If you exceed the annual allowance, you can ask the Fund to pay some or all of your annual allowance tax charge.
In some cases, the Fund is obliged to pay the charge on your behalf (mandatory scheme pays) and, in other cases, it’s entirely at their discretion (voluntary scheme pays). In return for the Fund paying your annual allowance tax charge, there will be an appropriate reduction to your pension benefits within the Scheme.
We'll send you confirmation that your election has been received and recorded. Where the Fund is not obliged to pay the charge on your behalf, but has the discretion to so, they’ll consider your application and get back to you a short time later to let you know if they’ve approved your application or not.
If you’re interested in the Scheme Pays option, our helpful ‘Scheme Pays flowchart’ will tell you exactly what to do.
If your annual allowance charge changes after you send us the Election form, you can't revoke that election, but, in some circumstances, you can amend it by sending in a further form to Capita.
Please note that timescales for ‘mandatory’ and ‘voluntary’ scheme pays are different and, in some circumstances, you may have a tax charge that falls into both categories. Failure to comply with the timescales could result in:
- HMRC fines; and
- A ‘mandatory’ scheme pays election turning into a ‘voluntary’ one, so the Fund wouldn’t be obliged to pay the charge on your behalf
For more information on scheme pays (including the qualifying criteria for a ‘mandatory’ scheme pays and the relevant timescales that apply), please see our ‘
Scheme Pays Q&A’ factsheet.