The Impacts of Remedy on Annual Allowance

The SPPA has delivered a series of seminars to support pension scheme members to understand and manage Annual Allowance charges stemming from the 2015 Remedy.

The seminars focused on:

• An overview of the UK Pensions Tax regime including what is the Annual Allowance is and how it is tested
• Why the Remedy was implemented, who is affected and how it impacts your pensions benefits
• Information providing insight into how the Remedy affects previous Annual Allowance tax charges including a case study
• Your Remedy Pensions Savings Statement
• Features of the HMRC digital service
• Settling your revised tax position
• Actions to consider
• Question and answer session 

You can view recordings of the seminars delivered to date:

Police webinar recording:

NHS webinar recording 

The SPPA is required under HMRC legislation to provide Pension Savings Statements (PSS) by 6 October 2025 to individuals who: 

• Breach the Annual Allowance (AA) limit in a single scheme; or
• Request an On Demand PSS before 6 July 2025 

In addition to these requirements, this year the SPPA must send a Remediable Pension Savings Statement (RPSS) to all active and deferred members to replace a previously received PSS for any tax year in the remedy period. 

If you are a self-employed GP, you will be sent a 2023/2024 PSS as this is the latest pension information held. 

If you are eligible for the 2015 Remedy 

Changes due to the 2015 Remedy will affect you if you meet all the following eligibility criteria: 

• joined a public service pension scheme on or before 31 March 2012
• have pensionable service in a legacy scheme or the 2015 scheme during the remedy period (1 April 2015 to 31 March 2022);
• were still a member of the scheme on or after 1 April 2015; or
• left the service after 31 March 2012 but returned within five years. 

When you retire, you will need to make a decision about your pension benefits built up during the ‘remedy period’, this is the period between 1 April 2015 and 31 March 2022. Any CARE pension built up has been moved back to your legacy pension scheme. This means your pension growth must be calculated to correct your AA. 

Remediable Pensions Savings Statements 

The SPPA must recalculate the pension input periods for members impacted by the rollback of service in the remedy period and must send a Remediable Pension Savings Statement (RPSS) to members affected by pensions tax. This statement will set out amended pension input amounts for each of the tax years in the remedy period and any relevant carry-forward years. 

You’ll need to use the information in the RPSS with the HMRC Digital Service to correct your tax position. 

HMRC has introduced a Digital Service that enables members impacted by the 2015 Remedy to calculate any new or amended tax charges relating to the changes to their pensions tax position. 

When you receive a RPSS, you must use the HMRC Digital Service to correct your pensions tax position. You can access this service from the following link: Calculate your public service pension adjustment - GOV.UK (www.gov.uk) 

Before you use the HMRC Digital Service in full you should use the first part of the service to work out whether your tax position is affected. This should only take a few minutes to complete and may help avoid the need to use the HMRC Digital Service unnecessarily. 

We are sorry that SPPA administrators have no access to this service and cannot assist members to use this process so enquiries relating to this service must be directed to HMRC. 

Calculate any AA changes

Making a submission using the HMRC Digital Service means you will not be required to correct your self-assessment tax return for the years 2015/2016 to 2022/2023. 

Instead, you should input the information required by the HMRC Digital Service including the recalculated pension input amounts (PIA) from your RPSS. 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 this year has been split accordingly. 

If you have other personal or private pensions in addition to your SPPA pension, you will need to include this information as well. Pension input amounts for additional pension arrangements must be supplied to you by the pension provider if you do not already have it. 

1. Determine if your tax position has changed 

Once you have completed your submission, HMRC will review the information you have provided against: 

• Your original self-assessment tax returns for the remedy years;
• The Accounting for Tax (AFT) submissions the SPPA submitted to HMRC if we paid any of your tax charge;
• Any direct tax charges you already paid for the remedy years 

Once the review is complete, HMRC will let you know what you need to do next. Remember, you do not need to amend a previously submitted HMRC self-assessment tax return for any of the remedy years. 

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

The tax years from 2015/2016 to 2018/2019 are out of scope for HMRC tax corrections and cannot be settled directly with HMRC, If there is a decrease in your AA tax charges for any of these years, HMRC will notify the SPPA to allow for any necessary refund or adjustments in benefits.   Any increase in your AA tax charges for these years will be waived and will not need to be paid to HMRC. 

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

The tax years from 2019/2020 to 2022/2023 are in scope for HMRC tax corrections so HMRC can action amendments to your tax position for these years. HMRC will refund overpaid AA tax charges and collect any new or additional AA tax charges that have been incurred in any of these years. 

Decrease in tax charge 

Where an AA tax charge in an in-scope year has decreased, HMRC will refund whoever originally paid the tax charge:

•  Where the original AA tax charge was paid directly to HMRC through self-assessment, you will receive the refund directly to the bank details provided with your submission.
• Where the SPPA paid the AA tax charge via your pension scheme on your behalf (this is known as Scheme Pays), then HMRC will refund the scheme who will reduce the pension debit you received to offset the tax charge that was paid on your behalf. 

