Annual allowance

The annual allowance (AA) is set by HMRC. It’s the amount your pension savings can increase in any one year without you having to pay a tax charge. If your savings increase by more than the AA, you’ll have to pay tax on the excess. Most people won’t be affected by the AA because their pension savings won’t increase by more than the limit. Or, if it does, they’re likely to have unused allowance from previous tax years that can be carried forward.

If, you’re affected we’ll let you know by no later than 6 October following the end of the relevant tax year.

For information on:

• who’s affected by the AA
• how it’s calculated
• tapered AA
• how to pay

please read the annual allowance factsheet on our guides page. You can also find more information on tax and your pension on the LGPS members website.