Tax on private pension - PAYE or Self Assessment

balmoralpad

My wife and I have a SSAS, which is now an orphan (no Principal Employer) fund and a micro (two members only) scheme.  25% of the fund was taken tax free some years ago.  

We have now decided to withdraw cash from the fund, which due to investments is continuing to grow year on year.  We are currently basic rate tax payers and retired.

We have, by choice, no pension fund advisor and no professional pensioneer trustee.

Despite a great deal of research, it is still not clear whether we have to pay tax through PAYE or by annual Self Assessment.  

Marcon

balmoralpad said:

My wife and I have a SSAS, which is now an orphan (no Principal Employer) fund and a micro (two members only) scheme.  25% of the fund was taken tax free some years ago.  

We have now decided to withdraw cash from the fund, which due to investments is continuing to grow year on year.  We are currently basic rate tax payers and retired.

We have, by choice, no pension fund advisor and no professional pensioneer trustee.

Despite a great deal of research, it is still not clear whether we have to pay tax through PAYE or by annual Self Assessment.  

Withdrawals are taxed at source under PAYE, as with other forms of pension drawdown.

You've chosen not to have an adviser or pensioneer trustee, but are you sure you are complying with all the (quite complex) rules and and procedures involved in running a SSAS?

balmoralpad

Thank you for that.  With reference to compliance, we're confident that we are. 

The issues which we feel may change this situation (sorry for not including all of them initially) is that apart from being an orphan fund and a micro scheme it is also non-contributory, as well as being a non-contracted out money purchase scheme.

We have spent hours trying to find the simple facts from various sources; the professional companies are unwilling to advise unless we put our money into one or more of their products, while the HMRC recommend "speak to your pension adviser".  An IFA has admitted she has not come across these circumstances before and is seeking advice from pension suppliers and HMRC.

It seems that this may come down to a difference of opinions?

DRS1

It seems that this may come down to a difference of opinions?

What opinions?

You have only had one answer that I can see.

Are you used to running a payroll?  I assume you must have done one when the employer was extant.

Marcon

balmoralpad said:

Thank you for that.  With reference to compliance, we're confident that we are. 

The issues which we feel may change this situation (sorry for not including all of them initially) is that apart from being an orphan fund and a micro scheme it is also non-contributory, as well as being a non-contracted out money purchase scheme.

We have spent hours trying to find the simple facts from various sources; the professional companies are unwilling to advise unless we put our money into one or more of their products, while the HMRC recommend "speak to your pension adviser".  An IFA has admitted she has not come across these circumstances before and is seeking advice from pension suppliers and HMRC.

I'm not sure how you and your wife can be 'confident you are compliant' if you don't know the basics of running a SSAS.  A SSAS is a trust-based occupational scheme, with all that entails, albeit on a small scale. You and your wife are the trustees, so have all the responsibility for ensuring reporting requirements etc are met. You have admitted you don't even know the simple facts, which doesn't bode too well in that respect!

balmoralpad said:

It seems that this may come down to a difference of opinions?

This sort of thing tends to come down to the trust documentation, legislation and HMRC requirements. Getting some proper (paid for) advice could save you a lot of headaches - and an IFA who can't answer simple questions probably isn't your best source. Find a firm which deals regularly with SSASs and you should get immediate answers at modest cost.

Have you considered winding up the SSAS?

TheSpectator

As much as you would maybe want I don't think you will find an opinion that says pension income is taxable under anything other than PAYE.

balmoralpad

Thank you all for your opinions, which I am sure are well intentioned.  

However the “opinions” I referred to will probably end up being those of HMRC and whoever (legal / financial) we appoint, to determine how the bureaucracy should efficiently operate.  

Thank you again and have a nice weekend   This post is finished.  

QrizB

Another happy customer, then!

Dazed_and_C0nfused

balmoralpad said:

Thank you all for your opinions, which I am sure are well intentioned.  

However the “opinions” I referred to will probably end up being those of HMRC and whoever (legal / financial) we appoint, to determine how the bureaucracy should efficiently operate.  

Thank you again and have a nice weekend   This post is finished.  

If you find someone in HMRC who says you don't need to operate PAYE on (taxable) pension income then please report back.

I'm sure there are plenty of pension providers who would like to avoid the hassle of operating PAYE given the chance.

Marcon

A rash of SSASs came into being shortly after so-called pension freedoms were introduced. They were touted as a magic answer when people found they were having problems transferring out of a DB scheme because they were being (wrongly) told there were no schemes which would accept the transfer without positive advice from the adviser. Many a newly-set up 'employing company' soon bit the dust, leaving clueless trustees who didn't understand their responsibilities and directors who often failed to ensure their company had been correctly disposed of.

Unfortunately 'accidental compliance' is rather rare in a world which involves tax advantages with the eagle eyes of HMRC watching over... Tax approval can be withdrawn, and the consequences aren't pretty when that happens.