Scheme Pays elections
If the value of the benefits across all your pensions arrangements increase by more than £60,000 in a year, you may be subject to an Annual Allowance tax charge. This charge can either be paid directly through HMRC’s self-assessment arrangement or you can choose to have it paid on your behalf through a Scheme Pays election. This means the pension scheme pays the charge on your behalf and reduces your future pension entitlement.
There are two types of Scheme Pays: mandatory and voluntary.
Mandatory Scheme Pays
Mandatory Scheme Pays can be used if:
- your Pension Input amount within a single scheme exceeds the £60,000 Annual Allowance; and
- your total tax charge is over £2,000; and
- your Scheme Pays election applies to the benefits within that scheme only.
For mandatory Scheme Pays the scheme administrator becomes jointly and severally liable (with the member) for the annual allowance charge and must pay this to HMRC within a given timescale. No interest is payable if the SPPA makes payment by the mandatory Scheme Pays deadline.
Voluntary Scheme Pays
Annual allowance charges that do not meet the mandatory Scheme Pays conditions are due to be paid to HMRC at the relevant self-assessment deadline.
SPPA will accept a voluntary Scheme Pays election where the total SPPA AA Tax charge exceeds £1,000 if;
- You do not meet the mandatory conditions;
- The charge is due to growth in combined SPPA scheme benefits (final salary and 2015 CARE benefits); or
- you are subject to a tapered annual allowance.
- you missed the mandatory deadline
Any Voluntary Scheme Pays elections paid to HMRC after the relevant self-assessment deadline may be subject to late payment charges and interest from HMRC from this date until the charge is paid. The SPPA is not responsible for these payments and you will be liable for any such charges.
The UK Government have published guidance that will help you understand your reduced (tapered) annual allowance.
Apply for Scheme Pays
If you wish to apply for Scheme Pays, completed forms should be submitted by email to sppaschemepays@gov.scot.
If your election form is electronically signed, your email must also confirm that you have personally submitted the request as we cannot accept Scheme Pays election forms submitted by a third party.
Any Scheme Pays election forms that are incomplete or submitted by a third party will be rejected. Please note that rejected forms will not be considered as meeting any applicable deadlines, which may affect how your election is processed and any subsequent payments to HMRC.
Alternatively, completed form can be posted to:
Scottish Public Pensions Agency
7 Tweedside Park
Tweedbank
Galashiels
TD1 3TE
The Member’s Role
Following receipt of a Pension Savings Statement (PSS) or Remediable Pension Savings Statement (RPSS), it is the member’s responsibility to:
- engage with HMRC to calculate and settle any Annual Allowance tax liability; and
- determine whether they wish to utilise Scheme Pays.
As the SPPA has no visibility of whether a member has engaged with HMRC or intends to utilise Scheme Pays, it cannot anticipate or align with HMRC processing or turnaround times.
The SPPA’s Role
Where a member chooses to utilise Scheme Pays following receipt of their PSS or RPSS, the SPPA will process the request upon receipt of a valid Scheme Pays Election submitted by the member (or notification from HMRC for 2015 Remedy cases). The SPPA will:
- calculate the Scheme Pays debit and apply the corresponding adjustments to the member’s pension benefits; and
- settle the relevant tax charge with HMRC.
The SPPA aims to process Scheme Pays Elections within one month of receipt of all required information.
Scheme Pays Election Deadlines
Scheme Pays Elections should be submitted following the year in which the annual allowance charge relates.
Deadline dates are set by HMRC and further information can be found here: PTM056440 of the Pensions Tax Manual.
Deadlines may be brought forward if:
- You expect to retire - your completed election must be sent to SPPA before your pension is authorised.
- You reach age 75 - your completed election must be received by SPPA before your 75th birthday.
