculating, declaring and paying any tax due.

Information on how to calculate whether there is any tax to pay is available at:

www.hmrc.gov.uk/pensionschemes/calc-aa.htm