Welcome to the annual kick in the nuts. I’ve had one for the last 2 years. Last year’s made my eyes water and was big enough to change my financial planning over the medium term; this year’s is pennies in comparison, but that’s not really the point, it’s wrong!
I won’t bore you with the fine detail, and bearing in mind I’m not an IFA, I will just say there are a couple of things I think about when faced with this scenario. You may of course be in a very different boat, but fwiw.
1. Join Forces Pension Society if you’re not already a member. They will run a ruler over it and tell you what’s going on. You may not understand what they are saying - I didn’t and my Met degree means I am at least averagely numerate (or was at one point)! However they will tell you if it’s right or wrong.
2. When doing your tax return look for everything you can to offset the charge. If you are on a posting of less than 2 years (according to your AO) you come under temporary workplace rules and there’s all sorts you can claim back. Rift, who advertise in various Service magazines can advise but so can any other half decent accountant for a lot less. Better still, if you look on the Rift website it outlines the legislation and you’ve probably got enough wits to DIY and save a packet. I did that, was the best afternoon’s work I’ve done for a long time.
3. Even if you are over 2 years, if you pay accommodation for work relate duties ie live in during the week and the Mess isn’t your full time home - that’s claimable. I managed it last year, took a bit of explaining but it went through in the end and sliced a grand off the bill.
4. Be careful with Scheme Pays. It looks good up front but is horrendously expensive. Unlike a bank loan where you pay only the capital & interest, Scheme Pays takes an initial lump sum off your pension and then makes an annual deduction every year for the rest of your life. Daylight robbery! And over the course of a lifetime you can potentially overpay massively if you live to a ripe old age. It’s like the bank chasing you for a loan after you’ve paid it. I’ve never found anyone able to explain the rationale for legalised theft by the Government of its own employees, so be aware. You may not have the cash lying about to pay the tax, but given the excessive, almost punitive charges under Scheme Pays, it may be worth looking at a bank loan instead - as my accountant recommended to me. It’s far cheaper in the long run as you’re only paying for the duration of the loan rather than forever.
As I said, not advice, I’m not qualified, just my thoughts and experiences I’m happy to pass on.