NHS Pensions Annual Allowance Charge Compensation Scheme for Eligible Clinicians
Are you an NHS clinician eligible for the annual allowance charge compensation scheme for 2019/2020? Submissions need to be made by 31 December 2020! Page Kirk partner, Neil Moon, briefly outlines the scheme.
The Government has been making changes to pension savings tax relief for many years, more recently with the aim of capping the amount of tax relief given on the growth in annual pension savings, which has caused members of the NHS Pension scheme to face unexpected tax liabilities.
Due to the harm the pensions' tax system was causing to the health service and clinicians, the Government changed the rules from April 2020 but unfortunately, for those affected by pension tax charges for the tax year 2019/20, the changes have not been implemented quickly enough. As a result, NHS England and NHS Wales have introduced the annual allowance charge compensation scheme for 2019/20.
The scheme allows eligible clinicians to elect for NHS Pensions to settle annual allowance tax charges. If you are currently a clinician who is a member of the NHS England or Wales pension scheme and have an annual allowance tax charge for 2019/20, you are eligible for the scheme.
What you need to do
Once you know how much of a charge you are due to pay, this amount should then be stipulated in a formal election and filed with NHS Pensions, and declared on your 2019/20 self-assessment tax return.
There is a hard deadline of 31 July 2021 for you to submit an election to the scheme and a soft deadline of 31 December 2020. We recommend you meet the December deadline, if possible, to minimise interest charges that will be applied to your pension savings by NHS Pensions.
If you do not know whether you have an annual allowance charge by the time of the scheme pays deadline, we strongly recommend you put a best estimate of your tax liability on the scheme pays election, or complete a form with a nominal amount, for example £25 (per scheme if you are in more than one scheme).
You can amend the amount entered on the scheme pays election up to four years later. However, if you do not submit a scheme pays election you will potentially be ineligible for the scheme if you subsequently find that you have a tax liability.
Annual allowance calculations are a complex area and consequently the process of working out if you have an annual allowance tax liability, and the process of applying for "scheme pays" can be both daunting and complicated. Page Kirk can deal with all of this for you.
If you would like our help or any more information, please contact us on 0115 9555500 or email enquiries@pagekirk.co.uk