stake holder pension

Hi Toshi,

The decision you have to make about which income tax and NIC regime to apply to an employee depends on whether the pension scheme is occupational or personal. Occupational schemes are tax deductible for PAYE and benefit from the contracted out rebate, hence the use of categories D and F (not tables surely, so 20th century!).

Personal pensions can still qualify for tax relief and rebates but not in payroll, the provider of the pension usually deals with it or failing that the taxpayer claims relief using the self assessment process.

So, having established the rules where does a stakeholder come in? The simple test is whether the scheme is COMP/COSR or not. If its COMP/COSR (there is a more obscure form which is COMB, contracted out mixed benefits) its occupational otherwise its a personal pension.

Stakeholder is a personal pension, you may also be asked about Appropriate Personal Pension Schemes (APPS), Appropriate personal pension stakeholder schemes etc and they are personal pension schemes as well. The new mandatory enrolement pension schemes due to come in October 2012 will also be personal pensions so in every case no pre tax deduction and no category D or F.

Remember that in most cases an employee can elect to pay their personal pension contributions by direct debit from their personal bank account and the only difference with stakeholder is that the employer is obliged to make the deductions, other than that there is no difference between stakeholder and any other personal pension scheme.

Payrollpro
"Youth and vitality are no match for age and treachery"