Allowing ‘Voluntary’ Scheme Pays elections in respect of the 2016/17 tax year and beyond

From the 2016/17 tax year, SPPA have introduced an option for members who become subject to an Annual Allowance tax charge but who are unable to meet the statutory conditions to ask the NHS, Teachers, Fire and Police Schemes to meet this tax charge on their behalf. All pension savings that have accrued since 6 April 2016, that have triggered a tax charge against:

the member's Annual Allowance threshold, andeither do not qualify for, or cannot be met in full using the Mandatory Scheme Pays election mechanism

can now be paid by the NHS, Teachers, Fire and Police Schemes using a Voluntary Scheme Pays election.

Please note that deadlines for Voluntary Scheme Pays and Mandatory Scheme Pays are different.  For the 2016/17:

 Scheme Pays  Mandatory  Voluntary
 Conditions  Pension input amount in the final salary scheme or CARE scheme is greater than the Annual Allowance and a total Annual Allowance charge of more than £2,000.  Pension input amount in the final salary scheme and the CARE scheme results in an Annual Allowance charge of more than £2,000.
 Member Self-assessment submitted to HMRC  Paper - 31 October 2017 Electronic - 31 January 2018  Paper - 31 October 2017, Electronic - 31 January 2018
 Election Deadline  31 July 2018  31 July 2018
 Liability  Shared between you and SPPA  You
 Deadline the tax must be paid to HMRC (without interest)  14 February 2019  31 January 2018
 Interest  Nil if SPPA makes payment by 14 February 2019  From 31 January 2018 to the date SPPA makes payment

The SPPA will not accept  scheme pays if members do not have an annual allowance tax charge arising singly or in aggregate in the NHS, Teachers, Fire or Police schemes that they are in.

The member must provide us with details of the tax charge they face and we will have to check if this has resulted in a tax charge either singly or in aggregate. Therefore where members have not already had a pension saving statement, they may ask for a pension saving statement.  Schemes have three months to provide a statement on request, provided they have all the relevant information.  For 2016/17 members must elect for scheme pays by the 31st of July 2018  if they wish us to pay the tax which  would be paid in the next tax return SPPA makes.  These returns are submitted quarterly. 

The member  is liable for any interest  accrued in respect of scheme pays e.g. for 2016/17 interest would be accrued from 31st January 2018 until the tax is paid. SPPA will not pay any interest charges in respect of a voluntary Scheme Pays election.

When completing self-assessment there is a requirement to provide details of the pension scheme tax reference number.  If you have a charge against more than one scheme you should provide HMRC with details relating to the amount of Annual Allowance charge allocated against each scheme and the relevant scheme tax reference numbers relating to each charge.  You can use the 'additional information' section to do this.

To see further information and what this may mean for you please refer to the Scheme Pays section on the SPPA internet, which is currently being updated to reflect these changes:

We regret that we cannot revisit previous cases that were denied the opportunity to make a 'Voluntary' Scheme Pays election in respect of tax years up to 5 April 2016.

Link to Scottish Government Website