If a member has an annual allowance charge they can either pay the charge directly to HMRC or share the responsibility for the payment with the NHS Pension Scheme using the scheme pays facility.
This is known as a scheme pays election. The NHS Pension Scheme offers both mandatory and voluntary scheme pays facilities.
If a member is about to retire, they should try to submit their scheme pays election before they retire. This allows us to consider their election for payment under the mandatory scheme pays facility or a combination of the mandatory and voluntary scheme pays facilities.
When paid through the mandatory scheme pays facility, the NHS Pension Scheme is responsible for paying their tax charge to HMRC by their deadline.
You can find more information about mandatory and voluntary scheme pays facilities on our annual allowance webpage.
If it isn’t possible for the member to submit their scheme pays election before they retire, we have recently changed our processes to accept scheme pays elections after retirement.
Members can now submit a scheme pays election after they have retired, as long as their election is received before the relevant scheme pays deadline for the tax year in question.
So for example, if a member would like to make a scheme pays election for 2019/20 this must be received by 31 July 2021.
Any scheme pays elections submitted after retirement will only be considered under the voluntary scheme pays facility.
If an election is accepted after retirement the member will remain responsible for the charge and any interest charges if the payment is received by HMRC after its tax bill deadline of the 31 January (for 2020/21 this is 31 January 2022). We may also need to put in place arrangements to recover any pension overpayments that have been caused because of the scheme pays election being accepted after retirement.