The NHS pension annual allowance tests how much your NHS benefits grow in a tax year, not what you pay in. The limit is £60,000 in 2026/27, says GOV.UK.

A promotion, a clinical excellence award or buying extra pension can push growth over it, and any tax charge reaches you through Self Assessment. Close to £60,000 of NHS growth in a year, or unsure? An FCA-authorised adviser can line up your NHS benefits against any other pensions you hold; to arrange that free call, NHS staff complete the form on this page.

What is the NHS pension annual allowance?

It is a yearly cap on tax-free pension growth. GOV.UK gives it as "£60,000 this tax year", which is 2026/27 at the time of writing, and NHSBSA, which runs the scheme, gives NHS members the same £60,000 figure. The cap covers "everything that you save towards your pension and pension benefits, not just your NHS Pension Scheme benefits", while the State Pension is left out.

NHSBSA's own view is that the majority of members should not be affected, though some circumstances can produce significant growth in NHS benefits. The general rules sit in the pension annual allowance guide. Two lower versions exist: the tapered allowance for very high incomes, explained in the annual allowance taper guide, and the allowance that follows flexible access to a defined contribution pot, covered by the money purchase annual allowance page.

How do you calculate your NHS pension annual allowance?

The test looks at growth in the value of your benefits. NHSBSA's factsheet says the amount "is not based on the amount of employee or employer contributions paid", but is the gap between the opening value and the closing value of the tax year. Both values start from the annual pension you had built up at that point, multiplied by 16. HMRC's manual sets out the same 16 times rule and adds that the opening value is then raised by the 12-month rise in CPI to the previous September.

  • 1995 Section: a lump sum is worked out and added to the pension total at both ends of the year.
  • 2008 Section and 2015 Scheme: no lump sum is added, so the sum is the pension times 16 alone.

The CPI rises NHSBSA uses for the opening value in recent years are below. A high rise lifts the opening value and so lowers measured growth.

Tax yearCPI uplift on opening value (NHSBSA)
2023/2410.1%
2024/256.7%
2025/261.7%

Here is the sum for an invented 2015 Scheme member whose pension rises from £10,000 to £11,500 a year over 2025/26:

  • Opening value: £10,000 x 16 = £160,000, then x 1.017 = £162,720.
  • Closing value: £11,500 x 16 = £184,000.
  • Growth, the pension input amount: £184,000 - £162,720 = £21,280.

That is illustrative only. The factsheet lists cases where the amount is nil, among them a year spent deferred throughout, a refund of contributions, or a retirement that meets HMRC's severe ill health condition. It can also be nil where CPI growth in the opening value outweighs the real growth. A negative result in the 2015 Scheme counts as nil, and from 2023/24 a negative 1995/2008 result can be set against the 2015 amount only, never below zero.

Transition members have one more rule. HMRC's manual says that from 6 April 2023, someone with rights in both a legacy scheme and its reformed successor has the reformed scheme's input amount cut, though never below zero, by any shortfall of the legacy closing value against its opening value. The defined benefit annual allowance guide goes through the general method, and which NHS pension scheme am I in shows how to tell your section.

Which events push NHS pension growth over the limit?

Because growth is measured on pension built up, one step can matter more than years of steady saving. NHSBSA publishes worked examples of the allowance being exceeded through a promotion, a clinical excellence award, a promotion combined with buying additional pension, and crystallisation of benefits, meaning the point at which you start taking them.

Members of both the 1995/2008 Scheme and the 2015 Scheme can exceed the limit on combined growth even when each scheme alone is below it. For practitioners, benefits depend on earnings across a career, and NHSBSA says it cannot calculate growth until certified year-end earnings arrive. The NHS pension McCloud remedy page covers the remedy, which NHSBSA says may affect your allowance too.

If you are weighing a promotion, buying extra pension or when to retire, the sum changes with your section and is hard to run by hand; on the free call the enquiry form here arranges, an FCA-authorised adviser can take your NHS numbers through it with you.

How do you get your NHS pension annual allowance statement?

A statement is sent automatically when your NHS growth, in either the 1995/2008 Scheme or the 2015 Scheme, passes the standard limit. NHSBSA's timetable is 6 October if your employer's data reaches it by 6 July, and otherwise three months after the data arrives. Medical practitioners wait for certified earnings; where a first statement rested on uncertified figures, NHSBSA says to write asking for a revised one once your annual certificate is done.

You can also request an on-demand statement if you do not expect to be over the limit or you save in other schemes too. NHSBSA gives you the input amount for the year and the three before it where available, and stresses that the statement is not an estimate of your benefits. Statements for 2024/25 have run late: on 27 October 2026 NHSBSA's annual allowance page said it had no confirmed date for issuing all outstanding 2024/25 statements.

