High earners to report pensions growth on tax return

In its Pension Schemes Newsletter 115 HMRC states that it knows ‘scheme members are forgetting to declare details of their annual allowance charge on their self-assessment returns’. Taxpayers who have exceeded their 2018-19 annual allowance (£40 000 or £10 000 for those affected by the tapered allowance) and who do not have enough unused annual allowance to carry forward to cover the excess must declare this on their tax return. 

The department asks scheme administrators to remind members of this requirement even if the scheme is paying the tax charge. Any pension input above the annual allowance is charged at an individual’s marginal income tax rate.

According to Royal London director of policy Steve Webb this admission means that many people may have failed to declare pension inputs on their return and could face a large bill when HMRC catches up with them. Further pension schemes will notify members...