Why would an annual allowance charge be due?

An individual will need to pay an annual allowance charge if their total pension savings, in the pension input periods that end in the relevant tax year, exceed the annual allowance and they don’t have sufficient unused annual allowance to carry forward from the previous three tax years. An annual allowance charge is payable at a person’s highest marginal rate of income tax. If the individual needs to pay this charge, then they need to report this to the HMRC in their self-assessment tax return.