What is the situation?
Following increased pressure on the NHS in Winter 2019, it was announced that any clinicians incurring a pensions savings tax charge in the 2019/20 tax year (following their NHS Pension growth exceeding their Annual Allowance), would have this covered by NHS England & NHS Wales by way of a Scheme Pays Election. This was a move by the Government (in response to the ongoing pension issues experienced by healthcare practitioners), in part to try and ensure that practitioners could complete additional work over the winter period without financial penalty. The election will contractually ensure that the individual is fully compensated for their respective charge when taking their benefits on retirement. This is a one-off measure, and any Annual Allowance charges going forwards will be the responsibility of the individual. Whilst Scheme Pays Elections are an available outlet for clinicians in other years, there is a reduction in final benefits to recover the tax paid. This being the case, we advise individuals to seek financial advice by contacting Lovewell Blake Financial Planning prior to making an election under normal circumstances.
How do I ascertain if I have an Annual Allowance charge?
Secondary care workers, such as hospital consultants should receive an Annual Allowance Pensions Savings Statement (AAPSS) by 5 October following the tax year concerned (i.e. by 5 October 2020 for the 2019/20 tax year). The statement will detail your pensions input growth for the year, along with the previous 3 years (in order to ascertain any potential unused allowances to carry forward against current year growth). A statement will automatically be sent if your pensions growth has exceeded the standard Annual Allowance of £40,000, however this does not take into account the scenario in which your Annual Allowance has been tapered. As such, we recommend that you request a statement annually.
Primary care practitioners will only be able to obtain an AAPSS following the submission of their Type 1 superannuation certificate detailing their pensionable profits for the year. As these certificates are only submitted in the February following the end of the tax year concerned (i.e. by 28 February 2021 for the 2019/20 tax year), an AAPSS is unlikely to be issued until around October 2021. In this circumstance, it will be necessary to include an estimate of your Annual Allowance charge on your tax return, if applicable.
Once your Annual Allowance position has been ascertained (whether with reference to your AAPSS or an estimate) this will need to be entered on your 2019/20 self-assessment tax return, the original filing deadline for which was 31 January 2021 (extended to 28 February 2021 by HMRC). It is possible to amend this electronically up to 31 January 2022, however thereafter in order to amend your return, this will require writing to HMRC.
If you have not received an AAPSS we recommend that you request a statement from the NHS Pensions Agency (email: email@example.com or telephone: 0300 3301 346).
What do I need to do to ensure my charge is paid for by NHS England/Wales?
In order to take advantage of the special arrangements in place for the 2019/20 tax year, you will need to do two things:
1) Complete the Scheme Pays Election form (SPE2) and submit this to the NHS Pension Business Services Authority by the 31 July 2021 deadline.
2) Complete the 2019/20 Annual Allowance Charge Compensation Policy Application Form before the 31 March 2022 deadline.
- Primary care clinicians (such as GPs) will need part 3 of their policy application endorsed by Primary Care Support England (PCSE). The exact process is expected to be published in March 2021, however it is anticipated to be an online portal to which the respective form can be uploaded.
- Secondary care clinicians will need their forms endorsing by their respective employers.
What if I don’t know if I have an Annual Allowance charge for 2019/20?
If you have not received an AAPSS, and/or are unaware as to whether you may have an Annual Allowance charge for the 2019/20 tax year, the British Medical Association have advised that you either utilise an estimate or a nominal amount of £25 (per scheme you are within). Submitting a provisional election on this basis prior to the 31 July 2021 deadline will safeguard your access to the scheme. If you do not submit an election prior to the 31 July 2021 deadline, you will not be able to take advantage of the scheme. In this scenario, if you subsequently find out you are liable to a charge, the responsibility for payment will fall on you personally.
In addition, it is worth noting that if you are looking to take your retirement benefits, you will need to ensure that your Scheme Pays Election has been submitted first, as you will not be able to make an election subsequently thereafter.
If you have submitted a provisional Scheme Pays Election (i.e. based on an estimate of your pension growth) you will have four years from the 31 July following the tax year of the charge to amend your election, once final figures have been received (i.e. by 31 July 2024 for the 2019/20 tax year).
|2019/20 self-assessment filing deadline||28 February 2021|
|Scheme Pays Election form (SPE2) submission to NHS Pensions Agency||31 July 2021|
|Annual Allowance Compensation Policy form||31 March 2022|
|Revised Scheme Pays Election Form (SPE2) submission to NHS Pensions Agency||31 July 2024|