The pensions standard Annual Allowance is £40,000 for the 2020/21 tax year. If you’ve exceeded the Annual Allowance 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 Annual Allowance 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 Annual Allowance tax charge, HMRC have a calculator which can be found here (This link opens in a new window) (This link opens in a new window).

An Annual Allowance charge must be declared to HMRC on your Self-Assessment return. If you don’t usually 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 2022. 

You can find out more about the Annual Allowance in our series of briefing notes and our 2020/21 factsheet, all of which can be found here. You can also watch our short video (This link opens in a new window) for more information.

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 Annual Allowance 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 2020/21 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 can’t 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 (PDF, 262 KB) (This link opens in a new window).

If you’ve already made a Scheme Pays Election and have received acknowledgment of your election, then don’t panic this isn’t to inform you of any issues with your election. If you’ve 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’s being paid by. If you don’t provide this information on your Self-Assessment HMRC will chase you for the payment.
More information on how to declare an Annual Allowance 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) (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 2020/21 tax year, the deadline to do so is 31 July 2022.