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Pension savings tax charges

This screen is accessed via the data input tab within the tax return and is used to enter any tax charges on excess pension payments and taxable lump sums from overseas pension schemes.

See the following HMRC helpsheets:

Helpsheet 345 Pension savings

Helpsheet 346 Pension tax charges

Pension benefits in excess of Available Lifetime Allowance

This tax charge may apply if the standard lifetime allowance of £1 073 100 has been exceeded when starting to receive pension benefits from a UK registered pension scheme during the year and an Enhanced Lifetime Allowance is not in use.

  • ‘Description‘ Enter a brief description of the benefit
  • ‘Excess taken as a lump sum‘ Enter the excess taken in the form of a lump sum.
  • ‘Excess not taken as lump sum‘ Enter the excess not taken as a lump sum
  • ‘Tax paid by scheme‘ If any tax was paid by the scheme, enter the amount here.

Amounts saved in excess of the Annual Allowance

This tax charge may apply if the total amount saved toward pension benefits in registered pension schemes during ‘pension input periods’ ending in the current year (and overseas pension schemes, with some modifications) exceeded the total of the Annual Allowance plus any unused Annual Allowance carried forward from the three previous tax years.

Annual Allowance

The maximum annual allowance for the 2020/21 tax year is £40,000. This annual maximum will be lower if

If ‘threshold income’ is in excess of £200,000 and ‘adjusted income’ is in excess of £240,000 then the Annual Allowance will be reduced. The minimum Annual Allowance for 2020/21 is £4,000. Taxfiler does not automatically calculate the reduced Annual Allowance based on the amount of income included in the Tax Return so you will need to do this to ensure any excess of pension savings made over the Annual Allowance is correctly entered into this screen.

See HMRC – work out reduced (tapered) annual allowance

HMRC has provided a tool to calculate the annual allowances  Check if you have an annual allowance tax charge

  • ‘Description’ Enter a brief description of the pension.
  • ‘Scheme reference’ Enter the Pension Scheme Tax Reference (PSTR) number provided by the pension scheme administrator.
  • ‘Amount saved‘ Enter the amount saved that is in excess of the Annual Allowance.
  • ‘Tax paid by scheme‘ Enter any tax that has already been paid on the excess by the scheme.

Overseas transfer charge

  • ‘Description of transfer’ Enter a brief description of the transfer
  • ‘Scheme reference‘ Enter the Pension Scheme Tax Reference (PSTR) number provided by the pension scheme administrator.
  • ‘Transferred value’ Enter the amount transferred
  • ‘Tax paid by scheme‘ Enter any tax that has already been paid on the excess by the scheme.

Unauthorised payments from a pension scheme

The unauthorised payments tax charge applies when an unauthorised payment is made. The charge is at 40% of the value of the unauthorised payment. If such payments exceed the surcharge threshold, more tax, at 15% of the amount of the payment, will be due.

If all the tax has already been deducted by the scheme administrator then there is no requirement to enter it on the tax return.

  • ‘Description‘ Enter a brief description of the unauthorised payment.
  • ‘Amount not subject to surcharge’ Enter the amount of the payment that is below the surcharge threshold.
  • ‘Amount subject to surcharge’ Enter the amount of the payment this is subject to the surcharge.
  • ‘Foreign tax paid’ Enter any foreign tax already paid on the pension payment.

Short service refund (overseas pension schemes only)

  • ‘Description‘ Enter a brief description of the payment.
  • ‘Short service refund‘ Enter any taxable short service refund of contributions.
  • ‘Foreign tax paid‘ Enter any foreign tax suffered on the payments.

To delete a line from the grid, click the ‘trash can‘ button at the end of the line.