Annual allowance charge for excess pension contributions

Don’t forget to include the annual allowance charge for excess pension contributions on the self assessment tax return.

Those working in the private client tax field will need no reminder that the filing deadline for the 2015/16 return is 31 January 2017. Something that is often forgotten is the annual allowance charge which needs to be disclosed in the additional information pages of the self-assessment. Individuals who exceeded the 2015/16 annual allowance and do not have sufficient unused annual allowance to carry forward from previous tax years will have to pay a tax charge.

It is simple enough to calculate the contributions made for defined contribution pension schemes and there is an annual allowance calculator to assist with calculating carried forward relief on GOV.UK. However, calculating the contributions for a defined benefit scheme is more tricky and the pension member will probably have to request the information from the pension scheme administrator.

If the tax charge on contributions in excess of the annual allowance plus brought forward allowances exceeds £2,000, the member can ask the scheme to pay the tax. This request must be made by 3 July.

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