Over the past few years, many teachers have been caught in the complexities of pension corrections following the McCloud judgment, a legal ruling that exposed age discrimination in the reformation of public sector pension schemes. The implications have been far-reaching, and for those affected, the result has often been a confusing and technically challenging experience.
As a firm that works closely with education professionals, we’ve seen firsthand how this process has impacted teachers. Whether you’re trying to understand the reporting requirements to HMRC or grappling with Annual Allowance breaches, it’s crucial to have clear, accurate guidance. Our work has involved not only helping teachers comply with these new responsibilities but also instilling confidence in them to do so.
What Is the McCloud Pension Remedy?
The McCloud judgment addressed age discrimination introduced during 2015 pension reforms, offering affected public sector workers, including teachers, the choice between staying in their original final salary pension scheme or moving to a newer career average scheme for the period between 2015 and 2022.
This choice isn’t just about preference; it can have a substantial impact on your future pension benefits and tax liabilities. That’s where things get technical, and the relationships with financial advisers and tax advisers pay off. Teachers now face the additional burden of reporting changes to HMRC, particularly where their Annual Allowance position has been affected.
What This Means for Teachers
Teachers impacted by the McCloud remedy may be required to submit revised information to HMRC. This typically involves:
- Completing HMRC’s McCloud-specific reporting forms
- Reviewing Annual Allowance calculations
- Declaring any new or adjusted tax liabilities
- Understanding the longer-term implications for their retirement planning
For many, this process can feel frustrating and overwhelming. The documents are complex, the deadlines are strict, and the stakes, including potential fines or incorrect tax payments, are high. Not to mention that Teachers are having to pay for professional advice, potentially for a second time, for a pension fund to which they currently do not have access.
Collaborating with Financial Advisers
We’ve found that the most effective approach is one that brings together the skills of financial advisers and tax specialists. Financial advisers help teachers understand their broader pension options and retirement goals. We step in to handle the detailed tax reporting, calculations, and direct communication with HMRC.
This teamwork ensures:
- Nothing is missed in the submission process
- Tax charges are calculated and applied correctly
- Teachers receive a complete picture of how the remedy affects their financial future
For teachers, this collaborative model means less stress, more clarity, and confidence that the necessary reporting is being handled thoroughly and professionally.
Why Specialist Knowledge Matters
The Teachers’ Pension Scheme is nuanced, and the McCloud remedy has added layers of complexity. Many generalist accountants simply aren’t familiar with its specific rules, thresholds, and long-term impacts. That’s why it’s crucial to work with professionals who understand both the education sector and the tax system.
At BHP, we’ve worked with a wide range of teachers, from headteachers to leaders of multi-academy trusts, and we’ve developed a deep understanding of the scheme, its implications, and the McCloud-related requirements, regularly dealing with HM Revenue & Customs on the remedial action required. Over the past few months, many teachers have come to us from smaller accountants that do not have the number of clients impacted by the McCloud judgement to build up the detailed knowledge and processes to be able to offer this service.
Our team has advised members of the Association of School and College Leaders (ASCL) as an approved ASCL provider, reflecting the trust and recognition we’ve earned within the sector.
What sets our work apart is our commitment to:
- Clarity – We avoid jargon and explain your options in plain English.
- Accuracy – Every number is checked and double-checked.
- Support – You’re not left to figure it out on your own.
Making a Real Difference
Many of the teachers we’ve supported had no idea where to begin. They faced tight deadlines and unfamiliar documentation. In some cases, errors in Annual Allowance reporting could have resulted in fines or unnecessary tax payments.
We’ve helped:
- Recover overpaid tax through accurate recalculations.
- Prevent penalties by catching common reporting mistakes.
- Provide reassurance in a time of confusion and uncertainty.
- Take away the administrative burden of dealing with HMRC.
- Clients in claiming back tax relief on subscriptions not previously claimed.
As one teacher put it, “I had no idea how to even begin reporting my McCloud figures. You made it simple and took the stress off my shoulders.”
Beyond McCloud: Supporting Teachers with Tax
While McCloud may be a once-in-a-career event, tax compliance is an ongoing process. Many teachers today have income streams beyond the classroom, including tutoring, inspections, rental properties, or investments. We also ensure that tax relief is claimed on your expenses incurred in relation to your job where these are not reimbursed, such as subscriptions to professional bodies or items purchased for the school out of your own pocket.
We continue to support teachers with:
- Self-Assessment returns
- Capital Gains Tax reporting
- Annual and Lifetime Allowance tax planning
- HMRC enquiries or disputes
Looking Ahead
The McCloud remedy has highlighted a broader truth: teachers deserve reliable, knowledgeable support when it comes to financial and tax matters. Whether your financial adviser has referred you or you are simply trying to make sense of your situation, the key is not to go it alone.
Your work is demanding enough. Let experienced professionals handle the reporting complexities, so you can focus on doing what you do best, shaping the future through education.
If you’d like to learn more or need support with pension-related reporting, speak with a BHP specialist who understands the unique needs of teachers and their specific circumstances.
-By Peter Dobson and Kay Colliver
