If you exceed the AA, there may be an annual charge to pay to HM Revenue & Customs (HMRC).
The AA charge is not a fixed rate but will depend on:
- how much taxable income you have
- the amount of your pension savings which exceeds the AA
To calculate this, work out the rate of tax which would be charged if your excess pension savings were added to your taxable income and taxed and charged at your marginal income tax rate.
We cannot advise on the calculation of your AA charge.
If you have an AA charge, you must tell HMRC about your pension savings and liability to the charge.
Use the HMRC calculator to check if you have an AA tax charge on your pension savings.
How to pay the AA charge
You’re responsible for making arrangements to pay your AA charge to HMRC.
You can either:
- pay all or part of the charge directly to HMRC
- ask us to pay some or all the charge for you using scheme pays
If you pay the charge yourself, it’s payable as part of a self-assessment tax bill.
You must pay the charge to HMRC by their 31 January self-assessment deadline. They may ask you to pay interest if your payment is late.
If we’re paying any of your AA by voluntary scheme pays, this must be paid by the 31 January self-assessment deadline or HMRC may charge you interest.