Tax regulations have been announced relating to the age discrimination remedy in public sector pension schemes (the McCloud case). The main impacts are:
Reporting of annual allowance (AA) tax charge
Scheme Members should not report their AA position for 2022 to 2023 through self assessment (where the deadline is 31 January 2024). Instead, a new reporting system will be used. Members will use information provided by their scheme administrator to send specified information to HM Revenue and Customs using an electronic form. Further guidance on the form will be published in due course.
Retired Members will be able to use 'Scheme pays'
If a retired member finds their AA charge increases due to the age discrimination remedy then they can make a 'Scheme pays' election. The scheme will then adjust the member's benefits to account for the increased tax payment.