Managing your NHS pension can feel overwhelming, especially when unexpected figures appear on your statement, like a negative pension input amount. These numbers can look puzzling, particularly when they show up as ‘-£20,000.00’ or in brackets like ‘£(20,000.00)’. But what do they actually mean?
If you’ve received a 1995/2008 scheme pension savings statement for the 2023/24 tax year, you may wonder how to interpret these figures and whether they affect your tax position.
For many clients, the NHS pension is the cornerstone of their long-term financial planning, providing the foundation of financial security in retirement. Yet, recent changes in government regulations have altered how pension input amounts are calculated – and how they interact with your annual allowance for pension savings.
In this article, we’ll break down:
- What does a negative pension input amount mean
- Why does it appear this way in your statement
- The latest HMRC updates impacting NHS pensions
- And how to find out if a tax charge applies to you
Understanding these details is key to making informed decisions about your pension and long-term financial well-being.
What is a negative pension input amount?
A negative pension input amount represents a reduction in your pension savings in the 1995/2008 scheme for a specific tax year, rather than an increase. This decrease might occur due to changes in pension benefits, salary adjustments, inflation factors, or scheme-specific regulations.
Previously, when a negative pension input amount appeared on a statement, HMRC automatically treated it as zero, meaning it did not affect your overall pension savings or tax obligations. However, tax rules introduced in the 2023 Spring Budget have changed how negative pension input amounts are used.
In short, this is a welcome change for many NHS members, bringing more balance to how pension input amounts are calculated and how tax is applied.
How pension input amounts are displayed
Your pension savings statement may show a negative pension input amount in one of two ways:
- Brackets: The traditional method used in accounting, e.g., ‘£(20,000.00)’, indicating a deduction from the pension savings amount.
- Minus Sign: A newer, more intuitive format currently being phased into pension statements, e.g., ‘-£20,000.00’, directly indicating a negative amount.
Regardless of how the figure appears, the impact remains the same.
Key HMRC changes from 2023/24
The Spring Budget 2023 introduced a significant change to how public service pension schemes, including the NHS pension scheme, treat negative pension input amounts.
Before the 2023/24 tax year
Any negative pension input amount in the 1995/2008 scheme was automatically treated as zero. This meant it had no effect on your pension growth and could not affect pension tax calculations.
From the 2023/24 tax year onwards
Negative pension input amounts in the 1995/2008 scheme can now be offset against positive pension input amounts in the 2015 scheme. This adjustment helps reduce the risk of exceeding the annual allowance, potentially lowering or eliminating an annual allowance tax charge.
Why this matters
For NHS pension scheme members, this change means you now have greater flexibility and potentially more headroom within your annual allowance. The negative figure can be used to balance pension savings across the two schemes rather than being disregarded entirely, leading to a fairer, more accurate reflection of your overall pension.
What does this mean for you?
If your pension savings statement includes a negative pension input amount, it’s important not to overlook it.
You’ll need to accurately calculate your total NHS pension scheme pension input across both the 1995/2008 and 2015 pension schemes for the tax year. This combined figure will determine whether an annual allowance charge applies.
Here’s how you can do it:
Step 1: Add together your pension input amounts
Take your pension input amount from the 1995/2008 scheme and add it to the amount from your 2015 scheme.
If your 1995/2008 scheme input amount is negative, it will help reduce your overall pension input. This gives you your total pension input amount for the tax year.
Step 2: Compare against your available annual allowance
The standard annual allowance is currently £60,000 but can be reduced or tapered for higher earners.
For more details and to check if you are tapered, click here >
If your total NHS pension input amount is below the allowance – no charge applies.
If it exceeds your allowance – you may need to calculate a tax charge on the excess.
Note: If you’re unsure how to work this out, or your situation is complex, seek advice from your financial adviser.
Examples of pension input calculations
Example 1: No annual allowance charge
A member receives the following pension input amounts:
2015 scheme pension input amount: £65,000
1995/2008 scheme pension input amount: -£10,000
Total NHS pension input amount = £65,000 + (-£10,000) = £55,000. Since their annual allowance is £60,000, potentially no tax charge will apply.
Example 2: Potential annual allowance charge
2015 scheme pension input amount: £85,000
1995/2008 scheme pension input amount: -£10,000
Total NHS pension input amount = £85,000 + (-£10,000) = £75,000. Since their available annual allowance is £60,000, the member may need to pay a tax charge on the excess £15,000.
Carrying forward unused allowance
If you haven’t used your full annual allowance in previous tax years, you can carry it forward to the current tax year to help offset any potential tax charges. However, it’s important to note that:
- Negative pension input amounts cannot be carried forward – they can only be used within the same tax year.
- You can only offset a negative 1995/2008 scheme pension input amount against a positive 2015 scheme amount within the same tax year – not across different tax years.
Next Steps
To ensure that your pension tax calculations are correct:
- Consult the Negative Pension Input Amount Factsheet for detailed guidance.
- Use HMRC’s Annual Allowance Calculator to determine whether an annual allowance charge applies. Check if you have unused annual allowances on your pension savings
By understanding these key aspects, you can make informed financial decisions, ensure tax compliance, and keep on track for the retirement you are planning for.
If you’d like help reviewing your pension input figures, creating a long-term plan, or simply checking you’re still on track, now is a great time to speak with your adviser.
Don’t have a specialist medical IFA? Get in touch, we’d be happy to help.