New Pensions Annual Allowance Checking Tool

HMRC have released a new tool for pension scheme members to check whether they need to calculate an annual allowance tax liability and complete a Self Assessment tax return.

From 6 April 2011, the annual allowance for tax relief on pension savings in a registered pension scheme was reduced to £50,000, reports accountancy services Harris & Co. This includes employer’s contributions. Those whose pension savings exceed this amount may have to pay a tax charge and give details of this on a Self Assessment tax return. Pension providers should have issued annual allowance pension statements for the 2011-12 and 2012-13 tax years to all pension scheme members contributing more than £50,000 per year to a pension scheme. From tax year 2014-15 onwards, the annual allowance will go down to £40,000.

The checking tool will allow pension scheme members to determine whether they may be affected by an annual allowance charge and have to complete a tax return, even if they haven"t received a pension statement from their pension provider. Those affected can use HMRC’s pensions savings annual allowance calculator to work out whether they have any unused annual allowance that they can carry forward for the tax years 2008-09 to 2015-16.