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HMRC internal manual

Pensions Tax Manual

Annual allowance: pension input periods: defined benefits and cash balance arrangements

Glossary PTM000001
   

 

When the pension input period under a defined benefits, or cash balance, arrangement starts and ends
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 under a defined benefits, or cash balance, arrangement starts and ends

The first pension input period under a defined benefits arrangement or cash balance arrangement will run from the date rights start to build up for, or in respect of, the individual under the arrangement.

That first pension input period will end on the following 5 April unless an earlier or later end date is nominated. This nominated end date must be within 12 months of the 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. This 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) follow the same requirements as above for the second pension input period.

Example

Benefits first start to accrue under a defined benefits arrangement on 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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Persons who can nominate an end date for a pension input period

The scheme administrator is the only person who can change the end date of a pension input period for a defined benefits arrangement or cash balance arrangement. The individual cannot change the end date for either type of arrangement.

It is common for defined benefits arrangements 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).

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