How do I use the Annual pension allowance details wizard for defined benefit schemes

How do I use the Annual Pension Allowance details wizard for defined benefit schemes?

Whilst our wizard refers to terminology for defined contribution pension schemes, it can be used to determine the annual allowance and any resulting pension tax charge for defined benefit schemes (also known as final salary schemes).

What are defined benefit schemes?

Available largely in public sector organisations such as the NHS, these schemes provide pre-determined pension payments based on, for example, salary and length of service (in the case of final salary).

What information do I need?

Instead of using the value of amounts paid in contributions to determine the pension inputs for the period, the overall growth in the pension pot value is used. This can be calculated by deducting the opening value from the closing value for the period and this information is usually provided by the pension scheme via an end of year statement. The calculations are based on HMRC guidelines within the section ‘Work out your pension savings’.

Where do I enter the annual growth amount in the wizard?

The wizard can be found in:

SimpleStep:

Tax reliefs and allowances > Pension contributions and annual allowance

In the section Annual pension allowance, click on the wand next to ‘Total contributions for the 2023/24 tax year that are in excess of the personal allowance’.

OR

HMRC Forms:

Additional information > Page 4

Click on the wand next to Box 10 ‘Amount saved towards your pension, in the period covered by this tax return, in excess of the Annual allowance’.

Once in the Pension contribution details screen.

The annual growth amount (pension input) for the tax year should be entered in the section headed:

Workplace pensions scheme within ‘Your employer’s contributions’. This is the simplest way of entering the growth figure without having to separate employee/employer contributions. This will provide a correct calculation for both threshold and adjusted income calculations.

What if I have also paid additional personal contributions into the workplace scheme?

If you have paid additional contributions which have not been deducted from your pay before tax ( for example if you also have self-employment income from the same type of work), you will need to enter these separately:

SimpleStep:

Tax reliefs and allowances > Pension contributions and annual allowance

In the section Pension contributions paid gross without relief at source, enter the amount paid in ‘Contributions paid to your employer's occupational pension scheme where no tax relief has been claimed, either by the net pay arrangement or relief at source schemes’.

OR

HMRC Forms:

SA100 Core Return > Page 4 > box 3

This will ensure that you receive full income tax relief on these contributions. You should deduct the amount of personal contributions paid from the annual growth amount entered within the wizard. This will then allow for the correct amount of growth for Annual Allowance purposes.

For information on entries for defined contribution pension schemes please read our article :

How to use the pension contribution details wizard from 2023/24