We’ve got some vital updates on the NHS Pension Savings Statements for the 2022-23 tax year, and here’s a breakdown to help you understand it better.
A quick background:
In 2015, when the NHS Pension Scheme got a facelift, older members could stay in the original scheme (often called the legacy scheme), while the younger ones transitioned to the newer version. However, a twist occurred when this distinction was deemed as age discrimination, famously referred to as the McCloud age discrimination remedy.
How does the McCloud Remedy impact You?
This remedy enforces changes retrospectively, impacting members’ pension services from April 1, 2015, to March 31, 2022. One significant consequence is on the tax treatment of the pensionable service. To correct the unintended discrimination, a “rollback” method was introduced. This tweak changes the opening value for pension input for the affected members.
Due to the intricate nature of these adjustments, the remedy will be in full swing from October 2023.
The result:
For pension administrators to make these changes seamlessly, there’s a shift in the deadline for issuing the pension savings statements for 2022-23. The new extended deadline is 6 October 2024, specifically for those members reverting to the legacy scheme.
Who gets their statement by 6 October 2023?
– Members who consistently stayed in the legacy scheme from 1 April 2015 to 31 March 2022.
– New members who signed up for the 2015 scheme without prior experience in any other public sector pension.
If you’re one of the above or requested your statement before 6 July 2023, mark your calendar for 6 October 2023. For those who send in requests post this date, expect your statement within three months of your request.
And who waits until 6 October 2024?
Those who transitioned to the reformed scheme between 1 April 2015 and 31 March 2022. Recognising the magnitude of these changes, HMRC has kindly moved the legislative deadline for issuing the 2022/23 Pension Savings Statements to 6 October 2024. Additionally, the Scheme Pays deadlines are now set for 31 July 2025.
A note on Self-Assessment for 2022/2023:
HMRC has confirmed those affected by rollback will not need to report any annual allowance charge for 2022/23 on your self-assessment tax return by the standard 31 January 2024 deadline, even if you receive a 2022/23 pension savings statement before this date. You’ll still need to submit a self-assessment form to report and pay any other tax charge you are liable for by 31 January 2024.
Members who are not affected by rollback should receive a 2022/23 pension savings statement as normal by 6 October 2023 and an annual allowance charge for 2022/23 must be included on your self-assessment tax return as normal. If you are not affected by rollback and don’t receive a pension savings statement but you don’t know whether you have an Annual Allowance (AA) charge for that year you should submit an estimated AA charge as per HMRC’s pension tax manual, PTM 056450 “Estimating the AA Charge” on your self-assessment.
Feeling overwhelmed? We’re here to help!
Navigating these changes can be daunting. If you’re unsure or need guidance, don’t hesitate to consult Chase de Vere Medical or engage with a seasoned Medical Accountant. We’re here to support and ensure you make the best decisions tailored to your situation.
Content correct at time of writing and is intended for general information only and should not be construed as advice.