#2026/671Registered Pension Schemes Net Pay Arrangements Regulations 2026
AI-generated summary for informational purposes only. Not legal advice. See the original source for the authoritative text.
This law changes how HMRC calculates payments for pension savers in net pay pension schemes who lose out compared with people receiving relief at source. It updates section 193A of the Finance Act 2004 so the payment is based on the gap between the tax benefit actually received under a net pay arrangement and the benefit the person would have received under relief at source. The change matters mainly for low earners and some Scottish or Welsh taxpayers in workplace pension schemes. HMRC must, where reasonably practicable and subject to detailed rules, pay individuals the difference when the net pay route gives them less tax support than the relief-at-source route would have done.
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Key Changes
- Reframes section 193A as a rule about disparity between net pay arrangements and relief at source.
- Requires HMRC to arrange payments to individuals where the net pay tax benefit is lower than the equivalent relief-at-source benefit.
- Sets out a comparison method that takes account of Scottish and Welsh tax rate adjustments and certain tax reductions.
Obligations
What this law requires
HMRC must make arrangements to pay an individual the difference between the tax benefit actually received under net pay pension relief and the hypothetical amount the individual would have received under relief at source, where relief was given under section 193 for a contribution in a relevant tax year and the two amounts differ.
HMRC must calculate the section 193 amount as the higher of the actual reduction in the individual's income tax liability from net pay relief and the reduction that would have applied if the individual had not been entitled to married couples' or civil partners' tax reductions or community investment tax relief.
HMRC must calculate the hypothetical section 192 amount by assuming relief at source had applied instead of net pay relief, determining the amount deductible from the pension contribution under section 192(1), and applying any required Scottish or Welsh rate adjustments under sections 192A or 192B.