Exceeding Annual Allowance
Discussion
Hi.
I understand that when the pension annual allowance is exceeded in a tax year, a tax charge is triggered, but may be reduced or eliminated with the help of unused allowance from the previous three years.
Do HMRC automatically do this when the AA is exceeded, or do we need to report the fact and claim the unused allowance?
I’m hoping it’s the former, but think it’s the latter!!!!
I understand that when the pension annual allowance is exceeded in a tax year, a tax charge is triggered, but may be reduced or eliminated with the help of unused allowance from the previous three years.
Do HMRC automatically do this when the AA is exceeded, or do we need to report the fact and claim the unused allowance?
I’m hoping it’s the former, but think it’s the latter!!!!
Jazzer said:
Hi.
I understand that when the pension annual allowance is exceeded in a tax year, a tax charge is triggered, but may be reduced or eliminated with the help of unused allowance from the previous three years.
Do HMRC automatically do this when the AA is exceeded, or do we need to report the fact and claim the unused allowance?
I’m hoping it’s the former, but think it’s the latter!!!!
I’m not massively convinced that HMRC can identify from source much more than a basic excess of saving over the annual allowance. They seem to be getting better but when I clocked up a calculation on tapered AA a few years ago it was me that spotted it the following year, not them. I understand that when the pension annual allowance is exceeded in a tax year, a tax charge is triggered, but may be reduced or eliminated with the help of unused allowance from the previous three years.
Do HMRC automatically do this when the AA is exceeded, or do we need to report the fact and claim the unused allowance?
I’m hoping it’s the former, but think it’s the latter!!!!
In the years when I’m over the allowance (I’m in a DB scheme so it’s not as easy to manage as under DC) I’ve always had to self-report and/or do the calls around brought forward allowances myself.
Here’s what I posted this week on a different thread
mikef said:
In my experience there is nothing specific to do at the time of contribution, but do run the HMRC calculator at https://www.tax.service.gov.uk/pension-annual-allo... before making the over-contribution and double- or triple-check that you do have the available carry-over allowance that you expect
Important - keep all your annual pension statements from all your pension schemes and providers going back six years, and also make sure you have the PSTR references for each scheme (in most cases I had to ask them for it)
If you do use the carry-over, you are liable to be audited at some point by the HMRC Wealth Unit who demanded all the above statements and supporting information within 15 days
Important - keep all your annual pension statements from all your pension schemes and providers going back six years, and also make sure you have the PSTR references for each scheme (in most cases I had to ask them for it)
If you do use the carry-over, you are liable to be audited at some point by the HMRC Wealth Unit who demanded all the above statements and supporting information within 15 days
CharlesElliott said:
Do you do a tax return? If so, you have to declare any excess on that.
HMRC said:
Unused annual allowance carry forward
You can carry forward any annual allowance you did not use in the previous 3 tax years automatically.
You do not need to make any claim to HMRC to carry forward unused annual allowance and you do not need to show this on your tax return if your unused annual allowance means that an annual allowance charge is not due.
https://www.gov.uk/government/publications/pension...You can carry forward any annual allowance you did not use in the previous 3 tax years automatically.
You do not need to make any claim to HMRC to carry forward unused annual allowance and you do not need to show this on your tax return if your unused annual allowance means that an annual allowance charge is not due.
Most of us middle career medics are dicing with this at the moment.
The NHS pension is DB and the AA charge is triggered when your calculated theoretical benefit goes up in a year by more than £60k, not contributions. This year they didn't do any calculations for us of even give out the pension figures, so complete darkness.
HMRC absolutely do not inform you of the charge or your need to pay it. If you were igorant of it, and didn't pay the tax charge over £60k (minus your calculations of the carry forward from previous 3 years, but NB it wasn't always 60k) then you would be a unwitting tax fraudster come Feb 1st.
Many of us have given up doing extra waiting list work in the NHS because of this.
I've had 2 AA tax bills (I've made payments as self identified, HMRC never once wrote to me with a bill) despite carry forward and the rise from 40 to 60k allowance and I have to pay for an accountant to work it out. And pay it at 45% levy.
