The pensions standard Annual Allowance (AA) is £40,000 for the 2021/22 tax year. If members exceeded the AA, and they don’t have any/enough carry-forward available from the previous three years to offset against the excess, they’ll be liable to an AA charge.

If this is the case, members should’ve already received a Pension Savings Statement (PSS) which will assist them with assessing their carry-forward position.

If members are unsure as to whether they have an AA tax charge, HMRC have a useful calculator (This link opens in a new window) on their website. An AA charge must be declared to HMRC on a member’s Self-Assessment return. If a member doesn’t ordinarily complete a Self-Assessment return they’ll need to request one from HMRC.

If a member has enough carry-forward to offset against the excess, then they don’t need to do anything, and don’t need to inform HMRC.

The Self-Assessment deadline (online) is 31 January 2023.

We encourage both members and employers to read more about the AA in our series of briefing notes and our 2021/22 factsheet.

Making a Scheme Pays election

Voluntary Scheme Pays payments are required to be paid to HMRC by the Self-Assessment deadline – 31 January following the end of the tax year. Therefore, if a member’s affected by the tapered AA and they intend to make a Scheme Pays Election, we recommend that the member submits an election to us immediately and at least ten working days before the 31 January deadline. Any voluntary payments in respect of the 2021/22 tax year made by us beyond the 31 January may incur interest and/or late payment charges by HMRC, who’ll bill members separately for any late payment charges. Interest and/or late payment charges CANNOT under any circumstances be included as part of the Scheme Pays election.

If a member wishes to make a Scheme Pays election, please direct them to complete our new online form, which can be accessed via My Pension Online.

A paper form is still available but we encourage you to ask staff to use the online method.

If a member hasn’t received acknowledgement of their election within one month of submitting the form, then please advise them to contact us on 0345 606 6166.

Please remind members that if they make/have made a Scheme Pays election, they must record it on their Self-Assessment return. This is so HMRC knows how much is being paid, when to expect the payment, and by which Scheme it’s being paid by. If a member doesn’t provide this information on their Self-Assessment, HMRC will contact them for the payment.

More information on how to declare an AA tax charge and Scheme Pays election on the Self-Assessment return can be found on HMRC's help sheet (This link opens in a new window). 

If a member’s unsure of anything in relation to the Self-Assessment tax return, we recommend they contact HMRC directly or speak with an Independent Financial Advisor as we’re not authorised to provide advice.