Pension schemes newsletter 109 addresses relief at source for Scottish taxpayers

HMRC's Pension schemes newsletter 109 included an item on how relief at source will be dealt with for Scottish taxpayers.  For 2019 to 2020, the administrator of a pension scheme using the relief at source mechanism will continue to claim tax relief at the rate of 20% for members who are Scottish taxpayers.  For members with incomes which do not attract income tax at a higher rate than the Scottish starter rate of 19%, HMRC will not recover the difference between the Scottish starter rate and the Scottish basic rate of 20%.

Pension scheme members who are Scottish taxpayers liable to income tax at the Scottish intermediate rate of 21% are entitled to claim the additional 1% relief due on some or all of their contributions above the 20% tax relief paid to their scheme administrators.  HMRC is not able to put this directly into a scheme on behalf of members, but will adjust their tax code so that they get this tax relief through their pay.

Pension scheme members liable to income tax at the Scottish intermediate rate can claim the additional relief for 2019 to 2020 through their self-assessment return or, if they do not already complete self- assessment returns, by contacting HMRC.

HMT consultation on Fifth Money Laundering Directive

The Government has consulted on transposing the EU's Fifth Money Laundering Directive (MLD 5) into UK law.  The Fourth Money Laundering Directive (MLD 4) was transposed into UK law in June 2017.  Although MLD 4 was not specifically targeted at pension schemes, it did bring in new requirements on trusts, thus imposing additional compliance requirements on many pension schemes.  These initially comprised record-keeping requirements and, depending on what taxes the pension scheme had been liable for, potentially an obligation to register with the new Trust Registration Service (TRS).  However, in a last minute U-turn, HMRC announced that registered pension schemes would not be required to register on TRS.  MLD 5 introduces registration requirements for all express trusts (regardless of what taxes they pay), broadens access to beneficial ownership information and requires national registers to be linked up to a new EU platform.

Our thoughts

Given current uncertainty over the UK's future relationship with the EU, as well as the fact that with MLD 4 we saw a last minute U-turn by HMRC regarding the implications for pension schemes, we think it would be premature for pension scheme trustees and providers to make detailed plans for compliance with the MLD 5 requirements at this stage.  However, this is an area which scheme trustees should keep under review.