Understanding the effect of rollback on annual allowance

The Public Service Pensions Remedy and pension tax

Some members affected by the Public Service Pensions Remedy, also known as McCloud, will need to update their pension tax information with HM Revenue & Customs (HMRC).

This is because, as part of the remedy, these members have had their pensionable service between 1 April 2015 and 31 March 2022 moved from the 2015 Scheme to the 1995/2008 Scheme.

This move may have changed their pension tax position for the tax years 2015/16 through to 2021/22 and could mean they have an annual allowance tax refund to claim, or a small number may have extra tax to pay.

We will send you a Remediable Pension Savings Statement (RPSS) as soon as possible if your service has moved back to the 1995/2008 Scheme and:

• you went over your annual allowance limit in any tax year from 2015/16 to 2021/22, or you are over the standard annual allowance limit in the tax year 2022/23
• and you have not claimed any of your pension benefits yet, or you retired on or after 1 October 2023

While many will find there is little or no change to their pension tax position, all members who receive an RPSS should follow the steps explained on this page to check with HMRC.

Receiving your RPSS

Before you can check with HMRC, you will need your RPSS. This is a letter that gives you information about your revised pension growth and your pension input amounts in both the 1995/2008 and 2015 Schemes, for all the tax years affected by the remedy.

If you need an RPSS, we will automatically send it to you.

We have started sending out RPSS letters from October 2024 to members who need them. We are sending these in phases, so if you do not have yours yet, you do not need to do anything – we will send it as soon as possible.

Members who do not need an RPSS

If your pensionable service between 1 April 2015 and 31 March 2022 was always in the 1995/2008 Scheme there is no change to your pension input amounts. This means you do not need an RPSS, and you do not need to check your tax position with HMRC.

If you have not yet received one, you can request a Pension Savings Statement (PSS) for the tax year 2022/23.

If you started receiving pension benefits before 1 October 2023

If you retired before 1 October 2023, you will not receive an RPSS until after you have been contacted to choose which benefits you want for the remedy period. The government has designed the remedy so that you only get an RPSS if you need one, depending on the benefits you choose when we contact you to make your choice.

Timings for when you can expect to receive your choice are currently under review, and we will update our Public Service Pensions Remedy page when these timings are confirmed. If your decision means you need to update HMRC about your pension tax position, we will send you an RPSS at the time.

What information your RPSS includes

The figures included in your RPSS are based on the information given to NHS Pensions by employers. If something does not look right, please check with your employer.

Your RPSS shows you:

• any updated pension input amounts in both the 1995/2008 Scheme and 2015 Scheme
• your old pension input amounts in both schemes
• any annual allowance charges you asked the scheme to pay on your behalf to HMRC using ‘Scheme Pays’

Where we have the information to calculate your pension input amount for the tax year 2022/23, we’ll include this information in your RPSS, and you will not receive a separate Pension Saving Statement (PSS).

You’ll need the information included in your RPSS to use the HMRC 'Calculate your public service pension adjustment' tool, specifically designed to support members affected by the Public Service Pensions Remedy.

How HMRC’s 'Calculate your public service pension adjustment' tool can help you

The HMRC's tool has been developed to help you:

• submit information for HMRC to review and check if your pension tax position has changed because of the remedy
• work out any reduced annual allowance charge you have previously overpaid
• work out any new or extra annual allowance charges that you may have to pay
• apply to claim compensation from the scheme for any previously overpaid annual allowance charges that you have paid directly to HMRC for tax years 2015/16 to 2018/19
• apply to claim a refund from HMRC of any previously overpaid annual allowance charges that you have paid directly to HMRC for tax years 2019/20 to 2021/22
• apply to update a Scheme Pays arrangement for any previously overpaid annual allowance charges that you asked the scheme to pay to HMRC for tax years 2015/16 to 2021/22
• automatically update your Self-Assessment tax return information with any pension tax changes during the remedy tax years of 2015/16 to 2021/22
• pay an annual allowance charge for tax year 2022/23

Members who use HMRC’s tool will not have to include an annual allowance charge on their Self-Assessment tax return for the tax year 2022/23. 

The lifetime allowance part of the tool

The tool also has a lifetime allowance section for members who retired before 1 October 2023. If this is you, you will not know whether you need to use the tool until you have been contacted to choose the benefits you want for the remedy period. We will update our Public Service Pensions Remedy page with the timings for when you can expect to receive your choice and when you will need to use this part of the tool.

What to do once you have your RPSS

1. Visit the HMRC 'Calculate your public service pension adjustment' tool.
2. Complete the first section of the tool to understand whether your tax position is affected. This is a maximum of 10 questions asking for ‘yes’, ‘no’, or ‘don’t know’ answers. Most members will be able to answer these questions themselves, without needing professional support from an accountant or Independent Financial Adviser (IFA). If your tax position is not affected, the tool will tell you, and there is nothing more you need to do.

Your sign-in options

You can use your government gateway user ID and password to sign in before you use the tool. If your pension tax position has been affected and you need to use the tool in full, you will be asked for a lot of information and it will take time to complete. Signing in means you can save your information and return to it later, and you will only have to submit your information once.

If you do not have one, you can create a government gateway user ID by visiting HMRC’s website.

