How would I pay an Annual Allowance tax charge?
If you exceed the Annual Allowance (AA) limit in any year, you are responsible for reporting this to HMRC on your self-assessment tax return.
Merseyside Pension Fund is obliged to notify you if your LGPS benefits (plus the amount of any Additional Voluntary Contributions (AVCs) you may have paid) exceed the AA limit in a year by no later than 6 October of the following tax year.
If you have an AA tax charge that is more than £2,000 and your pension savings in the LGPS alone have increased in the year by more than the AA limit, you may be able to opt for the LGPS to pay some or all of the tax charge on your behalf. The tax charge would then be recovered from your pension benefits.
If you want the LGPS to pay some or all of an AA tax charge on your behalf, you must notify the Fund no later than 31 July in the year following the end of the year to which the AA charge relates by completing the appropriate Scheme Pays election form below.
However, if you are retiring (and draw all of your benefits from the LGPS) and you want the LGPS to pay some or all of the tax charge on your behalf from your benefits, you must tell the Fund before you become entitled to those benefits.