Reporting non-taxable pension payments

The Pension (Non-Taxable Payments Following Death) (Real Time Information) Regulations, SI 2021/506 provide for the mandatory reporting to HMRC of certain types of non-taxable payments through the real time information (RTI) system. This will require the pension payer (i.e. the employer) to report relevant payments made following the death of a scheme member where those payments are not taxable. ‘Relevant payments’ include:

• pension amounts payable after the death of the member;
• pension benefits payable to dependants of the scheme member; and
• certain lump-sum death payments;

that are not PAYE pension income.

The Regulations set out (in the Schedule) the information required to be reported to HMRC by the pension payer in an RTI return.

HMRC’s aim is to ensure it has ‘full and complete’ information covering both taxable and non-taxable payments to ensure the individual pays the correct amount of tax based on ‘all their income for PAYE purposes’. The changes will also ensure the DWP has access to the same information when calculating means-tested benefits.

The Regulations will come into force on 6 April 2022.