See Full Document Text
Status: This is the original version (as it was originally made). This
item of legislation is currently only available in its original format.
STATUTORY INSTRUMENTS
2026 No. 671
INCOME TAX
The Registered Pension Schemes (Net
Pay Arrangements) Regulations 2026
Made - - - - 22nd June 2026
Laid before the House of
Commons - - - - 23rd June 2026
Coming into force - - 14th July 2026
The Treasury make these Regulations in exercise of the powers conferred by section 193A(9) of the
Finance Act 2004(1).
Citation and commencement
1.—(1) These Regulations may be cited as the Registered Pension Schemes (Net Pay
Arrangements) Regulations 2026.
(2) These Regulations come into force on 14th July 2026.
Net pay arrangements: disparity with relief at source
2.—(1) Section 193A of the Finance Act 2004 (net pay arrangements: relief where no income
tax liability) is amended as follows.
(2) In the heading, for “relief where no income tax liability” substitute “disparity with relief at
source”.
(3) For subsections (1) to (3) substitute—
“(1) W here—
(a) relief is given to an individual in accordance with section 193 (net pay
arrangements) in respect of the payment of a contribution under a pension scheme
in a given tax year (“the relevant tax year”), and
(b) there is a difference between the section 193 amount and the hypothetical
section 192 amount,
(1) 2004 c. 12; section 193A was inserted by section 25 of the Finance (No. 2) Act 2023 (c. 30).Document Generated: 2026-06-23
Status: This is the original version (as it was originally made). This
item of legislation is currently only available in its original format.
the Commissioners for His Majesty’s Revenue and Customs must make arrangements
to secure that, so far as reasonably practicable and subject to provision made under
subsection (5), they pay the individual the amount of the difference.
(2) “The section 193 amount” is the higher of—
(a) the amount by which the individual’s liability to income tax for the relevant
tax year is reduced in consequence of the giving of the relief mentioned in
subsection (1)(a), and
(b) the amount by which the individual’s liability to income tax for the relevant tax
year would have been reduced in consequence of the giving of that relief if the
individual had not been entitled to a tax reduction under either of the following—
(i)Chapter 3 of Part 3 of ITA 2007 (tax reductions for married couples and
civil partners);
(ii)Chapter 1 of Part 7 of that Act (community investment tax relief).
(3) “The hypothetical section 192 amount” is the amount given by assuming that relief
had been given to the individual in accordance with section 192 (relief at source) instead of
section 193 and taking the following steps on the basis of that assumption—
Step 1
Determine the amount that the individual would have been entitled to deduct out of
the contribution under section 192(1).
Step 2
If section 192A or 192B (adjustments for differences between basic rate and Scottish
or Welsh rates) would have applied by reference to the individual and the contribution,
adjust the amount determined at Step 1 by (as the case may be)—
(a) adding to it the amount of the tax reduction to which the individual would have
been entitled under section 192A(1), or
(b) subtracting from it the amount of tax for which the individual would have been
treated as liable under section 192B(1).
Step 3
If the individual’s liability to income tax for the relevant tax year would have been
reduced by virtue of the application of section 192(4) (increase in basic rate and
higher rate limits) by reference to the contribution, add the amount of the reduction
to the amount determined at Step 2 (or, where Step 2 does not apply, to the amount
determined at Step 1).”.
(4) After subsection (5) insert—
“(5A) If an amount is paid to a person under subsection (1) that ought not to have been
paid to the person, the amount may be assessed and recovered as though it were an amount
of income tax due from the person for the relevant tax year.”.
(5) Omit subsections (6) to (8).
Deirdre Costigan
Christian Wakeford
Two of the Lords Commissioners of His
22nd June 2026 Majesty's Treasury
2Document Generated: 2026-06-23
Status: This is the original version (as it was originally made). This
item of legislation is currently only available in its original format.
EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations amend section 193A of the Finance Act 2004 (c. 12). Section 193A requires
the Commissioners for His Majesty’s Revenue and Customs (HMRC) to make top-up payments
directly to individuals who save into an occupational pension scheme under net pay arrangements,
in order to reduce disparities with occupational pension schemes administered under relief at source
arrangements.
At present, section 193A only requires HMRC to make top-up payments to individuals whose
total taxable income is below the personal allowance. However, this does not fully address the
disparities between schemes administered under net pay arrangements and schemes administered
under relief at source arrangements - there are individuals whose total taxable income exceeds the
personal allowance who will nonetheless receive less relief under net pay arrangements than they
would have done under relief at source arrangements. These Regulations address these disparities
by requiring HMRC to make a top-up payment to individuals with pensions administered under net
pay arrangements where they obtain less relief than they would have done had their pension been
administered under relief at source arrangements.
A Tax Information and Impact Note has not been prepared for this Instrument as it contains no
substantive changes to tax policy.
3