NHS Pensions

Introduction

As Chartered Financial Planners and Pension Advice Specialists, we can provide independent fixed fee financial advice tailored to your situation. So whether you wish to continue to work and accrue benefits whilst being aware of the tax implications, or seeking to retire early, we can help.

What is annual allowance?

The amount of pension savings you can make in one year before receiving a tax charge is known as the annual allowance, and since 6th April 2014, the standard annual allowance limit has been set at £40,000. However, depending on your taxable income, you may be subject to a lower tapered annual allowance.

You will receive a tax charge (on the additional amount) if your pension savings are more than the annual allowance in one scheme year.  The tax rate charged will reflect your marginal tax rate.

Provided you were a member of a qualifying pension scheme at some time during all of the 3 previous tax years, it is possible to carry forward any unused annual allowance. You can do this for a maximum of three years.

What is tapered annual allowance?

In April 2016, tapered annual allowance was introduced with the intention of reducing pension tax relief for high earners. It will apply to you if your adjusted incomes (taxable income and pension savings) exceed £150,000 and threshold incomes (taxable income excluding the value of pension savings) exceed £110,000. 

Here's an educational video by Ray Adams, Niche founder, about how tapered annual allowance could affect you in the NHS Pension Scheme.

What is scheme pays?

Scheme pays is an option available to you whereby you can ask your pension scheme to pay your annual allowance tax charge, on your behalf, to HMRC. In return, your benefits in retirement are reduced by a corresponding amount. If you might struggle to pay your annual allowance tax charge upfront, this could be an attractive option and is available if:

• You are a high earner subjected to a lower, tapered annual allowance
• You incur a tax charge above £2,000

If you wish to use scheme pays, you must notify NHS Pensions of your intention before the relevant annual deadline for each tax year.

Our process & fees

For us to conduct an analysis and produce a report, we will require the following documents from you:

• March payslips from at least the last 3 years
• April payslip from this year
• Total reward statement
• Pension input statement

Once these documents have been received, we will calculate whether your annual allowance has been tapered or not, whether you have exceeded your annual pension allowance and if you have any ‘carry forward’ allowance available to utilise. We will then produce a report which will contain all this information as well as confirming if you have any tax to pay.

If you would like us to produce a report for you, please contact us on 01633 859555 or email info@nicheifa.co.uk