How does scheme pays work for the NHS pension?

Scheme pays means the NHS Pension Scheme pays your annual allowance charge to HMRC and reduces your benefits to cover it. The scheme must agree to it when the charge is over £2,000 and your NHS pension savings alone are over £60,000. Below that, the NHS scheme offers voluntary scheme pays. Either way, the notice must reach the scheme by 31 July in the year after the year in which the tax year ended.

Mandatory and voluntary

Mandatory scheme pays
Applies when the charge is over £2,000 and your savings in the NHS scheme alone are over the standard £60,000 allowance. A tapered allowance and the money purchase annual allowance are ignored for this test.
Voluntary scheme pays
The NHS scheme offers it where the mandatory conditions are not met, for example where a taper caused the charge. The liability stays with you.
The deadline
31 July in the year after the year in which the tax year ended. For 2026/27 that is 31 July 2028. You cannot elect before the tax year ends.

HMRC Pensions Tax Manual PTM056410 and PTM056430; NHSBSA annual allowance guidance. Checked 13 October 2026. 2026/27 rules. The Budget on 28 October 2026 can change them.

Scheme pays and your pension benefits

The charge paid on your behalf is recovered from your NHS benefits when you take them, so your pension is lower than it would have been.

Paying the charge yourself leaves your pension untouched. Which suits you depends on your cash, your age and how you plan to take the pension.

For a 2026/27 charge, the scheme pays notice has to reach NHS Pensions by 31 July 2028.

Related questions

Who pays the annual allowance charge under voluntary scheme pays?

The scheme pays HMRC, and the liability remains yours. Under mandatory scheme pays the scheme is jointly liable.

When is the deadline for a 2026/27 charge?

31 July 2028.

Where this fits

We can compare paying the charge yourself with using scheme pays.

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The advisers for this subject

Sunny Bharj

Sunny Bharj

Independent Financial Adviser

Tony Springer

Tony Springer

Independent Financial Adviser

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