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HMRC publishes extra guidance on lifetime allowance abolition

Author: ICAEW Insights

Published: 09 Apr 2024

HMRC has published additional guidance for pension scheme administrators on a range of issues, including the abolition of the lifetime allowance.

HMRC provides further guidance on the abolition of the lifetime allowance (LTA) in the latest issues of the pension schemes newsletter. This includes answers to more frequently asked questions (FAQs). HMRC has circulated a consolidated copy of all of the FAQs published so far to the LTA working group. It will share it more widely later in April.  

HMRC advises that a scheme administrator with a query on the legislation to abolish the LTA should also consult HMRC’s pensions tax manual, which has recently been updated. The scheme administrator can also email HMRC at ltaadministration@hmrc.gov.uk

The newsletters summarise the changes made in regulations to the legislation to abolish the LTA. Further technical changes will be made through a second set of regulations. HMRC states that the changes mainly relate to specific protections, or to individuals who plan to transfer their pension savings to a qualifying recognised overseas pension scheme (QROPS). The regulations will be made shortly and will be effective from 6 April 2024. Guidance is also provided on the implications of abolition of the LTA with regard to the public service pensions remedy

Guidance in issue 157 and issue 158 of the newsletter on other areas is summarised below:

Pension remedies for politicians 

The independent parliamentary standards authority (IPSA) and the Senedd Commission intend to implement a remedy to the discrimination in the reforms to public service pension schemes. As a result of this, regulations will be introduced in 2024/25 to provide for the tax consequences relating to a member’s pension benefits where a member makes a choice for different benefits. The tax regulations will apply from 6 April 2024. HMRC has provided guidance on what will be included in the regulations. 

Annual returns for relief at source schemes 

A person operating a relief at source scheme must send HMRC a return for the tax year ending 5 April 2024 by 6 July 2024. HMRC has provided the following guidance on making a return:  

  • only the versions of the spreadsheet and electronic flat text file specifications currently on GOV.UK should be used;
  • the correct naming convention should be used when submitting the annual return through the secure data exchange service. Further, the file name reference should match the sub-reference included in the return. Guidance on the naming convention is provided alongside the spreadsheet and file; 
  • all fields should be completed in the correct format and should not include unacceptable characters, or exceed the maximum amount of characters; and
  • form APSS590 should be completed to declare that the information submitted on the return is true and complete. Without the APSS590, HMRC will consider the return to be outstanding.

Changes to HMRC forms for QROPS

Form APSS262 is used to report a transfer of funds or assets from a registered pension scheme to a QROPS. The form has been updated recently. HMRC will only accept the new version of APSS262 for transfers where the date of transfer is on or after 6 April 2024. A number of related forms were also updated on 6 April 2024. Scheme administrators should ensure they use the correct form. 

Using the managing pension schemes (MPS) service 

A person accessing the MPS service for the first time since 18 March 2024, will be asked to provide additional information to verify their personal individual details. They will only need to do this once. HMRC has asked scheme administrators to consider joining the MPS service user panel. The scheme administrator can provide feedback on the function to submit form APSS262 (see above) on the MPS service and influence the future design and development of the service. 

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