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...

Unauthorised payments from UK registered pension schemes: HMRC charges, de-registration risks, discharge applications and reporting obligations

Published by a LexisNexis Pensions expert

Practice notes

There is no overall cap on the benefits a registered pension scheme may provide. Nevertheless, under the Finance Act 2004 (FA 2004), if a scheme makes an unauthorised payment:

tax liabilities will usually arise for both the individual receiving the payment and the scheme itself. For more detail, see Tax charges on making unauthorised payments, below
in the worst case, the scheme could face de-registration, leading to the loss of its tax-privileged status. For more detail, see De-registration and the de-registration charge, below
specific reporting obligations will apply. For more detail, see Reporting requirements and penalties, below

In certain situations, HMRC may grant a discharge from some of the tax charges linked to unauthorised payments. For guidance, see Applying to HMRC for discharge from tax charges, below. Further exceptions to the standard unauthorised payments position exist and are set out in Practice Note: Unauthorised payments: exceptions. For an explanation of what constitutes an unauthorised payment, see Practice Note: Authorised and unauthorised payments...

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Web page updated on 22/05/2026

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