For information purposes, we have outlined the HMRC deadlines in the table below:
| Tax Year | Pension Savings Statement Issued | Voluntary Schemes Pays Election Form Deadline | Voluntary Schemes Pays Payment Deadline | Self- Assessment Deadline | Mandatory Schemes Pays Election Form Deadline | Mandatory Schemes Pays Payment Deadline | Revised Scheme Pays Revision Deadline |
| 2017/2018 | 06/10/2018 | 01/12/2018 | 31/01/2019 | 31/01/2019 | 31/07/2019 | 31/01/2020 | 31/07/2024 |
| 2018/2019 | 06/10/2019 | 01/12/2019 | 31/01/2020 | 31/01/2020 | 31/07/2020 | 31/01/2021 | 31/07/2025 |
| 2019/2020 | 06/10/2020 | 01/12/2020 | 31/01/2021 | 31/01/2021 | 31/07/2021 | 31/01/2022 | 31/07/2026 |
| 2020/2021 | 06/10/2021 | 01/12/2021 | 31/01/2022 | 31/01/2022 | 31/07/2022 | 31/01/2023 | 31/07/2027 |
| 2021/2022 | 06/10/2022 | 01/12/2022 | 31/01/2023 | 31/01/2023 | 31/07/2023 | 31/01/2024 | 31/07/2028 |
| 2022/2023 | 06/10/2023 | 01/12/2023 | 31/01/2024 | 31/01/2024 | 31/07/2024 | 31/01/2025 | 31/07/2029 |
| 2023/2024 | 06/10/2024 | 01/12/2024 | 31/01/2025 | 31/01/2025 | 31/07/2025 | 31/01/2026 | 31/07/2030 |
| 2024/2025 | 06/10/2025 | 01/12/2025 | 31/01/2026 | 31/01/2026 | 31/07/2026 | 31/01/2027 | 31/07/2031 |
| 2025/2026 | 06/10/2026 | 01/12/2026 | 31/01/2027 | 31/01/2027 | 31/07/2027 | 31/01/2028 | 31/07/2032 |
Submitting a Scheme Pays Election after the Relevant Deadline
If you submitted an estimated Scheme Pays election or there is a change to the amount of your Annual Allowance tax charge, you can complete a revised Scheme Pays election following receipt of an initial Scheme Pays election. The SPPA must receive this no later than the 31 July that follows the end of the period of 6 years from the end of the tax year to which the tax charge applies.
McCloud Remedy
For members who are eligible for the 2015 Remedy and have a change to their pension input amounts as a result of the ‘rollback’ to the legacy scheme, the deadline to apply for mandatory Scheme Pays for the tax years 2019/2020, 2020/2021 and 2021/2022 as well as tax year 2022/2023 has been extended to 6 July 2027.
For any amended Scheme Pays Elections, the deadline extension depends on your status as at 1 October 2023:
- Active and Deferred Members may be submitted up to 6 July 2030; and
- Pensioner and Deceased Members may be submitted up to 6 July 2032.
Any election or revision submitted under these extended deadlines will still follow HMRC’s Accounting for Tax quarterly payment deadlines based on the date the Scheme Pays Election was received.
You can find out more information on how the 2015 Remedy affects Scheme Pays Elections here.
Estimating a Scheme Pays Election
If you think you will have an AA tax charge in 2024/2025 and want the SPPA to pay the tax charge to HMRC using mandatory Scheme Pays, but you have not received your 2024/2025 PSS, you can fill out a Scheme Pays Election Form and provide an estimate of your AA tax charge.
If you have completed Self-Assessment tax return with a provisional AA tax charge figure, you can use the same provisional figure to make a mandatory Scheme Pays election before 31 July 2026. Alternatively, if a member is unable to estimate their AA tax charge a minimum election of £2,000.00 will be accepted. If you have not received a 2024/2025 PSS at the time of making the election, SPPA will treat this election as an estimate.
When you receive your 2024/2025 PSS and have confirmed your actual AA tax charge, you will need to complete a revised Scheme Pays Election Form using the updated figure. You will then have to update your Self-Assessment tax return upon receipt of a Scheme Pays Notice from the SPPA.
Late Payment Interest Charges
For tax years 2023/2024 and 2024/2025 only, if members are unable to submit a mandatory Scheme Pays election due to the 2015 Remedy and delays in the provision of their RPSS, any late payment interest charges imposed by HMRC can be reclaimed through the NHS Cost Reimbursement Scheme. This means that members will not be disadvantaged because of delays in the provision of their RPSS.
Voluntary Scheme Pays
If you have not received your PSS, were unable to make a mandatory Scheme Pays election by the relevant deadline or did not meet the mandatory conditions, you may still submit a voluntary Scheme Pays election. If any voluntary Scheme Pays elections are submitted after the relevant deadline, these would be considered to be late and you may be subject to late payment charges and interest levied by HMRC.
In order for voluntary Scheme Pays Elections over £1,000.00 to be paid to HMRC by 31 January 2027, Scheme Pays Elections must be received by the SPPA no later than 1 December 2026.