GMP equalisation tax information
For former members who have taken a transfer in the past
If you are entitled to a top-up payment, you will be able to receive your payment as a transfer to the pension arrangement of your choice. In certain circumstances, you may also have a choice to receive your top-up payment as a cash sum instead of the transfer option. If you are affected by GMP equalisation, we will confirm the specific options available to you in your option pack.
Receiving your top-up payment as a cash sum
Top-up payments made as a cash sum will be subject to tax.
As you are no longer a member of this Scheme, we will not have up-to-date details of your tax record but will be required to make a deduction for tax from your payment. Under current tax rules, 25% of your payment will be tax-free.
For the remaining 75%, we will make a deduction for tax at the basic rate of income tax (20%). After payment, we will send you a P45 which will show the amount of tax taken.
If you are not a basic rate taxpayer, you should contact HM Revenue & Customs to reclaim any tax overpaid or pay any additional tax due.
Receiving your top-up payment as a pension transfer
In most cases, we would expect to make payment free of tax. This is because it would count as a payment from one UK 'authorised' pension scheme to another. Ultimately, you would pay tax on this money when you receive it as part of your pension.
If you have taken steps to protect your Lifetime Allowance, this payment could affect your tax position and result in you losing your protection.
Please note that if you live overseas, different tax rules may apply and you may need to take specialist financial advice.
For members receiving a pension from the Scheme
If your pension changed you may need to check your tax position.
Below is a summary of our understanding of the tax position based on current guidance, but remember it is your responsibility to check your benefits and determine any tax impact based on your personal circumstances.
If your pension increased
This could have pushed your yearly income into a higher tax bracket.
If you received a one-off additional payment
This could have pushed your income for the year into a higher tax bracket.
This means you might have paid more tax for the year in question than if you had received the right level of pension in the first place.
If this happened, you can apply to HM Revenue & Customs using the letter template below to spread the tax that was due over the previous years to which the additional payment relates.
Also, see the Tax matters questions and answersTax matters questions and answers for more detail.
Lifetime Allowance: a reminder
Historically and up to 5 April 2024, the Lifetime Allowance applied to the overall value of UK pension benefits (apart from the State Pension) you could build up over your working life without triggering an extra tax charge. At the point that you started to take your benefits, they were tested against the Lifetime Allowance. If you went over it, you would have had to pay an extra tax charge on the amount above the allowance.
Please note: The Lifetime Allowance will not affect most people. It is your responsibility to check whether or not your benefits go over any HM Revenue & Customs allowances.
This table shows the Lifetime Allowance, so you can check what it was in the year you retired:
| Tax year | LTA |
|---|---|
| Tax year2006/2007 | LTA£1,500,000 |
| Tax year2007/2008 | LTA£1,600,000 |
| Tax year2008/2009 | LTA£1,650,000 |
| Tax year2009/2010 | LTA£1,750,000 |
| Tax year2010/2011 | LTA£1,800,000 |
| Tax year2011/2012 | LTA£1,800,000 |
| Tax year2012/2013 | LTA£1,500,000 |
| Tax year2013/2014 | LTA£1,500,000 |
| Tax year2014/2015 | LTA£1,250,000 |
| Tax year2015/2016 | LTA£1,250,000 |
| Tax year2016/2017 | LTA£1,000,000 |
| Tax year2017/2018 | LTA£1,000,000 |
| Tax year2018/2019 | LTA£1,030.000 |
| Tax year2019/2020 | LTA£1,055,000 |
| Tax year2020/2021 | LTA£1,073,100 |
| Tax year2021/2022 | LTA£1,073,100 |
| Tax year2022/2023 | LTA£1,073,100 |
| Tax year2023/2024 | LTA£1,073,100 |
In the Budget on 15 March 2023, the Government announced that the Lifetime Allowance tax charge would be abolished for members retiring from 6 April 2023. The Lifetime Allowance itself was abolished from 6 April 2024.
If you are close to the Lifetime Allowance or have certain Lifetime Allowance protection
If you received an additional payment, and some or all of it is because your pension should have been higher due to unequal GMPs, the percentage of Lifetime Allowance you used up may have changed. In addition, if the increase is more than a permitted maximum, this may also have affected your Lifetime Allowance.
Extra tax charge
The ‘Lifetime Allowance charge’ remains applicable to members who retired prior to 6 April 2023. It is an extra tax charge of 25% - on top of your own highest tax rate – on the benefits you have built up above the Allowance.
If you were already over 100% of the Lifetime Allowance or if, as a result of GMP equalisation, you were taken over 100% of the Lifetime Allowance, the RSA scheme administrators will have taken the charge from your benefits before making any payment. The charge will then have been paid to HMRC automatically. You will have been notified if this applied to you.
You can find more details about the Lifetime Allowance on the tax page.