My government pays me (NHS), then taxes me on my wages (PAYE) the makes up an obscure tax on my pension growth (growth in DB scheme) then doesn't give me any idea of the tax and dares to tell me ill be fined again £100 plus interest on Feb 1st when I can't pay the tax on the taxed pension.
You also lose the 60k allowance when you go over a certain level, which is basically kicking the corpse.
So I don't do extra NHS work, my waiting list grows and screw the lot of them.
The NHS pension is DB and the AA charge is triggered when your calculated theoretical benefit goes up in a year by more than £60k, not contributions. This year they didn't do any calculations for us of even give out the pension figures, so complete darkness.
HMRC absolutely do not inform you of the charge or your need to pay it. If you were igorant of it, and didn't pay the tax charge over £60k (minus your calculations of the carry forward from previous 3 years, but NB it wasn't always 60k) then you would be a unwitting tax fraudster come Feb 1st.
Many of us have given up doing extra waiting list work in the NHS because of this.
I've had 2 AA tax bills (I've made payments as self identified, HMRC never once wrote to me with a bill) despite carry forward and the rise from 40 to 60k allowance and I have to pay for an accountant to work it out. And pay it at 45% levy.
My government pays me (NHS), then taxes me on my wages (PAYE) the makes up an obscure tax on my pension growth (growth in DB scheme) then doesn't give me any idea of the tax and dares to tell me ill be fined again £100 plus interest on Feb 1st when I can't pay the tax on the taxed pension.
You also lose the 60k allowance when you go over a certain level, which is basically kicking the corpse.
So I don't do extra NHS work, my waiting list grows and screw the lot of them.
Edited by The_Doc on Sunday 26th January 09:52
The_Doc said:
Most of us middle career medics are dicing with this at the moment.
The NHS pension is DB and the AA charge is triggered when your calculated theoretical benefit goes up in a year by more than £60k, not contributions. This year they didn't do any calculations for us of even give out the pension figures, so complete darkness.
I'd just put a note in the white box on your tax return stating that you can't submit the figures due to the McCloud ruling. If not going down the scheme pays route, I wouldn't be happy paying interest on the unpaid tax.The NHS pension is DB and the AA charge is triggered when your calculated theoretical benefit goes up in a year by more than £60k, not contributions. This year they didn't do any calculations for us of even give out the pension figures, so complete darkness.
Edited by The_Doc on Sunday 26th January 09:52
MaxFromage said:
I'd just put a note in the white box on your tax return stating that you can't submit the figures due to the McCloud ruling. If not going down the scheme pays route, I wouldn't be happy paying interest on the unpaid tax.
This is s
t advice. Really st advice. It will lead to a fine, do not do it. People who know fk all about this incredibly complex issue should STFU.You are obliged to guess.
Obliged.
No, I'm not making that up.
If you think there .might be a liability, you have to declare and pay. Failure to do so will trigger a fine. You can appeal, but there's no guarantee, and if you had the PSS there is no excuse. If you under report once you have the figures there is no fine because you tried. If you over report you will, eventually, get a refund, once claimed.
Follow tony Goldstone on X.
No it's not fair, no it's not right, this is how f
king brilliant this is.Edited by macron on Sunday 26th January 10:45
Don't worry.
My accountant and I made an educated guess using her formalae and experience. I got a RPSS, but no PSS.
I submitted. She billed me. I paid her firm.
Then I claimed back the accountancy bill from my government, which pays me and taxes me.
Accountants are rightly getting rich on work. Patients are suffering. I am mildly bemused, but well educated.
Lots of my colleagues have no knowledge on this whatsoever and display blank looks
And the final irony: I doubt HMRC will ever chase them for the AA charge!
My accountant and I made an educated guess using her formalae and experience. I got a RPSS, but no PSS.
I submitted. She billed me. I paid her firm.
Then I claimed back the accountancy bill from my government, which pays me and taxes me.
Accountants are rightly getting rich on work. Patients are suffering. I am mildly bemused, but well educated.
