There are two types of Scheme Pays: Mandatory and Voluntary.

Mandatory Scheme Pays

Can be used if all three of these criteria apply to you:

  • your Pension Input Amount within a single Civil Service Pension Scheme is in excess of £40,000;
  • the tax charge resulting from the excess within that scheme is over £2,000; and
  • your Scheme Pays deduction is applied to the benefits within that scheme only.

Members with a tapered (reduced) Annual Allowance must have a Pension Input Amount in excess of £40,000 in one particular scheme (for example, alpha or classic) to use Mandatory Scheme Pays for part of their tax charge.

For members with current benefits in both the Principal Civil Service Pension Scheme and alpha, if their Pension Input Amount in each scheme exceeds £40,000 then they may be able to use Mandatory Scheme Pays to pay the tax charge for one scheme. The remaining scheme would be paid on a voluntary basis. This facility would not be available for those with tapered Annual Allowance wishing to use Scheme Pays for their entire tax charge.

Voluntary Scheme Pays

Voluntary Scheme Pays can be used if:

  • you don’t meet the Mandatory Scheme Pays criteria, but you still wish to pay your tax charge by Scheme Pays.

If you decide to use Scheme Pays, you’ll need to advise HM Revenue & Customs (HMRC). This should be done via your self-assessment.

To prevent any late payment charges being imposed by HMRC, we encourage you to take note of the Scheme Pays deadlines which can be found in the table below.

Any Scheme Pays quote request received after 19 November 2021 will still be processed, but payment of tax by 31 January 2022 cannot be guaranteed.

Action

Deadline date

You receive a Pension Savings Statement

By 6 October 2022

Complete and return a Scheme Pays quote request form to us using this email address:

schemepays@MyCSP.co.uk

Or post it to:

Civil Service Pensions
PO Box 2017
Liverpool
L69 2BU

By 18 November 2022

We issue you with your Scheme Pays quote

By 9 December 2022

If you decide to go use Scheme Pays, you should complete and return your Scheme Pays form accepting the quote

By 23 December 2022

We process your Scheme Pays deductions

By 14 January 2023

You should notify HMRC that you have a tax charge owing and inform them of your intention to pay it using Scheme Pays

By 31 January 2023

If you’re using Voluntary Scheme Pays, we’ll pay your tax charge (assuming all deadlines are met, or on the next AFT if later).

By 31 January 2023

If you’re using Mandatory Scheme Pays, we’ll pay your tax charge (or on the next AFT if received before this date).

By 14 February 2024

Please note: you won’t be able to withdraw your application once we’ve received your acceptance form. However, we will accept revisions to the tax charge, amend your record and reclaim any overpaid tax if required. At this point we’ll adjust your benefits accordingly and pay the tax charge to HMRC on your behalf.

Tax is your responsibility

If you have a tax charge due you’ll need to follow the HMRC guidelines for calculating, declaring and paying.

Read the information about Annual Allowance and Scheme Pays on the HMRC website.

You can use HMRC calculator to help work out if you have a taxable breach.

Scheme Pays quote request form

Tapered Annual Allowance

Individuals with adjusted income over £150,000 may be subject to a tapered (reduced) Annual Allowance.

From 6 April 2020, the adjusted income increased to £240,000 and the minimum reduced Annual Allowance decreased to £4,000.

Adjusted income is not based on your salary alone, if you have other sources of income you may need to include this when calculating your adjusted income.

How to calculate adjusted income and tapered Annual Allowance

Published:
19 December 2021
Last updated:
27 May 2022