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HMRC internal manual

Pensions Tax Manual

Annual allowance: pension input periods: other money purchase arrangements

Glossary PTM000001
   

 

When the pension input period for an other money purchase arrangement starts and ends
Meaning of first contribution to the arrangement
Persons who can nominate an end date for a pension input period

Section 238 Finance Act 2004

Paragraph 27(2) Schedule 17 Finance Act 2011

A pension input period is the period over which the amount of pension saving (pension input amount) under an arrangement is measured. The measurement works on the principle of how much was saved from the start of the pension input period to the end of the pension input period.

When the pension input period for an other money purchase arrangement starts and ends

The first pension input period under an other money purchase arrangement will start from the date that the first contribution is paid to the arrangement.

That first pension input period will end on the following 5 April unless another end date is nominated. This nominated end date must be within 12 months of the pension input period starting date. A nomination for an end date later than 5 April can be made after 5 April but this cannot be a date before the nomination is made.

Note, if the first pension input period actually starts on a 5 April it will end on that same 5 April (and not the following 5 April) unless a later end date is nominated. Such a nominated end date must be within 12 months of that 5 April. A nomination for a later end date can be made on or after that 5 April but this cannot be a date before the nomination is made.

The next (second) pension input period starts the day following the end of the first pension input period. It will end on the anniversary of the date on which the first pension input period ended, unless another end date for the second pension input period is nominated instead. Such a nominated end date can be any date but the chosen date:

  • cannot be a date before the date the nomination is made, and
  • must be in the tax year that follows the tax year in which the previous (first) pension input period ended. You cannot have two pension input periods relating to the same arrangement ending in the same tax year.

The requirements relating to the start and end dates for later pension input periods (third, fourth, fifth etc) follows the same requirements as above for the second pension input period.

Example

The first contribution is paid 1 June 2011 - the first pension input period starts on 1 June 2011.

No nominations made

First pension input period runs from 1 June 2011 to 5 April 2012. First pension input period applies for tax year 2011-12.

Second pension input period starts on 6 April 2012 and ends on 5 April 2013. Second pension input period applies for tax year 2012-13.

Third pension input period starts on 6 April 2013 and ends on 5 April 2014. Third pension input period applies for tax year 2013-14.

And so on for subsequent pension input periods.

Nominations made in some years

First pension input period runs from 1 June 2011 and ends on the nominated date of 31 May 2012. First pension input period applies for tax year 2012-13 and not 2011-12.

Second pension input period starts on 1 June 2012 and ends on 31 May 2013. No nomination made in respect of the end date for the second pension input period. Second pension input period applies for tax year 2013-14.

Third pension input period starts on 1 June 2013 and ends on the nominated date of 31 December 2014. The nomination date means that the third pension input period is longer than 12 months but the third pension input period still ends in the tax year following the tax year in which the second pension input period ended. Third pension input period applies for tax year 2014-15.

Fourth pension input period starts on 1 January 2015 and will end on 31 December 2015 unless another end date, that falls in 2015-16, is nominated instead. The fourth pension input period will apply for tax year 2015-16.

And so on for subsequent pension input periods.

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Meaning of first contribution to the arrangement

The first pension input period under an other money purchase arrangement will start from the date that the first contribution is paid to the arrangement.

For this purpose the first contribution means:

  • a relievable pension contribution paid by, or on behalf of, the individual, or
  • a contribution paid in respect of the individual by the individual’s employer.

The first contribution can also include an employer’s contribution that was not initially allocated to the individual’s arrangement, but allocated at a later date. The date of the allocation to the member’s arrangement is taken as the date of payment and not the date it was initially paid to the pension scheme.

Where the arrangement is contracted out of the State Second Pension, minimum payment rebate and contracting out rebates paid by HMRC are not relievable pension contributions and will not start a pension input period.

The way that a contribution is paid can affect the payment date for a contribution. PTM041000 and PTM053200 give guidance on when a contribution is paid.

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Persons who can nominate an end date for a pension input period

Both the scheme administrator and the member can nominate the end date for a pension input period relating to an other money purchase arrangement. If both the scheme administrator and member nominate an end date for the same pension input period it is the nomination that is made first that takes precedence.

Example

Marcus is a member of an other money purchase arrangement. The pension input period for this arrangement started on 1 June 2011. Without a nomination the pension input period will end on 5 April 2012.

On 1 September 2011 Marcus sends a notice to his scheme administrator telling them that he wants the end date of his pension input period to be 31 May 2012. On 3 September 2011 the scheme administrator sends a notice to Marcus telling him that they want the pension input period to end on 31 March 2012.

As Marcus was the first person to nominate a new end date his nomination takes precedence. The pension input period end date will be 31 May 2012. The first pension input period will end in the tax year 2012-13.

For workplace schemes it is common for the pension input period to be the year to 31 March, 31 December or the employer’s accounting date (although when a scheme is first set up, the first pension input period may be shorter than one year). This use of a common date is because scheme administrators can, within certain parameters, nominate the pension input period end date for their scheme.

For personal pension schemes, it is commonly the date the first contribution was made that sets the first and subsequent pension input periods.

PTM052500 gives more information about nominating end dates for a pension input period.