188ÌåÓý

Pre-alignment tax year � amount of annual allowance
Post-alignment tax year � amount of annual allowance

Section 228C Finance Act 2004

Transitional annual allowance rules apply for tax year 2015-16.

For annual allowance purposes only, the 2015-16 tax year is split into two ‘mini� tax years - the ‘pre-alignment tax year� and the ‘post-alignment tax year� (see PTM058010 for more details).

Each ‘mini� tax year has its own allowances for annual allowance and money purchase annual allowance purposes. PTM058030 has details about the money purchase annual allowance.

Pre-alignment tax year � amount of annual allowance

The annual allowance for the pre-alignment tax year is £80,000.

Available unused annual allowance from 2012-13, 2013-14, 2014-15 can be carried forward to the pre-alignment tax year and added to the £80,000 annual allowance.

If it applies, the individual will also have to test pension input amounts against the money purchase annual allowance and alternative annual allowance for the pre-alignment tax year (see PTM058030) to determine whether the individual has an alternative, or default, chargeable amount for that ‘mini� tax year.

Top of page

Post-alignment tax year � amount of annual allowance

The amount of annual allowance for the post-alignment tax year depends on:

• whether or not the individual is a member of a registered pension scheme at some time during the pre-alignment tax year, and
• if the individual is such a member, whether or not the money purchase annual allowance had practical application for the pre-alignment tax year.

The money purchase annual allowance having practical application for this purpose means:

• the money purchase annual allowance applies to the individual for the pre-alignment tax year because a trigger event occurs during that ‘miniâ€� tax year, and
• the individual’s chargeable amount for the pre-alignment tax year is the alternative chargeable amount.

PTM056510 has details about the money purchase annual allowance test in general and PTM056520 lists the trigger events.

Individual was a member of a registered pension scheme at some time during the pre-alignment tax year � money purchase annual allowance did not have practical application for that same year

The annual allowance for the post-alignment tax year is nil.

However, the following available unused annual allowance can be carried forward to the post-alignment tax year:

• unused annual allowance from the pre-alignment tax year but subject to a maximum of £40,000, plus
• unused annual allowance from 2012-13, 2013-14, 2014-15.

Example

An individual’s total pension input amount for the pre-alignment tax year is £25,000. This means £55,000 worth of the £80,000 annual allowance has not been used.

However, the maximum amount of available unused annual allowance that can be carried forward to the post-alignment tax year is £40,000 (not £55,000). Any available unused annual allowance from 2012-13, 2013-14, 2014-15 can also be carried forward to the post-alignment tax year as well.

If the individual’s total pension input amount for the pre-alignment tax year was £45,000 then the amount of available unused annual allowance that can be carried forward from the pre-alignment tax year is £35,000 (plus any available unused annual allowance from 2012-13, 2013-14, 2014-15).

Individual was a member of a registered pension scheme at some point during the pre-alignment tax year � money purchase annual allowance had practical application for that same year

The annual allowance for the post-alignment tax year is nil.

However, the following available unused annual allowance can be carried forward to the post-alignment tax year:

• unused alternative annual allowance from the pre-alignment tax year but subject to a maximum of £30,000, plus
• unused annual allowance from 2012-13, 2013-14, 2014-15.

Example

An individual’s money purchase inputs for the pre-alignment tax year are £25,000 and other inputs are £23,000. The money purchase annual allowance has practical application for the pre-alignment tax year because the individual’s chargeable amount for that ‘mini� tax year is the alternative chargeable amount of £5,000 (£25,000 less £20,000). There is no default chargeable amount because the individual’s total pension input amount for the pre-alignment tax year is less than £80,000.

This means £37,000 worth of the £60,000 alternative annual allowance has not been used but the maximum amount of available unused alternative annual allowance that can be carried forward to the post-alignment tax year is £30,000 (not £37,000). Any available unused annual allowance from 2012-13, 2013-14, 2014-15 can also be carried forward to the post-alignment tax year.

Individual was not a member of a registered pension scheme at any time during the pre-alignment tax year

The annual allowance for the post-alignment tax year is £40,000.