View more on these topics

Now: Pensions to top-up pots of savers missing out on tax relief


Auto-enrolment scheme Now: Pensions is to top-up up savings of its non-taxpaying customers who are missing out on tax relief because of an administrative quirk.

The provider – like most occupational and trust-based schemes – uses a net pay model of distributing tax relief on pension contributions.

However, because the starting rate of income tax has risen above the £10,000 auto-enrolment threshold members are losing out.

Pensions minister Ros Altmann has persistantly hit out at schemes using net pay instead of the alternative, relief at source, that does pass on tax relief to non-taxpayers.

It was expected radical tax relief reform was going to solve the problem, but the Chancellor has shelved the plans. Now: Pensions had been working with HMRC on a ‘sweep up’ solution but decided to act now.

Members will need to submit a claims form through the Now: Pensions website giving the tax office permission to divulge tax details to the provider for the 2015/16 tax year.

Funds will be credited by the end of March 2017.

Chief executive Morten Nilsson says: “Through no fault of their own non taxpayers in net pay schemes are being disadvantaged because of the increase in the nil rate income tax band. We are talking to the Treasury and HMRC to find a way to resolve this anomaly over the long term but, in the interim, we will put our hands in our pockets to top up these members’ pension pots.

He adds: “We believe that net pay offers a number of benefits to savers and if we can agree a work around with HMRC we’d be keen to do this in order to avoid the upheaval and expense of moving to relief at source.”



Now: Pensions reveals new charging structure

Now: Pensions has unveiled a new charging structure that will see employers pay up to £36 plus VAT a month to use the scheme. The auto-enrolment provider announced in September it would be adding an employer charge for firms staging from 1 January 2016. Following a consultation, it says new employers will pay £36 plus VAT […]

Ros Altmann

Now: Pensions in ‘catch 22’ over Govt tax relief stance

Now: Pensions says it is caught in a  “catch 22” after the pensions minister warned employers against its chosen tax relief model. This week Ros Altmann wrote to The Pensions Regulator asking it to warn employers that providers using a ‘net pay’ arrangement do not allow people earning under £10,600 to claim tax relief on their contributions. […]

Adrian Boulding L&G 2012 - correct size

Now: Pensions to add employer auto-enrol charge

Automatic enrolment provider Now: Pensions is to introduce an employer charge of up to £40 a month from next year. The announcement comes as the provider launches a month long consultation aimed at finding out the needs of small employers. Concerns have been growing that firms yet to auto-enrol will have to turn to Nest […]

Show me the money – earnings are central to performance in Europe

Equity markets globally currently remain vulnerable to sharp shifts in sentiment caused by either unexpected or unwelcome outcomes in key upcoming political events (the US and German elections, Brexit and the Italian referendum). These top-down influences, combined with the current low global growth environment, will likely lead to broadly directionless markets, and prolong the current low beta return environment. We do, though, […]


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. Is this top up deemed a 3rd party contribution when they make the top up? A Number of business owners who take mostly dividend remuneration may be in a similar situation and may also be making large employer contributions thus using up their full annual allowance so this may create a tax charge if deemed a contribution. Does the legislation around net pay schemes allow them to make such a top up? Why not just move to relief at source???

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm