The following Employment Tax guidance note by Tolley in association with John Hayward provides comprehensive and up to date tax information covering:
The annual allowance in relation to registered pension schemes is the maximum amount:
See Example 1.
If the annual allowance is exceeded, there is a tax charge (the annual allowance charge) on the member. See Example 2.
The annual allowance covers all contributions whether made by the member or any other person, eg the member’s employer.
Following the Finance Act 2004 reforms, the annual allowance reached £255,000 in 2010/11. The annual allowance for 2011/12 to 2013/14 was £50,000. The annual allowance reduced to £40,000 from 2014/15, and has since remained at that level.
Pension scheme administrators are required to provide a standard pension savings statement to a member if that member’s pension input amount exceeds the general untapered annual allowance of £40,000 (see below).
From 2020/21 onwards, pensions tax relief is restricted for those with 'adjusted income' (ie taxable earnings including any member and employer pension contributions but excluding charitable contributions) of over £240,000. From 2016/17 until 5
April 2020, it was restricted for those with ‘adjusted income’ of above £150,000.
FA 2004, s 228ZA; HMRC policy paper
From 6 April 2020, for every £2 of adjusted income over £240,000 an individual earns, that individual's annual allowance is reduced by £1. The maximum reduction to the annual allowance is £36,000, so that anyone with adjusted income
of £312,000 or above has an annual allowance of just £4,000.
From 6 April 2016 until 5 April 2020, for every £2 of adjusted income over £150,000 an individual earns, that individual’s annual allowance was reduced by £1. The maximum reduction to the annual allowance was £30
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login