The Impacts of Remedy on Annual Allowance
The SPPA are required under HMRC legislation to provide Pension Savings Statements (PSS) to all members by 6 October 2024 who either;
- Breach the AA limit in a single scheme; or
- Request an On Demand PSS before 6 July 2024
In addition to these requirements, this year SPPA will also need to issue a Remediable Service Pension Savings Statement (RS PSS) for all active / deferred members (as at 1 October 2023) requiring an updated statement to replace a previously received PSS for any tax year in the remedy period.
Members who hold a current self-employed GP post will only receive a 2022/2023 PSS.
The Impact of Remedy
Legislative deadlines for Annual Allowance Pension Savings Statements have recently changed due to the McCloud/Sargeant Ruling and steps required to deliver the 2015 Remedy.
Remedy Members
Remedy changes will affect members if they 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 5 years.
All scheme members who are eligible for Remedy will need to make a decision about their pension benefits for the remedy period between 1 April 2015 and 31 March 2022 (the remedy period). From 1 October 2023 this service has been moved back to the legacy pension scheme. This is referred to as rollback.
For AA purposes, pension growth each year for the remedy period has to be recalculated to take the effect of rollback into account.
If you fall into one of these categories, please continue to read this section. If you do not fall into one of these categories, please refer to this section.
On Demand Requests
If you are a Remedy member, any new requests received will be issued within 6 months of receipt.
Please note SPPA is unable to produce a Remediable Service Pension Savings Statements until we hold up to date and correct information from employers. If we need to contact employers, SPPA have 6 months from receipt of all the relevant information to provide a Remediable Service Pension Savings Statement. We will notify you if this affects your request.
General Practitioners Remediable Service Pension Savings Statements are issued a year later once certified earnings are received from Practitioner Services Division.
Remediable Service Pensions Savings Statements (RS PSS)
If you receive a Remediable Service Pension Savings Statement, you should use this information to correct your tax position with HMRC. Please note that HMRC’s Public Service Remedy service has been temporarily suspended. It is expected that HMRC will re-open the service in September 2024.
You can keep updated by referring to the following link - Calculate your public service pension adjustment: service availability and issues - GOV.UK (www.gov.uk).
Alternatively, you can email publicservicepensionsremedy@hmrc.gov.uk and use the subject line “PSPR submission request”. HMRC will send you a form to complete and return to them. This form asks for the same information as the digital service and can be used to avoid any further delay in correcting your tax position. SPPA are unable to assist with this process and any enquiries relating to this service would have to be directed to HMRC.
Calculate any AA changes
When making a submission for a tax correction you will not be required to correct any previously submitted HMRC self-assessment tax return.
By entering your pension input amounts (PIA) from your PSS(s), this service will allow you to calculate any changes to your AA tax liabilities. 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 that year has been split accordingly.
If you have personal or private pensions, these must be included in your tax calculation. Any additional information required must be supplied by the relevant pension provider.
1. Determine if your tax position has changed
HMRC will review a corrected submission against:
- Self-assessment tax returns for the remedy years;
- Accounting for Tax (AFT) submissions if the pension scheme paid any of your tax charge;
- any tax charges already paid.
When the review is complete, HMRC will let you know what to do next. Do not amend a previously submitted HMRC self-assessment tax return.
2. Tax years 2015/2016 to 2018/2019 (Out of scope years)
For these tax years, the tax position is unable to be corrected directly with HMRC. If there is a change in tax charges, HMRC will notify SPPA to allow for any necessary refund or adjustments in benefits. Any increase in tax charges will be waived.
3. Tax years 2019/2020 to 2022/2023 (In scope years)
For these tax years, the tax position can be corrected with HMRC. HMRC will issue refunds of tax and collect any new or additional AA tax charges that have incurred.
Decrease in tax charge
Where an AA tax charge has decreased, HMRC will issue a refund to whoever originally paid the tax:
- Where the charge was paid through self-assessment, you will receive the refund directly to the bank details provided on the submission.
- Where the pension scheme has paid on behalf of the member (this is known as Scheme Pays), then the refund will be issued to the pension scheme. HMRC will write to you to provide details of the refund due to allow the pension scheme to correct any Scheme Pays debits accordingly.
Increase in tax charge
Where a new or additional AA tax charge is due, you will need to indicate 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.
4. Tax Year 2023/2024 (only applicable where your pension growth exceeds £60,000.00)
For this tax year, the tax position has not been established previously and is not applicable for correcting your tax position through HMRC’s Public Service Pensions Remedy service.
You can use HMRC's calculator and enter the pension input amounts from your Pension Savings Statements. This will show whether you have a tax charge as well as any unused allowance from the previous three years. We have prepared some guidance you may wish to refer to whilst using the calculator.
The output from the calculator is the ‘amount on which tax is due’, and the actual charge payable is dependent on your marginal tax rate. To calculate this, you need to work out the rate of tax that would be charged if your excess pension savings were added to your taxable income and the tax based on your marginal income tax rate. If you're unsure, guidance and examples of the marginal tax rate can be found on the HMRC website.
Complete a HMRC self-assessment tax return
If you determine that you do have a tax charge liability for 2023/2024, 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.
Scheme Pays 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. SPPA would encourage you to correct your tax position and apply for Scheme Pays at your earliest convenience following retirement to minimise any pension overpayment that has been caused because of your Scheme Pays election being accepted after retirement. SPPA will implement the appropriate Scheme Pays debits upon confirmation of your finalised tax position from HMRC. We are unable to confirm anticipated turnaround times at present but will update this page once this is known.