This newsletter is published by HMRC’s Pension Schemes Services to update stakeholders on the latest news for pension schemes.
In Pension schemes newsletter 67 HM Revenue and Customs (HMRC) provided guidance on operating PAYE on pension flexibility payments. HMRC are aware that when making pension flexibility payments, some pension scheme administrators are still treating these as annual payments and calculating PAYE on a month 12 basis instead of week 1/month 1 basis.Flexibly accessed payments are not annual payments. These payments should be taxed using either:
the emergency code on a week 1/month 1 basis or, where a current year P45 is held; using that code on a week 1/month 1 basis.In cases where the fund has not been extinguished, HMRC will then issue a tax code to operate against future payments.
This applies to pension flexibility payments from 6 April 2016 onwards.
Data items 168, 171, 173 and 174
