PART 3U.K.DEDUCTION AND REPAYMENT OF TAX

CHAPTER 3U.K.[F1NEW PENSIONERS: FORMS P45 AND P46(PEN)]

Scope of Chapter 3U.K.

[F254.  This Chapter applies (instead of Chapter 2) when a pension starts and either—

(a)the pensioner will be continuing in employment and will be receiving relevant pension payments in addition to relevant payments from their employer, or

(b)the pensioner will not be receiving relevant payments other than relevant pension payments.]

[F3Application of this Chapter to Real Time Information pension payersU.K.

54ZA.—(1) Any requirement in this Chapter to complete (howsoever expressed) and send to HMRC Part 3 of Form P45 or Form P46(Pen) applies only to—

(a)non-Real Time Information pension payers, and

(b)Real Time Information pension payers to whom HMRC has given a notice requiring the pension payer to send to HMRC Form P45 or Form P46(Pen) on the commencement of a new pensioner’s pension.

(2) Paragraph (1) is without prejudice to the requirement in regulation 55(3)(b) (PAYE pension income paid by former employer) to complete and give Form P46(Pen) to the pensioner.]

[F4Relevant pension payments and relevant payments being received by a pensionerU.K.

54A.—(1) This regulation applies if the pensioner begins to receive relevant pension payments whilst continuing to receive relevant payments from their employer.

(2) On making relevant pension payments to the pensioner, the pension payer must deduct tax on the non-cumulative basis using the 0T tax code.

(3) The pension payer must send to HMRC the following information in the Form P46(Pen)—

(a)the pensioner’s national insurance number, if known,

(b)the pensioner’s full name,

(c)the pensioner’s sex,

(d)the pensioner’s date of birth,

(e)the pensioner’s full address including postcode,

(f)the date upon which the pension payments started,

(g)the pensioner’s work payroll number and the department or branch (if any) in which the pensioner is employed,

(h)confirmation that the recipient of the relevant payments is a pensioner,

(i)the pension payer’s PAYE reference,

(j)the pension payer’s name,

(k)the pension payer’s full address including postcode, and

(l)the tax code used in relation to the pension.

(4) Before sending the Form P46(Pen), the pension payer must indicate in the form that code 0T is being used on a non-cumulative basis in respect of the pension.

[F5Procedure in regulation 54A cases: code treated as issued by HMRC]U.K.

54B.—(1) The 0T code used by the pension payer in accordance with regulation 54A is treated, for the purposes of Parts 2 to 4 (codes; deduction and repayment of tax; payments, returns and information), as having been issued by HMRC as the code for use in respect of the pensioner.

(2) This does not apply for the purposes of regulation 18 (objections and appeals) and regulations 58, 60 and 61 ... late presentation of Form P45 etc).]

PAYE pension income paid by former employerU.K.

55.—(1) This regulation applies if the pension payer was, immediately before the pensioner’s retirement, the pensioner’s employer and so, in accordance with regulation 36(3), no Form P45 was completed.

(2) On making relevant pension payments to the pensioner, the pension payer must deduct tax on the non-cumulative basis, subject to regulation 32 (higher rate code: deductions), for the remainder of the tax year in which the pension starts or until directed otherwise by the Inland Revenue.

(3) Within 14 days after the pensioner’s retirement, the pension payer must prepare a [F6Form P46(Pen)] and—

(a)send it to the Inland Revenue, and

(b)give [F7a copy of the information] to the pensioner.

(4) The [F6Form P46(Pen)] must contain the following information—

(a)the pensioner’s name,

(b)the pensioner’s address, ...

[F8(ba)the pensioner’s date of birth,

(bb)the pensioner’s sex,]

(c)the pensioner’s national insurance number, if known,

(d)the pension payer’s PAYE reference,

(e)the date of retirement,

(f)the total payments to date at the date of retirement,

(g)the total payments to date relating to the employment in question at the date of retirement,

(h)the total net tax deducted corresponding to the total payments to date relating to the employment in question,

(i)the amount of pension payable [F9annually],

(j)any number used to identify the pensioner,

(k)whether the pensioner’s code is use on the cumulative basis,

(l)the pension payer’s name, and

(m)the pension payer’s address.

(5) Paragraph (4) is subject to regulation 212 (modifications for electronic version of [F6Form P46(Pen)] ...).

PAYE pension income paid by other pension payerU.K.

56.—(1) This regulation applies if the pensioner gives Parts 2 and 3 of Form P45 to the pension payer when a pension starts.

