Reminder of current tax relief for pension contributions

Source: HM Revenue & Customs | | 06/12/2017

Many commentators had predicted that the Chancellor would further reduce the annual amount that can be saved into a pension as part of the Budget measures. However, these fears appear to have been unfounded as no changes were announced.

The annual allowance for tax relief on pensions will remain at the current level of £40,000 for 2018-19. There is also a three year carry forward rule that allows taxpayers to carry forward unused annual allowance from the last three tax years if they have made pension savings in those years.

There is a tapered reduction of the annual allowance for high earners. Those with income in excess of £150,000 will begin to see their allowance tapered. For every complete £2 their income exceeds £150,000 the annual allowance is reduced by £1, up to a maximum reduction of £30,000 for individuals whose income is over £210,000.

Planning note

There is a separate allowance known as the Money Purchase Allowance (MPAA) which applies once money has been taken from a pension pot. This allowance was reduced to £4,000 (was £10,000) from April 2017. The MPAA effectively stops an individual using the flexibilities to access a money purchase pension arrangement and then divert their salary into their pension scheme, gaining tax relief, and effectively withdrawing 25% tax-free.



Accountancy service

“Are you feeling confused about how to comply with HMRC’s accountancy requirements?

Read more...

Your business

Your business

Are you a Start-up business? Are you a little confused about the different types of companies? 

Read more...

Virtual Director

Virtual Director

Are you looking to grow your business? A Virtual Financial Director can help you take your business to the next level.

Read more...

Xero

XERO

Ensure that your business has the edge over your competitors and incorporate Xero into your business, today!

Read more...

Latest News

Provisions for termination payment tax changes
19/02/2018 - More...
From 6 April 2018, all payments in lieu of notice (PILONs) equivalent to the

Campaign to promote shared parental leave
19/02/2018 - More...
In its “Good Work” response to the 2017 Taylor Review of Modern Working

Appealing to a tax tribunal
14/02/2018 - More...
There are a number of different options open to taxpayers that disagree with a

Search News


Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login