HMRC will tell pension scheme providers the residency tax status of their individual scheme members every January, starting from 2018.

Data submitted on the annual return of individual information for the previous tax year will be used to create an output file in line with the standard format which is used when submitting annual returns of information.

The residency tax status will be indicated with an S for Scottish tax status or will be left blank for the rest of the UK.

New scheme members who were not included on a 2016 to 2017 annual return of individual information will not be included on the January 2018 residency tax status, so some scheme members may not have the correct residency status applied for some time.

The introduction of the Scottish rate of income tax means that pension scheme members receive tax relief on their contributions based on their residency tax status. For scheme administrators operating relief at source pension schemes, if the Scottish rate of income tax differs from the rest of UK rate, this affects the amount of tax relief given to each member.

HMRC is currently developing a residency tax status look up service, aiming for it to be available for pension scheme administrators before the start of the 2018/19 tax year.

The service will be available to use in real time to check the residency status of scheme members when:

• a new member joins a scheme in-year
• a member re-commences contributions to a scheme after a period of inactivity

Access to the residency tax status look up service will be via GOV.UK or the Application Programme Interface (API).

The look up service will mean that scheme providers will be able to claim the correct tax relief for scheme members immediately which will prevent under or overpayments and will reduce the number of reconciliations.

The API technical information is set to be published at the end of June 2017.