(2) The pension payer must insert in Part 3 of Form P45—

(a)the pensioner’s address,

(b)any number used to identify the pensioner, ...

(c)the date on which the pension started.

[F10(d)the pensioner’s date of birth, and

(e)the pensioner’s sex.]

(3) The pension payer must then send Part 3 of Form P45 to the pension payer’s Inland Revenue office.

(4) The receipt by the pension payer of Parts 2 and 3 of Form P45 under paragraph (1) is treated as the issue by the Inland Revenue of the code shown in Parts 2 and 3 of Form P45 as the code for use in respect of the pensioner.

(5) On making relevant pension payments to the pensioner, the pension payer must, subject to regulation 32 (higher rate code: deductions), deduct or repay tax—

(a)on the non-cumulative basis, for the remainder of the tax year to which Parts 2 and 3 of Form P45 relate;

(b)on the cumulative basis, for subsequent tax years.

(6) Paragraph (5) applies until the pension payer is directed otherwise by the Inland Revenue.

[F11Information to be provided in Form P46(Pen) if code not known: non UK residents]U.K.

57.—(1) This regulation applies if a pension payer pays a pension, which does not arise wholly from an employment carried on abroad, to a pensioner—

(a)who is not resident in the United Kingdom,

(b)who has not given Parts 2 and 3 of Form P45 to the pension payer, and

(c)in respect of whom a code has not otherwise been issued by the Inland Revenue.

(2) On making the first payment which exceeds the PAYE threshold, the pension payer must send to the Inland Revenue the following information in [F12Form P46(Pen)].

[F13(3) The information is—

(a)the pensioner’s national insurance number (if known),

(b)the pensioner’s full name,

(c)the pensioner’s sex,

(d)the pensioner’s date of birth,

(e)the pensioner’s full address including postcode,

(f)date upon which payment of the pension started,

(g)the pensioner’s works payroll number and the department or branch (if any),

(h)the fact that the recipient is a pensioner,

(i)the pension payer’s PAYE reference,

(j)the pension payer’s name,

(k)the pension payer’s full address, including the postcode.]

(4) For the purposes of paragraph (1)(c), the pension payer must ignore any code issued to the pension payer in respect of a previous pension of the pensioner which has ended.

[F14Procedure if no Form P45 and code not known: UK pensioners]U.K.

58.—(1) This regulation applies if—

(a)a pension payer starts to make relevant pension payments to a pensioner,

(b)the pensioner is resident in the United Kingdom,

(c)the pensioner does not give to the pension payer Parts 2 and 3 of Form P45, and

(d)a code in respect of the pensioner has not otherwise been issued to the pension payer.

[F15(1A) This regulation does not apply where the relevant pension payment is a relevant lump sum payment.]

(2) On making any relevant pension payments to the pensioner before the Inland Revenue issue a code for use in respect of the pensioner, the pension payer must deduct tax on the non-cumulative basis applying the emergency code.

(3) The pension payer must send the Inland Revenue the following information in [F16Form P46(Pen)].

[F17(4) The information is—

(a)the pensioner’s national insurance number (if known),

(b)the pensioner’s full name,

(c)the pensioner’s sex,

(d)the pensioner’s date of birth,

(e)the pensioner’s full address including postcode,

(f)date upon which payment of the pension started,

(g)the pensioner’s works payroll number and the department or branch (if any),

(h)the fact that the recipient is a pensioner,

(i)the pension payer’s PAYE reference,

(j)the pension payer’s name,

(k)the pension payer’s full address, including the postcode, and

(l)the tax code used in relation to the pension.]

(5) The pension payer must also indicate in the Form that the emergency code is being used on the non-cumulative basis.

(6) For the purposes of paragraph (1)(d), the pension payer must ignore any code issued to the pension payer in respect of a previous pension of the pensioner which has ended.

[F18(7) In this regulation, and in regulation 58A (procedure if no Form P45 and code not known where payment is a relevant lump sum payment), a “relevant lump sum payment” is [F19a payment which]—

[F20(a)is treated as taxable pension income under—

(i)section 637G of ITEPA (trivial commutation lump sums and winding-up lump sums), or

(ii)section 637N of that Act (trivial commutation lump sum death benefits), and]

(b)F21... is made at a time when the pension payer is not making any other payments of PAYE pension income to the pensioner under the same registered pension scheme.]

[F22Procedure if no Form P45 and code not known where payment is a relevant lump sum paymentU.K.

