If carry forward is not sufficient, there are a number of options to adjust your benefits from USS.
USS tax relief options
These were introduced to assist members who may have or are likely to have an AA or Lifetime Allowance charge. Find out more about these options here.
If, after weighing up the choices and USS options available, and after taking obtaining financial advice, it is concluded you need to choose one of the options available from USS, you should proceed as follows:
Make an election for one of the USS tax relief options
An election form (separate form for each of the tax relief limits options) can be downloaded directly from the USS website, noting that USS requires 28 days notice in writing before the date of the election. All completed Election Forms should be sent to the Pensions Office, not to USS directly.
Pay the charge
If, after considering all the actions and options available to you it is identified that you have an AA tax charge, this has to be notified to HMRC by completion of a self-assessment tax return. This is regardless of whether you normally complete a tax return or not. Further information about how you inform HMRC is available on the HMRC website.
If the tax charge is above £2,000 and the total amount of your pension savings in the pension year for the same tax year has exceeded the AA, you can choose to have some or all of your AA charge paid by USS. There will be a reduction to the value of your USS benefits at retirement in exchange for the payment of the tax charge. The USS website has a factsheet about Scheme Pays. Further information about the Annual Allowance and the Scheme Pays option is available at the HMRC website.
The University has a pension cash supplement option for those adversely affected by pension tax allowances, subject to certain criteria.