Deemed date of pension contribution

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It seems everyone likes to leave their lump sum pension contribitions to the last minute and I am hoping for guidance from members on here on the deemed date for pension contributions where the payment was made via faster payment.

HMRC has their typically opaque/written by a toddler guidance published here but can someone direct me to the law that underlies this.

Thanks!

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DougScott
By Dougscott
03rd Apr 2024 21:01

The HMRC giudance for all methods of payment is that the date that the scheme administrator receives the payment and credits it to the clients pension account is the relevant date - which will match the date of the receipt/statement provided by the scheme administrator. I don't know what the law underlying it is but it seems common sense to me.

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By bettybobbymeggie
03rd Apr 2024 21:08

Dougscott wrote:
the date that the scheme administrator receives the payment and credits it to the clients pension account

To be fair I don't think these two events necessarily take place on the same date...in fact they are rarely the same date.

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Replying to bettybobbymeggie:
DougScott
By Dougscott
04th Apr 2024 08:40

Can you provide an example?

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By bettybobbymeggie
04th Apr 2024 08:52

Yes I made a one-off faster payment from my UK bank account on 19th March into my PensionBee pension which appeared in the pension on 22nd. When I queried it with them they said the relevant date is when they receive the funds not when I made the payment. For faster payments this doesn't make a great deal of sense - it's not as though the funds are in the ether for three days: they should be in either my account (which they weren't) or theirs.

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Replying to bettybobbymeggie:
paddle steamer
By DJKL
08th Apr 2024 13:22

They can certainly be in the ether for a fair few hours- we do a bit of paying amongst our own accounts, not all with same bank, I paid four rents received over this morning, these took circa 3 hours to turn up in the receiving bank.

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Routemaster image
By tom123
04th Apr 2024 11:48

If we consider the case of a regular employee (not a director of an SME who could influence such things), I presume they would consider a pension deduction made on their 31st March payslip as being within the tax year ending 6th April - notwithstanding that the contributions will probably not be paid over until 19th of April?

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By richard thomas
04th Apr 2024 12:58

The law that underlies it, not very helpfully for the purpose of the question, is sections 192(1), 193(2) and (4) and 194(1) FA 2004, all of which refer to payment or paid as the triggering event and explicitly or by implication (s 192(1)) link the payment to the year concerned.

But I don't see why or how when under an RAS scheme a person deducts tax from a payment when making it and that deduction and retention gives them their relief, the question when the scheme received it is at all relevant.

The HMRC guidance linked to covers the point in tom123's reply about net pay arrangements. It says that a payment is made in a net pay arrangement when the employer deducts it. That cannot be right and is inconsistent with what they say about other methods of payment: but it does stop the notion that a payment is made only when the scheme receives it (given what tom123 says about employers having until 19th of the next month to hand it over) preventing the employee being entitled to relief in that year under s 188(1). So it's a great big fudge.

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By Cleggy1
05th Apr 2024 12:14

I once made a payment on 31 March which due to weekend and Pension Providers administration didn't get credited until 6 April, I apparently missed the cut off time.

I allowed the payment in my accounts for the 31 March.

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By bettybobbymeggie
05th Apr 2024 14:04

Thanks for the replies - I was just a little concerned that, since so many clients seem to be making their payments at the last minute, some may be open to HMRC challenge when I submit their returns claiming large repayments. I guess I'll have to wait and see.

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By raycad
08th Apr 2024 13:07

The HMRC link you provided includes the following:

FASTER PAYMENT
Online banking payments complete near-instantly but they are not always guaranteed to do so, users should take account of their bank’s terms under which the payment is made. The use of electronic means to make payments is evolving and it is not possible for this manual to cover them all.

As you say, a bit of fudge but my take on that (subject to the following caveat) is this. If the payment exits the payee's bank account on or before 5 April and a transaction statement so confirms it, I see no reason why relief cannot be claimed in "that" tax year.

My only caveat would be that if one were to be paying at say 11.58pm on the 5th, that would be pushing your luck as that transaction, although still probably showing on the payee's bank account on the 5th, will likely appear in the bank records as the following day. (Or later if the 5th is a Friday, as it was this year.)

In other words, payment within "normal banking hours" on the 5th should be okay.

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