Part 4: Income tax, corporation tax and capital gains tax Section 23 and Schedule 4: Pensions: annual allowance Details of the section and Schedule 4 Part 2: Annual allowance for, and carry-forward from, 2015-16
Part 2 provides that every member of a registered pension scheme has an annual allowance of £80,000 for the 2015-16 tax year, but this is subject to an allowance of £40,000 for the period from 9 July 2015 to 5 April 2016. This is in addition to any existing unused annual allowance carried forward from the three previous tax years.
	Paragraph 6 inserts new section 228C into FA 2004.
	New section 228C amends the amount of the annual allowance for 2015-16 to prevent any retrospective taxation arising as a consequence of aligning pension input periods with the tax year during 2015-16.
	New subsection (2) splits the 2015-16 tax year into two parts for the purposes of the annual allowance, the pre-alignment tax year which ends on 8 July 2015 and the post-alignment tax year which starts on 9 July 2015.
	New subsection (3) ensures that that only one annual allowance charge can arise in 2015-16 which is the sum of any charge arising under the pre-alignment and post-alignment tax years. It also ensures that the rate of any charge arising is, as intended, at the individual's marginal rate for 2015-16, but where their taxable income includes any excess pension savings over the annual allowance.
	New subsection (4) doubles the normal annual allowance for the pre-alignment tax year to £80,000. For those who have flexibly accessed their pension savings, their money purchase annual allowance for this period is £20,000.
	New subsection (5) sets out that for members of registered pension schemes in the pre-alignment tax year, the annual allowance and the alternative annual allowance for the post-alignment tax year will be nil. The money purchase annual allowance for this period will be £10,000 less any amount that their money purchase savings for the pre-alignment tax year exceeded £10,000. As carry forward is not available for the money purchase annual allowance, this means that up to £10,000 will be available for the money purchase savings in the post-alignment tax year. If an individual is not a member of a registered pension scheme in the pre-alignment tax year, then this subsection does not apply, and their annual allowance will be £40,000 for the post-alignment tax year.
	New subsection (6) allows up to £40,000 of unused annual allowance from the pre-alignment tax year to be carried forward and therefore added to the nil annual allowance for the post-alignment tax year. However where an individual exceeded the money purchase annual allowance in the pre-alignment tax year, this carry-forward is limited to £30,000.
	New subsection (7) amends the carry forward rules for tax years 2016-17 to 2018-19. It ensures that although tax year 2015-16 has been split into two for the purposes of the annual allowance, the period over which unused annual allowance can be carried forward is not reduced as a result, and remains at three full tax years.
	New subsection (8) sets out the amount of unused annual allowance that can be carried forward to future years from 2015-16. For those not subject to the money purchase annual allowance, the maximum that can be carried forward is the amount of unused annual allowance in the pre-alignment tax year, subject to a maximum of £40,000, less any amount of this used up in the post-alignment tax year. For those subject to the money purchase annual allowance, the maximum that can be carried forward is the amount of unused annual allowance in the pre-alignment tax year, subject to a maximum of £30,000, less any amount of this used up in the post-alignment tax year. Subsection (7) also preserves the order in which unused annual allowance is used up, initially using the annual allowance for the current year and then any unused annual allowance carried forward from the earliest available year first.
	New subsection (9) ensures that where an individual dies or becomes severely ill in the post-alignment tax year they will not have a pension input amount for any savings for the pre-alignment tax year as well as the post-alignment tax year.