Annual allowance - tax charge
From April 2011 the annual allowance has reduced to £50,000 from £255,000. The annual allowance is the amount by which the value of a members tax approved benefits can increase in any year without incurring tax.
To assist employers when liaising with scheme members, please find attached a ready reckoner for calculating pension tax charges for 2011/12.
The ready reckoner requires simple input of some basic active member data (salary, service, AVCs paid etc) in only a handful of cells (highlighted in yellow).
It automatically calculates an estimate of the level of pension savings and tax charges for members, and any carry forward of unused annual allowance from the previous 3 years.
The carry forward can make quite a difference to the outcome. The non-highlighted cells are locked to avoid corruption or altering of the coding that's been developed.
Please note - the ready reckoner provides an estimate for illustration purposes only, although it is relatively sophisticated in its output. Pension benefits and tax calculations are complex. We claim no liability for damages arising from any decision taken based on the figures quoted.
The ready reckoner is password protected to ensure only registered employers in the Derbyshire Fund have access. If you have trouble with the password please contact the Pension Section at pensions@derbyshire.gov.uk
We have also provided a useful guide to the changes on the taxation of pension benefits in the related documents section.
Related documents
The following document is in Portable Document Format (PDF). You can download the PDF software for free from the Adobe website (opens in a new window)
The following document is in Excel format. You can download the Excel software for free from the Excel viewer page (opens in a new window) of the Microsoft website.