HMRC has introduced changes that may affect members who receive large increases in salary. The changes relate to:
The annual allowance (AA) is a limit of the tax free growth or input you can have in all registered pension schemes in a tax year. If the AA is exceeded, this gives rise to an AA charge. The AA for the tax year 2010/11 was £255,000 but this has now reduced to £50,000 for the tax year 2011/12. There is, however, the potential to utilise unused AA from the previous 3 years.
The lifetime allowance (LTA) is the maximum amount you can take in pension benefits during your lifetime from all pension schemes before an additional tax charge is incurred. If the LTA is exceeded, you will be subject to the LTA charge. The LTA for the tax year 2011/12 is £1,800,000, but will reduce to £1,500,000 in the tax year 2012/13.
Unfortunately NAHT does not have any tax expertise so cannot advise in this matter. Members are therefore advised to read the attached documentation which has recently been issued by Teachers' Pensions as well as visit the online calculator on TP website at: http://www.teacherspensions.co.uk/resources/xls/AA%20Calculator.xls
In addition, via the links on the TP website, members can access further information available on the HMRC website: http://www.teacherspensions.co.uk/resources/calculators.htm#anchor6
Page Published: 26/01/2012