If you do not sign in, you can still use the tool, but you will not be able to save your information. If you need to use the full tool beyond the first section, and if you need to make a claim to HMRC, you will have to sign into the tool later and resubmit all your information again.

3. Once you have reached the 'Check your answers' page, press 'Continue' – the next screen will confirm whether you must go on to use the tool in full to submit your updated information. You can either do this yourself or ask an accountant or IFA to help you.

        Make sure you have all the documents you need to hand. As well as your RPSS, you’ll need:

• a copy of your SA302 tax calculation for each tax year – to request these, visit HMRC’s SA302 support page or email publicservicepensionsremedy@hmrc.gov.uk and put 'SA302 request' in the subject line.
• a pensions savings statement for each tax year affected from any other pensions you have outside of your NHS Pension – you need to contact your other pension providers if you do not have these.

4. If you complete the HMRC tool on your own, the calculation results page will tell you at the end if you have:

• an annual charge to pay (tax years 2019/20 to 2022/23)
• overpaid an annual allowance charge and are entitled to:
  • compensation equal to a refund of annual allowance charge (tax years 2015/16 to 2018/19)
  • a refund of annual allowance charge (tax years 2019/20 to 2021/22)
  • an adjustment to your Scheme Pays arrangement (tax years 2015/16 to 2021/22)

5. If you are signed in and the calculation results page says you have overpaid an annual allowance charge, you’ll be asked for your bank details if you paid the original charge yourself to HMRC from 2019/20 to 2021/22, and HMRC will refund you the amount of charge overpaid.

         If you did not pay the charge direct to HMRC, there is nothing else you need to do – HMRC will automatically update NHS Pensions and we’ll write to      you to confirm that your Scheme Pays arrangement has been amended.  

         If the overpaid charge was for a tax year from 2015/16 to 2018/19 HMRC will automatically update NHS Pensions, and we’ll contact you.

6. If you are signed in and the calculation results page says you have an annual allowance charge to pay, this could only be for a tax year from 2019/20 to 2022/23. HMRC will ask you how you want to pay the charge. If you want to pay the charge yourself, HMRC will explain how to do this.

         If you want to use Scheme Pays you do not need to do anything else – HMRC will automatically update NHS Pensions of your decision, we’ll pay the charge to HMRC and then write to you to confirm your Scheme Pays arrangement has been updated.

7. If you are not signed in and need to pay an annual allowance charge, you can sign in and follow the above steps from Step 3.

Steps if your accountant or IFA is supporting your use of the HMRC tool

To use the HMRC 'Calculate your public service pension adjustment' tool on your behalf, your accountant or IFA will need access to information in your RPSS, your SA302 for each affected tax year and any pension input amounts you have for those tax years in a pension scheme outside the NHS Pension Scheme.

If you’ve used an accountant or IFA to use the HMRC tool and have an annual allowance charge that you want the scheme to pay, you should complete a Scheme Pays Election form (SPE2) (PDF: 280KB)) and send this to NHS Pensions. NHS Pensions will then contact you about this.

The mandatory Scheme Pays deadline for an annual allowance charge in tax years 2019/20 - 2022/23 is extended from 31 July 2024 to 6 July 2025. It is extended to 6 July 2027 for members who retired before 1 October 2023.

We will accept a Scheme Pays Election after these deadlines either via HMRC’s tool if you are signed in or a Scheme Pays Election form SPE2 if you are using an accountant or IFA, and your election will be processed as voluntary Scheme Pays.

If you are affected and you need professional support to use HMRC’s tool, you can apply to the NHS Pensions Cost Claim Back Scheme to have your costs reimbursed up to the eligible limit.

Our Cost Claim Back Scheme webpage explains what evidence you will need to supply with your application. For example, it’s a good idea to save a screenshot or image of any pages in the HMRC tool which tell you action is required, such as your calculation results page.

Most members who use the first section of the tool, and are told that their tax position is not affected, are unlikely to need professional support. This means applications for costs for support with the first section of the tool may not be accepted, but all claims will be individually considered.

If you need any help using the HMRC tool

NHS Pensions cannot answer any questions about your tax position or give any updates after you have submitted your information using the tool. HMRC has set up a dedicated support team to help with queries about updating your pension tax for the Public Service Pensions Remedy.

You can reach them at publicservicepensionsremedy@hmrc.gov.uk or by phoning 0300 123 1079 and choosing option 1.

Your 2023/24 tax year Pensions Savings Statement (PSS)

We’ll send your PSS for the tax year 2023/24 separately, after we send out your RPSS. You can check if you have an annual allowance charge on your pension savings using HMRC’s Annual Allowance Calculator.

You'll need your RPSS to use the annual allowance calculator for the tax years between 2015/16 and 2022/23.

NHS England and NHS Improvement (NHSEI) 2019/20 Pensions Annual Allowance Charge Compensation Policy

You could be compensated in retirement for any reduction to your NHS Pension Scheme benefits if the calculation results page of HMRC’s tool says you have a new or extra annual allowance charge for tax year 2019/20, and

• you are a clinician in England
• you have elected for the scheme to pay this charge to HMRC by Scheme Pays

You can find more information about the 2019/20 Pension Annual Allowance Charge Compensation Policy, whether you are eligible and how to apply on the NHSE website.