Increase in tax charge 

Where a new or additional AA tax charge is due, you will need to tell HMRC 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 

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. 

Scheme Pays requests can be made through the HMRC Digital Service. If a member indicates that they wish to use Scheme Pays for a new or additional tax charge, HMRC will notify the SPPA, removing the need for a member to submit a Scheme Pays Election. However, if a member representative submits an ‘Agent Form’ to HMRC on a member’s behalf, members wishing to use Scheme Pays must submit a Scheme Pays Election in the normal manner.

The SPPA will pay tax charges requested through Scheme Pays on a mandatory basis even if the pension input amount for the tax year does not exceed the AA limit or the tax charge is less than £2,000.00 provided the deadline is met. The pension scheme will be jointly and severally liable for the payment of the tax charge(s).

Scheme Pays Elections made after the deadline will be treated as voluntary Scheme Pays. This means you will be solely liable for the AA tax charge and interest may be applied by HMRC for late payment. 

You can find out more information on mandatory and voluntary Scheme Pays here: https://pensions.gov.scot/pensions-taxation/annual-allowance/scheme-pays

Scheme Pays Elections for 2015 Remedy 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. We encourage you to correct your tax position and apply for Scheme Pays as early as possible after you retire to minimise any pension overpayments that may result from your Scheme Pays debit being applied. The SPPA will implement the appropriate Scheme Pays debits upon confirmation of your finalised tax position from HMRC.

If you have not received a PSS or RPSS and think you might incur an Annual Allowance tax charge in the tax year 2023/2024, you will still be required to submit a self-assessment regardless of whether you have received a statement or not.

Latest HMRC guidance: Estimating Annual Allowance Charge

Updated guidance from HMRC.

Additional guidance has been provided from HMRC on how to estimate a Self-Assessment return, scroll to the end of the newsletter to read the guidance: Newsletter 166 — January 2025 - GOV.UK

For the tax year 2023/2024 and any future tax years you must follow the standard HMRC reporting process. 

If you have a tax charge to pay, 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

Changes to the Finance Act 2004, have now been introduced to allow for any negative growth in your Legacy scheme from 2023/2024 to be offset against any positive growth in your CARE scheme. 

You should use the HMRC calculator online at https://www.tax.service.gov.uk/paac to work out if you have an AA tax charge to pay for this tax year. 

You can read detailed guidance on how to complete the HMRC calculator using the information provided in your PSS on our website here: www.pensions.gov.scot/pensions-taxation/annual-allowance

Once you have used the calculator you will know the ‘amount on which tax is due’. The AA tax charge you will need to pay is dependent on your marginal tax rate. To calculate this, you should work out the rate of tax that would be charged if your excess pension savings were added to your taxable income. Further guidance about how to do this, and examples of the marginal tax rate can be found on the HMRC website: https://www.gov.uk/guidance/calculate-your-public-service-pension-adjustment 

Mandatory Scheme Pays

If you think you will have an AA tax charge in 2023/2024 and want the SPPA to pay the tax charge to HMRC using mandatory Scheme Pays, but you have not received your 2023/2024 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 2025. If you have not received a 2023/2024 PSS at the time of making the election, SPPA will treat this election as an estimate.

When you receive your 2023/2024 tax year 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.

Voluntary Scheme Pays

If you have not received your 2023/2024 PSS and are unable to make a mandatory Scheme Pays election by the 31 July 225 deadline, you may still submit a voluntary Scheme Pays election after that date once you receive your PSS. However, this would be considered a late voluntary Scheme Pays election and you may be subject to late payment charges and interest levied by HMRC.

For the 2023/2024 tax year 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.

If you retired before 1 October 2023, you will not receive a Remediable Pension Savings Statement (RPSS) until after you have been contacted to choose which benefits you want for the remedy period.  The SPPA will issue a RPSS to members who either:

• breach the AA limit in a single scheme; or
• require an updated statement to replace a previously received PSS for any tax year in the remedy period; or
• request an on demand RPSS

HMRC have extended the legislative deadlines for Scheme Pays for members affected by the 2015 Remedy who were pensioners as at 1 October 2023.

The extended deadlines for any new or additional tax charge incurred for any remedy affected years (2019/2020 to 2021/2022 as well as 2022/2023) are the later of:

• 6 July 2027; or
• six months after either an election is made or the end of the election period 

If a member requires an amended pension input amount for 2023/2024 and incurs a new or additional tax charge, the deadline is extended to the date three months from when the RPSS is sent to them.  A  Scheme Pays Election Form can then be submitted upon receipt of a RPSS.