The Treasury has made the Registered Pension Schemes (Net Pay Arrangements) Regulations 2026, signed on 22 June 2026, laid before the House of Commons on 23 June 2026 and due to come into force on 14 July 2026. According to legislation.gov.uk, the instrument amends section 193A of the Finance Act 2004, which already required HMRC to make top-up payments in some net pay pension cases. The practical change is that the law no longer focuses only on people with no income tax liability. It now focuses on whether a saver in a net pay arrangement received less pension tax relief than would have been available under relief at source.
The drafting change is explicit. The heading of section 193A moves from 'relief where no income tax liability' to 'disparity with relief at source', and new subsections (1) to (3) replace the earlier test. That matters because it shifts the statute away from a single income threshold and towards a direct comparison between two tax outcomes. Under the revised wording, HMRC must make arrangements to pay the individual the amount of any difference, so far as reasonably practicable and subject to further provision under subsection (5). For policy teams, that places the correction duty on the tax authority rather than on employers or pension schemes.
The comparison set out in the Regulations is technical but clear in structure. The law first identifies the 'section 193 amount', meaning the relief actually secured through the net pay route. It then constructs a 'hypothetical section 192 amount', asking what the position would have been if the same contribution had instead been handled under relief at source. The statutory steps require HMRC to consider the deduction that would have been available at source, any Scottish or Welsh rate adjustment under sections 192A or 192B, and any effect of section 192(4) on basic or higher rate limits. In plain English, the calculation is designed to measure the full gap between the two systems rather than only the case of a worker with no tax to pay.
The Explanatory Note states that the previous version of section 193A did not fully remove the difference between occupational pension schemes using net pay arrangements and those using relief at source. It says some individuals whose total taxable income was above the personal allowance could still receive less relief under net pay than they would have done under relief at source. From 14 July 2026, those cases fall within the statutory top-up rule if the comparison shows a shortfall. Section 193A itself was inserted by the Finance (No. 2) Act 2023, and this instrument broadens how that earlier reform works in practice.
For employers, payroll teams and pension administrators, the immediate message is that the method of giving relief inside a net pay scheme does not change. The instrument does not require schemes to move from net pay to relief at source, and it does not alter contribution deduction processes at source. What changes is the legal basis for a payment made afterwards by HMRC to the individual. Member communications, helpline scripts and internal guidance may therefore need updating so that savers understand that a wider set of comparative shortfall cases can now be corrected even where income exceeds the personal allowance.
The Regulations also add a new recovery rule. New section 193A(5A) provides that any amount paid to a person which ought not to have been paid may be assessed and recovered as though it were income tax due for the relevant tax year. That provision is narrow, but it has obvious administrative value. It gives HMRC a direct route to correct overpayments and it increases the importance of accurate contribution records, member identification and tax-year data across payroll and scheme administration.
The instrument also removes former subsections (6) to (8) of section 193A, replacing the earlier structure with the new comparison model. The Explanatory Note on legislation.gov.uk says no Tax Information and Impact Note has been prepared because the measure does not amount to a substantive change in tax policy. Even so, the administrative effect is material. For affected savers, the Regulations create a broader statutory route to a top-up where net pay relief falls short; for advisers and pension teams, they set a clearer legal test for explaining who should be made whole and why.