The pension tax letter is due 6 October. Register with HMRC by the 5th.

If your NHS pension grew by more than £60,000 in 2025/26, a letter is due by 6 October telling you so. It may bring a tax bill, and with it a fork: pay the charge from your own taxed money, or ask the scheme to pay it and take a permanent cut to the pension you retire on.

There is a problem in the dates. If you have never filed a tax return, HMRC’s registration deadline is 5 October 2026 — the day before the letter that tells you that you need one.

What the letter actually measures

Not your contributions. For a defined benefit scheme like the NHS one, the annual allowance measures the increase in the value of the pension you have been promised over the year. A promotion, a move up a band, or a large backdated rise can push that past £60,000 in a year when your bank balance felt no different at all. That is why the letter surprises people who have never earned anywhere near £60,000.

The standard annual allowance is £60,000, and has been since April 2023. Schemes must send a statement automatically where your growth passed it, and GOV.UK’s rule for administrators is plain: they must give you the statement by 6 October following the end of the tax year. NHS Pensions can only do that if your employer sent the annual pay and service update by 6 July. Where the employer was late, the scheme has three months from receiving the information.

What the charge costs

The excess is added to your income for the year and taxed at your marginal rate, so a large excess can straddle two bands. Suppose your pension value grew by £70,000 in the year. The £10,000 above the allowance costs £4,000 at the 40% rate, or £4,500 at 45%.

The tax is due with the return on 31 January 2027.

The other branch: Scheme Pays

Scheme Pays means NHS Pensions settles the charge and takes a permanent reduction from your benefits instead. Mandatory Scheme Pays — the kind the scheme must accept — is available only where both tests are met at once: your charge for the year is over £2,000, and your input in either the 1995/2008 scheme or the 2015 scheme on its own exceeded the standard allowance. Note “standard”: the test is against £60,000, not against a lower allowance the taper has left you with.

NHS Pensions also offers a voluntary election, with no minimum charge, where your combined input across NHS scheme memberships passed the standard allowance even though neither part did on its own.

The election deadline is 31 July following the January in which the charge had to be declared. For a 2025/26 charge, declared by 31 January 2027, that is 31 July 2027.

The trade is straightforward to state. Paying it yourself costs the cash now and leaves the pension whole. Scheme Pays costs nothing now and reduces the pension for as long as you draw it, by an amount worked out from your age at the election and the scheme’s own factors.

What the answer turns on

Four things sit outside the letter’s figure, and it settles none of them:

• Carry forward. Unused allowance from 2022/23, 2023/24 and 2024/25 can wipe the charge out completely. The statement does not take it into account, so a letter is not a bill.
• The taper. The allowance shrinks only if threshold income is over £200,000 and adjusted income is over £260,000. Both, not either. At its lowest it falls to £10,000.
• Pensions elsewhere. The statement covers pension growth in that scheme. A private pot, a previous employer’s scheme or a spouse’s arrangement is not in it, and your total is your job to add up.
• McCloud. Rollback moved service between 1 April 2015 and 31 March 2022 back into the 1995/2008 scheme, and a remediable pension savings statement revises the pension input amounts for 2015/16 to 2021/22. That can change what you owe, or are owed, for those years. It does not change your 2025/26 growth.

Two things are not yet known. Your own growth figure, until the envelope lands. And the Agenda for Change pay structure reform, which the government has said will give some staff increases backdated to 1 April 2026: it is still being negotiated, and when it lands it falls in 2026/27 growth, not in this statement’s year.

If the letter is late

This is not a hypothetical worry. NHS Pensions is still working through 2024/25 statements and has given no date for clearing the backlog.

File anyway. HMRC’s position is that you complete the return by 31 January 2027 using a provisional figure worked out to the best of your ability. Keep the working: HMRC will not charge a financial penalty for a provisional figure that turns out to be wrong, provided you calculated it as well as you could and kept a record of how. Two things do still follow. You must update the return with the real figure within a year of the filing deadline, and if the real figure is higher and you paid the charge yourself rather than through Scheme Pays, interest runs on the difference.

What comes out of your payslip for the pension each month, tier by tier, is on our NHS pension contributions page.

Where these figures come from

• Information pension scheme administrators must give to members — GOV.UK
• Tax on your private pension contributions: annual allowance — GOV.UK
• Annual allowance — NHS Business Services Authority
• What is scheme pays? — NHS Business Services Authority
• Improved Self Assessment registration service launched — GOV.UK
• Your annual allowance statement and exceeding the limit — British Medical Association

Every figure traces to a dated document — the line this section is named after. If one here is wrong, tell us and it gets fixed publicly. Work out your own figures.