Lots of my colleagues have no knowledge on this whatsoever and display blank looks
And the final irony: I doubt HMRC will ever chase them for the AA charge!
The_Doc said:
So I don't do extra NHS work, my waiting list grows and screw the lot of them.
I thought they were supposed to be fixing the problem where you would "earn" more but actually receive less? Have they done nothing or is it still not worth it despite any improvements?Edited by The_Doc on Sunday 26th January 09:52
They made some small changes, but stopped far far short of fixing it.
And then this year the NHS Pensions authority st the bed by not giving out information, and also giving out some info but got the numbers wrong. Their numbers.
Its basically impossible at various pay points to know if you are earning overtime or triggering a huge (£10k+) tax bill.
If they (HMRC/GOV) put things back to how it was 10+yrs ago, or excused the DB schemes from the AA charge then medics could go back to working hard.
But what do I know?
And then this year the NHS Pensions authority s
t the bed by not giving out information, and also giving out some info but got the numbers wrong. Their numbers. Its basically impossible at various pay points to know if you are earning overtime or triggering a huge (£10k+) tax bill.
If they (HMRC/GOV) put things back to how it was 10+yrs ago, or excused the DB schemes from the AA charge then medics could go back to working hard.
But what do I know?
macron said:
This is st advice. Really st advice. It will lead to a fine, do not do it. People who know fk all about this incredibly complex issue should STFU.
You are obliged to guess.
Obliged.
No, I'm not making that up.
If you think there .might be a liability, you have to declare and pay. Failure to do so will trigger a fine. You can appeal, but there's no guarantee, and if you had the PSS there is no excuse. If you under report once you have the figures there is no fine because you tried. If you over report you will, eventually, get a refund, once claimed.
Follow tony Goldstone on X.
No it's not fair, no it's not right, this is how fking brilliant this is.
Well luckily this isn't my area of expertise, so my client engaged a specialist NHS pension advisor. And this was her advice. Thanks I'll look into it.t advice. Really st advice. It will lead to a fine, do not do it. People who know fk all about this incredibly complex issue should STFU.You are obliged to guess.
Obliged.
No, I'm not making that up.
If you think there .might be a liability, you have to declare and pay. Failure to do so will trigger a fine. You can appeal, but there's no guarantee, and if you had the PSS there is no excuse. If you under report once you have the figures there is no fine because you tried. If you over report you will, eventually, get a refund, once claimed.
Follow tony Goldstone on X.
No it's not fair, no it's not right, this is how f
king brilliant this is.Edited by macron on Sunday 26th January 10:45
Oh and there's no need to get so worked up about it. Just a disagreement would have sufficed rather than all the swearing. Such is the way on the internet.
macron said:
This is st advice. Really st advice. It will lead to a fine, do not do it. People who know fk all about this incredibly complex issue should STFU.
You are obliged to guess.
Obliged.
No, I'm not making that up.
If you think there .might be a liability, you have to declare and pay. Failure to do so will trigger a fine. You can appeal, but there's no guarantee, and if you had the PSS there is no excuse. If you under report once you have the figures there is no fine because you tried. If you over report you will, eventually, get a refund, once claimed.
Follow tony Goldstone on X.
No it's not fair, no it's not right, this is how fking brilliant this is.
And reading the guidance, I'm afraid you are wrong in your posting. My client won't receive a fine for submitting without the figures as that's not how the system works. If they were paying themselves, interest would be due, but interestingly it would appear that scheme pays are not subject to the same interest loading.t advice. Really st advice. It will lead to a fine, do not do it. People who know fk all about this incredibly complex issue should STFU.You are obliged to guess.
Obliged.
No, I'm not making that up.
If you think there .might be a liability, you have to declare and pay. Failure to do so will trigger a fine. You can appeal, but there's no guarantee, and if you had the PSS there is no excuse. If you under report once you have the figures there is no fine because you tried. If you over report you will, eventually, get a refund, once claimed.
Follow tony Goldstone on X.
No it's not fair, no it's not right, this is how f
king brilliant this is.Edited by macron on Sunday 26th January 10:45
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