NHS pension annual allowance

This guidance informs you about your annual allowance statement and your options should you be charged.

Location: UK
Audience: All doctors
Updated: Thursday 25 May 2023
Piggybank illustration

The annual allowance is a threshold which restricts the amount of pension savings you are allowed each year before tax charges apply.

In the budget on 15 March 2023, the Chancellor announced that the annual allowance threshold would be raised to £60,000 and the minimum tapered AA would increase to £10,000 from 6 April 2023.

It was also announced in the Budget that open and closed public sector schemes would be considered linked so as to enable any negative growth in any legacy public sector schemes to be offset against growth in reformed schemes.


Tapered annual allowance 2023/24

  • Adjusted income includes all pension contributions (including any employer contributions). Threshold income excludes pension contributions.
  • In the NHS pension scheme, you add pension growth to threshold income to get adjusted income.
  • If your threshold income is above £200,000 and your adjusted income is below £260,000 you will be subject to the standard annual allowance.
  • If your threshold income is above £200,000 and your adjusted income is above £260,000 then your annual allowance will be reduced. For each £2 that your adjusted income exceeds £260,000, your annual allowance threshold is reduced by £1. If your adjusted income exceeds £360,000 or over then you will have a reduced annual allowance of £10,000
  • If your threshold income is under £200,000 you will not be subject to the taper irrespective of the level of adjusted income.

Use the HMRC tapered annual allowance tool to calculate if you are subject to tapering.

The NHS pension scheme will not necessarily know if you are subject to tapering and if you are subject to the taper you should request a statement.


Your annual allowance statement

The pensions agencies issue statements at the beginning of October relating to the previous tax year. Statements issued in October 2022 will relate to pension growth in the 2021/22 year.

Due to the McCloud age discrimination remedy, which is to be implemented from October 2023, the statements for 2022/23 will have an extended deadline of 6 October 2024 for members whose service reverts to their legacy schemes. 


Due to the certification process required to verify GP earnings and contributions annual allowance statements for GPs are usually late. 

GPs are therefore required to estimate their position to be able to pay charges when due and apply for scheme pays.

Read more about pension taxation and using scheme pays for GPs.


NHSBSA (England and Wales) and the HSC (Northern Ireland)  should issue statements if the combined growth between the 1995/2008 and 2015 schemes exceeds the standard annual allowance.

The SPPA (Scotland) is currently unable to issue combined statements and you will need to request a statement to ensure that your combined growth does not produce a tax charge.

In all nations we recommend you make a request for a pension saving statement on a yearly basis.


What your statement includes

The scheme will provide you with details of the current year's growth and that of the three previous years. Unused allowance in these years may be carried forward to offset any tax charge. The relevant limit will be detailed against each year (when the limit was previously different).

Pension input start date

Pension input start date indicates the beginning of the tax year being assessed.

Pension input end

Pension input end date indicates the end of the tax year being assessed.

Annual allowance

Annual allowance details the actual or notional limit during the period.

Pension input amount 

Pension input amount details the growth in NHS benefits during the PIP (pension input period).

Tax illustration
Annual allowance compensation (only relevant for 2019/20 for members in England and Wales)

See how you could benefit from the annual allowance compensation scheme 2019/20 - introduced to combat potential tax charges on clinicians who want to work more and help their patients but can't without being charged. Although the closing date of the policy in England was 31 March 2022 late applications can still be made up to 6 months after you have received the relevant information.  This facility will also be available should the McCloud remedy mean that a tax charge is incurred in 2019/20.