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HMRC internal manual

Pensions Tax Manual

Annual allowance: pension input amounts: hybrid arrangements

Sections 227B, 227D and 237 Finance Act 2004

Note – for tax year 2015-16 there are transitional rules for calculating pension input amounts.  PTM058070 has more details.

Under a hybrid arrangement it is necessary to identify the possible types of benefit that could be given under the arrangement and their pension input amount values. The pension input amount for a hybrid arrangement is the greatest of the possible input amounts.

If, for example, the arrangement offered possible money purchase benefits or defined benefits the pension input amount needs to be worked out as if it were a money purchase benefit and also as a defined benefit. If, for the pension input period, the pension input amount calculated on the defined benefit basis is greater than the money purchase input amount the defined benefit savings amount is used as the pension input amount for that pension input period and vice versa.

Note - in the case of individuals who are subject to the money purchase annual allowance there are further conditions over which pension input amount is applied for a hybrid arrangement. PTM056500 has more details.