Technically there are no deadlines – but more on that in a moment. And you can ask any scheme you are a member of to pay it, not just the scheme where the charge arose.
But the scheme does not have to offer it. And even if the scheme does allow it, the liability remains with the member.
Unsurprisingly, since the introduction of the tapered annual allowance, we have seen a big increase in the number of requests for voluntary scheme pays.
Under this option the liability for the charge remains with the member, and as such is due by the usual self-assessment deadline – i.e. January 31 in the following year.
This means that if you want the scheme to pay, it needs to do so by January 31 or the member could potentially face late payment charges. And the practical deadline to ensure the scheme pays in time is a lot earlier due to how schemes pay tax to HMRC.
Any tax charges paid under either type of scheme pays are paid to HMRC by the pension scheme via their accounting for tax (AFT) return. These are quarterly returns with tax paid to HMRC as set out below:
| Quarter | Transactions between | Tax paid to HMRC |
| Q1 | 01/01 - 31/03 | By 15/05 |
| Q2 | 01/04 – 30/06 | By 14/08 |
| Q3 | 01/07 – 30/09 | By 14/11 |
| Q4 | 01/10 – 31/12 | By 14/02 |
This means that to guarantee that the payment reaches HMRC by the self-assessment deadline the scheme must have accounted for it by September 30 in the previous year.
If this deadline is missed and it is accounted for in the fourth quarter, it may be paid in time – if the scheme administrator sends their return before January 31, but it is under no obligation to do so.
If the deadline is missed then theoretically the member could be charged for late payment. If they have agreement from the scheme then they should still complete the relevant section on the self-assessment form with details of the amount the scheme is going to pay.
In practice, we have seen cases when we have expected there to be a late payment charge but it has not been applied when HMRC has been informed that the scheme will pay.
Obviously, this is not guaranteed and your clients should be aware of the risk of a penalty. Currently the late payment interest is charged at 3.25 per cent.
Defined benefit versus defined contribution scheme pays
Although all schemes have to offer compulsory scheme pays, many schemes do not allow voluntary, particularly DB schemes.
In the public sector most, but not all, schemes have updated their rules to allow voluntary scheme pays since the introduction of the tapered annual allowance.
Most recently was the NHS scheme which introduced this option in October 2018 for tax years 2016 to 2017 onwards.
