Exceeding the Annual Allowance for 2019/20

The pensions standard Annual Allowance (AA) is £40,000 for the 2019/20 tax year. If you’ve exceeded the AA and you don’t have any/enough carry-forward available from the previous three years to offset against the excess, you’ll be liable to an AA charge.

 

If this is the case, you should already have received a Pension Savings Statement (PSS) which will assist you with assessing your carry forward position.

 

If you’re unsure as to whether you have an AA tax charge, HMRC have a calculator which can be found here (This link opens in a new window). An AA charge must be declared to HMRC on your Self-Assessment return. If you don’t ordinarily complete a Self-Assessment return you will need to request one from HMRC.

 

If you’ve enough carry-forward to offset against the excess, then you don’t need to do anything and you don’t need to inform HMRC.

 

The Self-Assessment deadline (online) is 31 January 2021. 

 

You can find out more about the AA in our series of briefing notes and our 2019/20 factsheet, all of which can be found here.

 

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 you’re affected by the tapered AA and you intend to make a Scheme Pays Election, we recommend that you submit an election to us immediately and at least 10 working days before the 31 January deadline. Any voluntary payments in respect of the 2019/20 tax year made by us beyond the 31 January may incur interest and/or late payment charges by HMRC. HMRC will bill you separately for any interest and/or late payment charges. Interest and/or late payment charges CANNOT under any circumstances be included as part of the Scheme Pays Election.

 

If you wish to make a Scheme Pays Election, please complete the form found here.

 

If you’ve already made a Scheme Pays Election and have received acknowledgment of your election, then do not panic this is not to inform you of any issues with your election. If you have not received acknowledgement of your election within one month of submitting the form, then please contact us on 0345 606 6166.

 

If you make/have made a Scheme Pays Election, you must record it on your self-assessment return. This is so HMRC knows how much is being paid, when to expect the payment, and by which Scheme it is being paid by. If you do not provide this information on your Self-Assessment HMRC will chase you 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 you’re unsure of anything in relation to the Self-Assessment tax return, we recommend you contact HMRC directly or speak with an Independent Financial Advisor. We’re not authorised to provide advice.

 

If you wish to make a Scheme Pays Election for the 2019/20 tax year, the deadline to do so is 31 July 2021.

 

Last Updated: 02/02/2021 10:19