Annual allowance guide: options for affected staff

The handy one-page guide can be shared with staff to highlight the options available, such as:

• carrying forward unused allowance from previous tax years
• using scheme pays to pay the tax charge to HMRC, with a corresponding reduction to their benefits in retirement
• paying the tax charge from existing personal funds or savings.

The annual allowance is the amount of pension savings an individual can make in one year without paying tax. If an employee builds up pension savings that exceed the annual allowance, a tax charge is due on the value of the excess benefits. Employees must take action to understand if they have incurred a tax charge and to consider the options available to them. 

We would encourage staff to take independent financial advice to ensure they fully understand their position and are able to make well informed choices. We have published a list of organisations that are able to offer expert guidance and advice on pension tax issues for members of the NHS Pension Scheme.

The infographic includes links to further information about the annual allowance to help improve awareness and understanding.

Visit our annual allowance web page for more key information about annual allowance and which NHS Pension Scheme members may be affected. Use the NHS Pension Scheme Annual Allowance Tax Ready Reckoner to assess your annual allowance liability.