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THE ANNUAL ALLOWANCE
This is the amount by which the value of your pension benefits may increase in any one year (disregarding any increase in the value of any benefits in the year that they become payable) without you having to pay a tax charge. Years run from 1 April to 31 March.
The Annual Allowance is set by HM Treasury covers any pension benefits you may have in all tax-registered pension arrangements – not just the LGPS.
| Tax Year | Annual Allowance |
| 2010/2011 | £255,000 |
| 2011/2012 | £255,000 |
| 2012/2013 | £255,000 |
| 2013/2014 | £255,000 |
| 2014/2015 | £255,000 |
| 2015/2016 | £255,000 |
If you exceed the Annual Allowance in any year (other than the year that that all your benefits become payable) you are responsible for reporting this to HM Revenue & Customs (HMRC) on your self-assessment tax return and for paying the annual allowance tax charge.
The annual allowance tax charge is 40% of any increase in benefits above the Annual Allowance. The tax charge will not apply if you have registered to have enhanced protection, but only if you keep enhanced protection throughout the relevant tax year.
