Annual allowance: transitional rules for tax year 2015-16: pension input amounts: general
Sections 229 – 237ZA Finance Act 2004
Transitional annual allowance rules apply for tax year 2015-16.
For annual allowance purposes only, the 2015-16 tax year is split into two ‘mini’ tax years - the ‘pre-alignment tax year’ and the ‘post-alignment tax year’ (see PTM058010 for more details).
In turn, an individual’s total pension input amount must be calculated for either, or each, of the pre and post-alignment tax years.
Any pension input amounts for the pre-alignment tax year are tested against the allowances (annual and, if applicable, money purchase annual allowances) for that ‘mini’ tax year. Similarly, any input amounts for the post-alignment tax year are tested against the allowances for that ‘mini’ tax year.
Essentially, there is no change to the way the pension input amount is calculated for an arrangement (as set out in PTM053000 onwards) except that for defined benefits and cash balance arrangements:
- a single pension input amount is calculated covering both pre and post-alignment tax years with an apportionment between the two ‘mini’ tax years,
- to reflect the longer period of time over which the pension input amount might be calculated, the CPI elements of the opening value part of the pension input amount calculation and the ‘deferred member carve-out’ calculations are replaced with 2.5%, and
- there are adjustments for deferred members.
The exceptions described above apply accordingly to defined benefits and cash balance elements of hybrid arrangements.
PTM058060 has details about other money purchase arrangements.
PTM058070 has details about defined benefits and cash balance arrangements.
PTM058080 has details about the adjustments for deferred members.
PTM058090 has details about pension input amounts for money purchase annual allowance purposes.