Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Unauthorised payment definition

What does Unauthorised payment mean? An unauthorised payment is any payment or benefit provided by a registered pension scheme to or in respect of a member, or to an employer, that does not meet the statutory conditions for an authorised payment. In the UK, this concept is set by the Finance Act 2004 and HMRC guidance: anything outside the authorised member payments and authorised employer payments categories is unauthorised. Typical scenarios include loans or advances to members or employers, early access to pension savings before normal minimum pension age (other than on ill‑health), lump sums exceeding permitted limits, and payments linked to investments...

UK registered pension schemes: when unauthorised payments are treated as authorised; HMRC genuine error relief, Authorised Payments Regulations 2009, death and lump sum errors, Pensions Advice Allowance, FSCS top‑ups

Published by a LexisNexis Pensions expert

Practice notes

A registered pension scheme may provide benefits without an overall ceiling. Nevertheless, under the Finance Act 2004 (FA 2004), where a scheme makes an unauthorised payment, tax charges arise for both the recipient and the scheme unless a specific exception applies (though, in certain situations, individuals and companies may seek from HMRC a discharge of liability for those charges where appropriate). For additional detail, see Authorised and unauthorised payments and Unauthorised payments: tax charges and reporting requirements, together with the associated reporting obligations outlined there.

Exceptions in special circumstances

At times, pension schemes make mistakes that lead to unauthorised payments being issued. There are also situations where making an unauthorised payment is necessary to ensure a beneficiary is treated equitably. Accordingly, there are several exceptions to the standard rules governing unauthorised payments. Such exceptions apply only in particular, defined circumstances...

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Web page updated on 27/05/2026

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