58A.—(1) This regulation applies if—

(a)a pension payer makes a payment of a relevant lump sum payment,

(b)the pensioner is resident in the United Kingdom,

(c)the pensioner does not give to the pension payer Parts 2 and 3 of Form P45, and

(d)a code in respect of the pensioner has not otherwise been issued to the pension payer.

(2) On making a relevant lump sum payment to the pensioner before HMRC issue a code for use in respect of the pensioner, the pension payer must deduct tax using the basic rate code on the non-cumulative basis.

(3) Where the pension payer is one to whom paragraph (6) applies on the day on which the relevant lump sum payment is made, or if that is not practicable, without unreasonable delay, the pension payer must complete Form P45 and provide—

(a)Part 1 of Form P45 to HMRC, and

(b)Parts 1A, 2 and 3 to the pensioner.

(4) Where paragraph (6) does not apply, on the day on which the relevant lump sum payment is made, or if that is not practicable, without unreasonable delay, the pension payer must complete and provide Parts 1A, 2 and 3 of Form P45 to the pensioner.

(5) The information listed in rows 1 to 6, and 10 to 16 of column 1 of Table 2 to regulation 36 must, subject to the conditions set out in column 2, be provided in the various Parts of Form P45 as indicated in columns 3 to 5, as if—

(a)references to “employer” were to “pension payer”, and

(b)references to “employee” were to “pensioner.

(6) This paragraph applies to—

(a)a pension payer who is a non-Real Time Information pension payer, and

(b)a Real Time Information pension payer to whom HMRC has given a notice requiring the pension payer to send to HMRC Form P45.]

UK resident pensioner’s code treated as issued by Inland RevenueU.K.

59.—(1) The emergency code used by the pension payer in accordance with regulation 58 is treated, for the purposes of Parts 2 to 4 (codes; deduction and repayment of tax; payments, returns and information) as having been issued by the Inland Revenue as the code for use in respect of the pensioner.

(2) This does not apply for the purposes of regulation 18 (objections and appeals) and regulations 58, 60 and 61 (... late presentation of Form P45 etc).

Late presentation of Form P45U.K.

60.—(1) Paragraphs (2) to (6) apply if the pensioner gives Parts 2 and 3 of Form P45 to the pension payer after the pension has started but before a code has been issued.

(2) The pension payer must insert in Part 3 of Form P45—

(a)the pensioner’s address,

(b)any number used to identify the pensioner, and

(c)the date on which the pension started.

(3) The pension payer must then send Part 3 of Form P45 to the pension payer’s Inland Revenue office.

(4) The receipt by the pension payer of Parts 2 and 3 of Form P45 under paragraph (1) is treated, except for the purposes of paragraph (1), as the issue by the Inland Revenue of the code shown in that Form as the pensioner’s code.

(5) On making relevant pension payments to the pensioner, the pension payer must, subject to regulation 32 (higher rate code: deductions), deduct or repay tax—

(a)on the non-cumulative basis, for the remainder of the tax year to which Parts 2 and 3 of Form P45 relate;

(b)on the cumulative basis, for subsequent tax years.

(6) Paragraph (5) applies until the pension payer is directed otherwise by the Inland Revenue.

(7) If Parts 2 and 3 of Form P45 are given to the pension payer after the pension has started and after a code has been issued by the Inland Revenue, they must be destroyed.

Subsequent procedure on issue of UK resident pensioner’s codeU.K.

61.—(1) On making any relevant pension payment to a pensioner falling within regulation 58 after the Inland Revenue have issued a code to the pension payer for use in respect of the pensioner, the pension payer must deduct or repay tax by reference to that code.

(2) For the purposes of paragraph (1) and regulation 66 (deductions working sheets)—

(a)any total payments to date notified to the pension payer by the Inland Revenue are treated as if they represented relevant pension payments made by pension payer; and

(b)the total net tax deducted before the first payment made in accordance with this regulation is taken to be the sum of—

(i)the total net tax deducted, if any, notified to the pension payer by the Inland Revenue, and

(ii)any tax which the pension payer was liable to deduct from the pensioner’s relevant pension payments under regulation 58.

(3) For the purposes of—

(a)item 8 of Table 2 in regulation 36(4) (Form P45), and

(b)regulation 55(4)(f) [F23(P46(Pen))],

any total payments to date and total net tax deducted which are which are notified to the employer by the Inland Revenue must be treated as if they were relevant pension payments made to the pensioner by, and tax deducted by, the pension payer.

(4) If the pensioner’s previous code was used on the cumulative basis, any amount notified to the pension payer under paragraph (2)(b)(i) must be added to the previous total tax to date for the purposes of regulation 23(8) (meaning of previous total tax to date).