Immediate Choice Retirements affected by Annual Allowance

If you receive a Remediable Service Pension Savings Statement as part of your retirement paperwork, you will need to use the information provided to submit your corrected tax position through HMRC’s Public Service Pensions Remedy service at your earliest convenience. This will allow you to:

• Calculate any AA changes;
• Make a submission for a tax correction without the need to correct any previously submitted HMRC self-assessment tax return.

By entering your pension input amounts (PIA) from your PSS(s), this service will allow you to calculate any changes to your AA tax liabilities. In 2015/2016, the period over which AA was measured changed to align with the tax year rather than the scheme year, so the data for that year has been split accordingly.

If you have personal or private pensions, these must be included in your tax calculation. Any additional information required must be supplied by the relevant pension provider.

1. Determine if your tax position has changed

HMRC will review a corrected submission against:

• Self-assessment tax returns for the remedy years;
• Accounting for Tax (AFT) submissions if the pension scheme paid any of your tax charge;
• any tax charges already paid.

When the review is complete, HMRC will let you know what to do next. Do not amend a previously submitted HMRC self-assessment tax return.

2. Tax years 2015/2016 to 2018/2019 (Out of scope years)

For these tax years, the tax position is unable to be corrected directly with HMRC. If there is a change in tax charges, HMRC will notify SPPA to allow for any necessary refund or adjustments in benefits. Any increase in tax charges will be waived.

3. Tax years 2019/2020 to 2022/2023 (In scope years)

For these tax years, the tax position can be corrected with HMRC. HMRC will issue refunds of tax and collect any new or additional AA tax charges that have incurred.

Decrease in tax charge

Where an AA tax charge has decreased, HMRC will issue a refund to whoever originally paid the tax:

• Where the charge was paid through self-assessment, you will receive the refund directly to the bank details provided on the submission.
• Where the pension scheme has paid on behalf of the member (this is known as Scheme Pays), then the refund will be issued to the pension scheme. HMRC will write to you to provide details of the refund due to allow the pension scheme to correct any Scheme Pays debits accordingly.

Increase in tax charge

Where a new or additional AA tax charge is due, you will need to indicate how you intend to pay the AA tax charge. You can choose to:

• Pay HMRC directly, or
• Use Scheme Pays to request that the pension scheme pays the AA tax charge on your behalf.

4. Tax Year 2023/2024 (only applicable where your pension growth exceeds £60,000.00)

For this tax year, the tax position has not been established previously and is not applicable for correcting your tax position through HMRC’s Public Service Pensions Remedy service.

You can use HMRC's calculator and enter the pension input amounts from your Pension Savings Statements. This will show whether you have a tax charge as well as any unused allowance from the previous three years. We have prepared some guidance you may wish to refer to whilst using the calculator.

The output from the calculator is the ‘amount on which tax is due’, and the actual charge payable is dependent on your marginal tax rate. To calculate this, you need to work out the rate of tax that would be charged if your excess pension savings were added to your taxable income and the tax based on your marginal income tax rate. If you're unsure, guidance and examples of the marginal tax rate can be found on the HMRC website.

Complete a HMRC self-assessment tax return.

If you determine that you do have a tax charge liability for 2023/2024, you are responsible for declaring this to HMRC by completing a self-assessment tax return. The Pension Scheme Tax Reference (PSTR) should be quoted on your self-assessment tax return and is available on your statement. Details about how to do this can be found on the HMRC website at https://www.gov.uk/topic/personal-tax/self-assessment.

Scheme Pays after Retirement

You can now submit a Scheme Pays election after you have retired, if your election is received before the relevant Scheme Pays deadline for the tax year in question. SPPA would encourage you to correct your tax position and apply for Scheme Pays at your earliest convenience following retirement to minimise any pension overpayment that has been caused because of your Scheme Pays election being accepted after retirement. SPPA will implement the appropriate Scheme Pays debits upon confirmation of your finalised tax position from HMRC. We are unable to confirm anticipated turnaround times at present but will update this page once this is known.