Pension Tax Charges and ‘Scheme Pays’
Post Author:
Angie Harvey
Date Posted:
November 13, 2018
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This is the third blog in our pension series and looks at pension tax charges.
Let’s consider the position where a taxpayer, even after considering carry forward allowances, has still over-contributed into their pension scheme. The sad reality here is that they will be subject to an income tax charge.
The pension overpayment would normally be disclosed on their Self-Assessment tax return, with the tax due on 31 January following the end of the tax year.
However, in certain cases it is possible to elect for the tax liability to be paid by the scheme. This arrangement is known as ‘Scheme Pays’.
If you find yourself in this unfortunate position you should contact the pension scheme trustees to establish if they are willing and able to pay the tax charge on your behalf. Each scheme will have different deadlines for completing ‘Scheme Pays’ applications so it is best practice to contact the pension trustees at the earliest opportunity.
Previous blogs:-
Already in pension drawndown and want to continue contributing
