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Number of judges breaching annual allowance grows 239% since 2015/16 tax year

Date: 14 October 2021

14 October 2021

New data from Quilter, the wealth manager, shows 1027 judges in the Judicial Pension Scheme (JPS 2015) breached the annual allowance in the 2020/21 tax year representing a 239% jump since the 2015/16 tax year.

Separate judiciary statistics show that in 2020 there were a total of 3,174 court judges in the UK illustrating that approximately 30% of all judges breached the complex annual allowance rules.

The Freedom of Information request to the Ministry of Justice illustrates why the government is scrambling to reform of the Judicial Pension Scheme. There is currently an open consultation looking at creating a new pension scheme in 2022.

The consultation sets out that the JPS 2022 will be a tax-unregistered scheme, meaning benefits accrued in the scheme do not count towards either the annual allowance or lifetime allowance limits.

A number of professions have been suffering with this issue, particularly within the NHS, where senior clinicians are facing huge tax bills and therefore choosing to do fewer hours due to the government’s controversial pension annual allowance taper.

The annual allowance affects individuals saving into a pension and restricts the amount they can save in any given year before facing a tax charge. In 2010/11 the annual limit was in excess of £250,000 but now stands at just £40,000. Contributions above an individual’s available annual allowance are subject to a tax charge, which is borne by the individual or paid for under a ‘scheme pays’ arrangement, which leads to a reduction in pension benefits.

For higher earners an additional ‘taper’ brings the allowance down further. Introduced in 2016, the policy sees savers lose £1 from the annual allowance for every £2 of ‘adjusted income’ over £240,000, with complex rules involved in calculating the ‘threshold’ and ‘adjusted’ income to determine who is subject to the taper. It reduces down to just £4,000 for individuals with total earnings of £312,000 or more.

In 2020, the threshold income was raised to £200,000 after concerns the taper was contributing to a staffing crisis in the NHS.

Certain public sector workers in defined benefit (DB) pensions historically have been particularly susceptible to the impact of these rules. This is due to the way benefits accrued under a DB pension are calculated and means a worker can easily see their pension accrual docked under an annual allowance tax charge.

Further to this, the scheme gives members a chance to apply for a ‘scheme pays’ option. However, it was only used by 372 members in 2019/20 representing only around 39% of those in the judicial pension scheme who have exceeded the annual allowance.



Number of JPS members that exceeded the annual allowance

Number of scheme pays applications

Number of scheme pays applications accepted

























Phil Carroll, director at Quilter Financial Planning says:

“Since the rules around the annual allowance were changed, we have seen a slew of senior members of key public services impacted. The most notable profession impacted was doctors who were declining extra shifts to avoid spiralling tax bills. It is laudable that the government have recognised this issue and are making significant changes to try and rectify it. However, this is not a problem exclusive to the judiciary and more needs to be done to help public sector workers across the board.

“This tax reform was introduced to reduce government expenditure on pension tax relief for high earners but has since had significant unintended consequences on public sector pensions. The tapered annual allowance has caused significant problems in the public sector.

For anyone worried about breaching the annual allowance it is worth seeking financial advice to see what options are available to help mitigate against this tax.”

Alex Berry

Alex Berry

External Communications Manager