Following announcements in October on the changes to tax relief on pensions (see previous bulletin), HMRC has published further guidance concerning the reduced annual allowance, specifically on ‘pension input periods’ (PIPs) and carry-forward provisions.

Queries over how schemes can align their PIPs to the tax year and how parties can take advantage of the carry-forward provisions have prompted HMRC to produce clarification.

Prior to the financial year 2011-2012, any unused allowance (available for carry-forward) should be calculated by applying the rules that would apply if the pension input period for each of the years 2008-09, 2009-10 and 2010-11 were a PIP ending in the tax year 2011-12, ie the applicable annual allowance would be £50,000.

Scheme administrators are also advised that where a PIP has not previously been nominated, it is possible to make a retrospective nomination to ensure that the PIP is aligned with the tax year. Otherwise, the default position is that a scheme’s PIP will run to 6 April of each year. Conversely, a scheme is not able to nominate an alternative PIP for the same tax year if it has already done so in this period.

HMRC’s latest guidance can be viewed online by clicking on the following link;

Other HMRC guidance is available at these links: