NHS Pension - Have you checked your Annual Allowance charge position?

23.11.2020
Shaun Davison
Healthcare

Thousands of NHS healthcare professionals, including consultants, general practitioners and dentists, have started to receive copies of their Annual Allowance Pension Savings Statements (AAPSS) from the NHS Business Services Authority (NHSBSA).

Every member of the NHS Pension scheme is entitled to receive a copy of their AAPSS, which details their NHS pension input growth for the year, along with the previous three years. This is then used to assess whether an Annual Allowance charge is payable. 

An Annual Allowance charge is payable if a member’s pension input, together with any other pensions held outside the NHS Pension scheme, exceeds the Annual Allowance limit. 

The standard Annual Allowance is currently set a £40,000, however, this allowance may be reduced based on an individual’s level of taxable income and pension savings. 

If you are a member of the NHS Pension scheme, it is your responsibility for establishing and calculating any Annual Allowance charge payable and report this to HM Revenue & Customs (HMRC) through your Self Assessment tax return. 

We are able to help with the review of your AAPSS and the calculation of the Annual Allowance limit to establish whether an Annual Allowance charge is payable. 

Further information can be found on the NHSBSA website.

What if I have not received a statement yet?

The NHSBSA will only send a copy of the AAPSS if your NHS Pension growth in the 1995/2008 or 2015 section exceeds the standard Annual Allowance. If you are a transitional member, with benefits arising under both schemes, they will look at the combined growth to assess whether this is in excess of the standard Annual Allowance.

This means that members who are below the standard Annual Allowance but may have an Annual Allowance charge due to the taper of their Annual Allowance, or have pension savings with another registered pension scheme taking their total pension savings above the Annual Allowance, will not receive a statement automatically.

We therefore recommend if you have not received a statement for the latest year, to manually request a copy from the NHSBSA (email: nhsbsa.annualallowance@nhs.net, or telephone: 0300 3301 346).

How do I know my AAPSS is correct?

Your AAPSS will based on the information held by the NHSBSA, therefore, it is important to obtain a Total Reward Statement (TRS) or Annual Benefit Statement (ABS) to ensure your NHS Pension history is correct.

Further information on how to request and check these are detailed on our website. We are happy to check your benefit statement on your behalf to confirm this is in order.

If you are concerned about a particular growth figure included on the statement, you can contract the NHSBSA who should be able to confirm how they have calculated your Annual Allowance pension input growth and what annual pension benefit figures they have used.

I am a GP Practitioner. Will I be able to obtain an AAPSS to complete my tax return?

The NHSBSA will only be able to produce a statement where they have details of a member’s latest pensionable earnings.

GP practitioners will submit their Type 1 superannuation to Primary Care Services England (PCSE) between December and February following the end of the tax year. PCSE will update NHS England following 28 February, which means the NHSBSA will not have the respective information in order to produce an AAPSS prior to the Self-Assessment tax return filing deadline.

In this instance, you should calculate a reasonable estimate of your Annual Allowance charge to include on your Self-Assessment tax return. Thereafter, once you receive an AAPSS you should amend your return accordingly.

HMRC allows individuals to file an amended tax return electronically up to 12 months after the filing deadline. If you miss this deadline you will need to write to HMRC to request an amendment of the return.

Can I opt for the NHS Pension Scheme to pay the Annual Allowance charge on my behalf?

If you have an Annual Allowance charge you can either pay the charge directly to HMRC yourself or share the responsibility for the payment with NHS Pensions using the scheme pays facility.

Following the impact that pension savings charges were having upon NHS employees, it was confirmed by NHS England that clinicians who face a pension tax charge, in respect of the growth of their NHS pension benefits above their pension savings Annual Allowance threshold for the 2019/20 tax year, will be able to have this charge paid by the NHS Pension Scheme by completing and returning a NHS Pension – Annual Allowance Scheme Pays Election form.

Usually Scheme Pay Elections reduce the benefits received on retirement in order to recover the tax paid, however, a contractually binding commitment will exist to fully compensate clinicians upon retirement for the amount deducted in respect of the 2019/20 tax year. Further information can be found by visiting: https://www.england.nhs.uk/pensions/

The deadline for making an election is 31 July following HMRC filing deadline, therefore, members have until 31 July 2021 to submit an election in respect of the 2019/20 tax year. If you do not receive an AAPSS by this date you can submit an estimated election and vary this once you receive your statement.

We recommend that independent financial advice is obtained prior to making a Scheme Pays Election, to understand the impact this has on your pension benefits. Please feel free to contact one of our NHS specialist advisers at Lovewell Blake Financial Planning Limited (LBFP) to arrange a meeting.

If you would like further assistance with checking your pension records, requesting your AAPSS and subsequent review

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