Working out the charge and reporting it is your job. HMRC's online calculator takes the figures from each pension's statement and shows any unused allowance. In Scotland, the Scottish Public Pensions Agency issues statements to members who breach the limit in a single scheme, and GP statements arrive a year later once earnings are certified. The NHS pension Scotland guide covers the other differences between the schemes.

Can carry forward stop an NHS annual allowance charge?

It can, if you left allowance unused. Under HMRC's rules you can carry forward unused allowance from the 3 previous tax years, using the earliest first. You must have been a member of a UK registered pension scheme, or a qualifying overseas pension scheme, in the year concerned, and unused money purchase annual allowance cannot be carried forward. NHSBSA's example is a member £15,000 over the limit in 2011/12 who had £25,000 unused across the three earlier years and so owed no charge. NHSBSA says checking this is your responsibility. The pension carry forward rules explain it in full.

Any tax left over is charged at your marginal rate, not at a fixed one. NHSBSA says the charge depends on your taxable income and on the amount over the limit, and the annual allowance tax charge guide shows how the charge is built up.

Scheme Pays for NHS members: who qualifies and what it costs

Scheme Pays lets NHS Pensions pay some or all of the charge to HMRC and reduce your benefits to match. You can instead pay HMRC directly. The two NHS versions differ:

MandatoryVoluntary
Who can use itGrowth in the 1995/2008 Scheme or the 2015 Scheme is above the standard allowance; HMRC also requires a charge over £2,000Growth in each scheme is under the standard allowance but the total across both is over it, or the charge comes from a tapered or alternative allowance; no £2,000 minimum
Deadline31 July in the year after the charge's tax year has ended (HMRC's example: 31 July 2024 for 2022/23). Earlier if you are about to take all your benefits; later in some cases where a statement issued because your input amount changed comes lateThe same 31 July deadline: NHSBSA takes voluntary and mandatory requests on one SPE2 form
Late payment to HMRCThe scheme is responsible for paying the charge by HMRC's deadlineYou stay responsible for interest if HMRC gets the money after 31 January

You apply on the scheme pays election form (SPE2). If you are about to retire, it asks you to send the election first, because one made afterwards is considered only under the voluntary rules and your benefits will reduce when it is accepted.

The cost is a reduction in what you later receive. NHSBSA's Scheme Pays factsheet, still linked from its annual allowance page, describes the arrangement as effectively a loan, recovered with interest when your benefits are paid or when you transfer them out, using factors set by the scheme's actuary. It covers only your NHS benefits, not other pension savings. Whether that or paying HMRC yourself suits you better depends on your own position; send the enquiry form here and, on the call-back, an FCA-authorised adviser sets the two routes side by side for you.

Scotland's scheme differs a little. The Scottish Public Pensions Agency offers its mandatory route when a single scheme's input amount is over £60,000 and the whole charge tops £2,000, and it then becomes jointly liable with you for the charge; other charges above £1,000 can go through its voluntary route. Its deadline table lists the mandatory election form deadline for 2025/2026 as 31/07/2027, earlier if you retire or reach 75.

Compensation, AVCs, doctors and reporting a charge

Was there compensation for an NHS annual allowance charge?

For 2019/20, NHS England and NHS Improvement announced that clinical staff who went over and used scheme pays would be compensated in retirement for any reduction in their NHS benefits. NHSBSA gives the application deadline as 31 March 2022.

Do my NHS AVCs count towards the allowance?

GOV.UK says the whole amount paid into a defined contribution arrangement in the year counts, whoever pays it, so money purchase AVC payments sit alongside your NHS growth. NHSBSA sends a statement to AVC members whose contributions exceed the standard allowance. Money purchase AVC values can fall as well as rise, and you may get back less than you paid in.

Is the allowance different for doctors and GPs?

The standard £60,000 figure is the same. Higher-paid doctors may have a tapered allowance, which GOV.UK applies once both threshold income passes £200,000 and adjusted income passes £260,000. GPs and other practitioners wait for statements until certified year-end earnings are in.

Do I still report a charge if NHS Pensions pays it?

Yes. GOV.UK says to complete the "Pension savings tax charges" part of Self Assessment even when your provider pays all or part of the tax.

What if my statement has not arrived by the Scheme Pays deadline?

NHSBSA says you can estimate your charge to meet HMRC's deadline and should not delay your election to wait for a statement.

Putting your NHS allowance question to someone

NHSBSA, or the Scottish Public Pensions Agency if you are in the Scottish scheme, can confirm figures on your record, and MoneyHelper offers free general guidance. The NHS pension advice guide shows which source suits which question, and the NHS pension tax relief page explains how relief works before the allowance applies. Growth, carry forward and Scheme Pays fit together as one decision; the enquiry form here books a free call-back, during which an FCA-authorised adviser takes all three in one conversation.

Sources