Annual allowance

  • Answer:

    The government’s consultation response set out the treatment of Annual Allowance:

    Under the DCU, reformed scheme members will be legally restored to membership of their legacy schemes by 2023 in respect of the remedy period. This will retrospectively alter the pension benefits they have accrued in each of the tax years during the remedy period. For the minority of members with sufficiently high income and/or pension accrual to trigger an AA charge, this could change their liability for that AA charge in a tax year or tax years falling within the remedy period. Most of these individuals will see a reduction in AA charge owed.

    Where an individual paid their original AA charge up front, they will receive a refund. If the individual originally used Scheme Pays to meet the tax charge, then the associated pension debit will be amended as appropriate, and schemes will receive the refund. In those cases where additional AA charge is owed, the individual will have the opportunity to utilise Scheme Pays if they do not want to pay the tax charge upfront. If a member then faces an increased AA charge as a result of choosing reformed scheme benefits when they take their benefits, the government will ensure they do not bear the cost of any additional AA charge that is directly caused by the member exercising that choice.

    We await further details on the above points and how changes will be processed.

Forms

Ready to apply? Our forms page has everything you'll need to get started.

Forms

Calculators

Get an insight into how your pension is built and explore your options.

Calculators

FAQ's

Find the answers with our range of Frequently Asked Questions.

FAQs