IFGL Pensions can provide a specialist service for international customers who hold an NT tax code. This bespoke service enables customers to receive taxable income by assignment of the investment bond or platform held within their SIPP, rather than by cash payment. This arrangement is referred to as an in-specie benefit payment.
What conditions apply?
- The arrangement requires full crystallisation of the SIPP.
- The bond or platform provider must be able to provide us with online valuations and assign the investment account held in the name of the trustee to the SIPP member.
- The SIPP member must hold an NT tax code.
What fees apply to this service?
A one-off fee of £2,000 plus VAT, where applicable, applies to this service.
Agreement to the fee will be obtained from the member before we proceed with the work required to complete the in-specie benefit payment.
The fee reflects the specialist nature of the service and the time required to complete the work. The process requires input from senior members of staff to review and authorise various stages of the work, as well as the separate and bespoke running of a payroll for the member concerned, including all relevant HMRC reporting.
The process also involves significant liaison with the investment provider in relation to the assignment of the bond or investment account, together with any associated administrative work, including cash injections into the investment account where excess cash is held in the SIPP cash account.
What are the requirements?
- A fully completed benefit election form for full income payment, clearly indicating assignment of the investment in lieu of cash.
- Certified proof of identity and proof of address dated within the last three months.
- Where there is any cash held in the SIPP bank account, this will normally be paid to the member’s bank account. To protect members, if the proof of address provided under requirement 2 is not a bank statement for the account being used, a certified bank statement supporting the bank details for payment is also required.
- An undated Deed of Assignment for the investment provider, pre-completed with the SIPP member’s details and signed by the SIPP member. If the in-specie payroll involves the assignment of an Utmost bond, the original deed signed in wet ink must be received by IFGL Pensions. This is required by the bond provider.
What is an NT tax code?
Depending on the member’s circumstances, country of residence and, where applicable, the country’s double taxation treaty with HMRC in the UK, they may be eligible to obtain an NT tax code from HMRC.
An NT tax code is a UK tax code issued by HMRC to indicate that no tax should be deducted via PAYE (Pay As You Earn) income tax from certain types of income. This is most commonly pensions or income for non-residents.
IFGL Pensions cannot provide financial advice or assist members with applications to HMRC to obtain an NT tax code.
How do I apply for an NT tax code?
The HMRC application process must be completed by the member and submitted directly to HMRC.
Based on our previous experience assisting advisers and members, HMRC may need to know the PAYE information for the scheme in which the member holds pension benefits:
| Scheme | PAYE reference |
|---|---|
| MW SIPP 2 | 428/HZ99317 |
| RL360 SIPP | 475/NE89365 |
| Hoxton Wealth SIPP | 120/WE93179 |
Members of the Ardan SIPP should use the PAYE reference shown above for MW SIPP 2.
Once the member’s application is in progress with HMRC, the member should contact IFGL Pensions to start taking nominal income from the SIPP. This will allow us to submit income requests to HMRC. HMRC will then notify us of the correct tax code to use for the member.
We may not receive notification of the NT tax code straight away and are dependent on HMRC notifying us when it updates its records.
As the process of obtaining an NT code can take several months or more, we recommend that members with an urgent income requirement plan sufficiently far in advance with their financial adviser.
HMRC expects a pension provider to pay a member regular income for the member to retain the NT code. Members who take only ad hoc payments may therefore find that HMRC changes their tax code. We strongly suggest that members speak to HMRC for guidance if they are not intending to take regular income payments from their SIPP.
Contact IFGL Pensions
If you have additional questions after reading this guidance, please email pensions@ifglpensions.com.