For high earners and individuals with significant pension benefits, the pension Annual Allowance can create an unexpected—and sometimes substantial—tax liability.
This is particularly common among:
🔹 Senior executives and professionals
🔹 Individuals with fluctuating income
🔹 Employees receiving significant employer pension contributions
🔹 People affected by the tapered Annual Allowance
🔹 Members of more than one pension scheme
At CPM Accountants, we recently assisted a client who was concerned that they may have exceeded their Annual Allowance across multiple tax years.
They needed more than a rough estimate. They wanted their position properly reviewed, the potential tax charge calculated and their Scheme Pays options clearly explained.
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⚠️ THE CHALLENGE
The client had a combination of employment income, taxable benefits, personal pension contributions and employer pension contributions.
The position could not be determined by looking at a single pension statement. It required a detailed, year-by-year review of:
✅ Tax returns, P60s and P11Ds
✅ Pension savings statements
✅ Personal and employer pension contributions
✅ Pension input amounts for each relevant tax year
✅ Unused Annual Allowance available for carry forward
✅ Previous Annual Allowance charges or Scheme Pays elections
The client also needed to understand whether earlier calculations had been correct and whether any additional reporting or action was required.
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🔍 OUR APPROACH
CPM Accountants carried out a structured review covering each relevant tax year.
We began by reconciling the client’s income information against their tax returns, employment records and supporting documentation.
This enabled us to establish the figures required to assess both the standard and tapered Annual Allowance position.
We then reviewed the pension input amounts for each scheme and tax year.
Rather than considering each year in isolation, we examined how the current year’s pension savings interacted with unused allowance carried forward from earlier years.
💡 Why is this important?
Carry forward can sometimes reduce—or even eliminate—an Annual Allowance excess. However, the available allowance must be calculated accurately and the relevant conditions must be satisfied.
Once the position had been established, we calculated the applicable Annual Allowance tax charge and considered the client’s Scheme Pays options.
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🏦 WHAT IS SCHEME PAYS?
Scheme Pays may allow an individual to ask their pension scheme to settle some or all of their Annual Allowance tax charge.
In return, the scheme will normally make an appropriate reduction to the individual’s future pension benefits.
Eligibility requirements and deadlines can apply, which means the figures and timing must be checked carefully.
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🎯 THE OUTCOME
The client received a clear, year-by-year calculation setting out:
✔️ The Annual Allowance available
✔️ Whether the tapered Annual Allowance applied
✔️ Total pension input amounts
✔️ Available carry forward
✔️ Any remaining excess
✔️ The estimated tax charge
✔️ The amount potentially eligible for Scheme Pays
✔️ The necessary next steps and relevant deadlines
This replaced uncertainty with a clear, documented position that the client could understand and use when communicating with their pension provider and financial adviser.
Just as importantly, the review provided a stronger foundation for future pension and tax planning.
The client now has greater visibility over how income, employer contributions and future pension decisions may affect their Annual Allowance position.
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⏰ WHY AN EARLY REVIEW MATTERS
Annual Allowance calculations can become complicated very quickly—particularly where:
🔸 Income exceeds the tapering thresholds
🔸 More than one pension arrangement is involved
🔸 Income or contributions fluctuate between years
🔸 Historic information is incomplete
🔸 A Scheme Pays deadline is approaching
Waiting until the last minute can create unnecessary pressure.
An early review provides more time to obtain missing documents, verify pension input figures, calculate carry forward and consider the available options.
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🤝 HOW CPM ACCOUNTANTS CAN HELP
CPM Accountants supports individuals, financial advisers and wealth-management professionals with:
📌 Annual Allowance calculations
📌 Tapered Annual Allowance reviews
📌 Multi-year pension contribution reviews
📌 Carry-forward calculations
📌 Scheme Pays calculations and supporting schedules
📌 Tax return reporting and amendment reviews
📌 Liaison with pension providers and professional advisers
📌 Forward-looking tax and pension planning support
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📞 DO YOU OR YOUR CLIENT NEED HELP?
If you are concerned that you—or one of your clients—may have exceeded the pension Annual Allowance, CPM Accountants can provide an independent review and a clear, practical explanation of the next steps.
🌐 Visit: www.cpmaccountants.com
💬 Contact CPM Accountants to arrange an initial, confidential discussion.
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Please note: This case study has been anonymised to protect client confidentiality. Individual circumstances differ, and this article is provided for general information only. Pension and tax rules can change, so professional advice should be obtained before taking action.
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