• Allowances

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Not sure what pension you are in?

Annual Allowance
The annual allowance is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It’s based on your earnings for the year and is capped at £60,000 for most people, though the highest earners may be capped by the Tapered Annual Allowance.

For more information visit www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/the-annual-allowance

Tapered Annual Allowance
The Annual Allowance is reduced for higher earners, called the Tapered Annual Allowance. The Tapered Annual Allowance applies to members of a registered pension scheme with ‘Adjusted Income’ of over £260,000. The Adjusted Income threshold increased on 6 April 2020, and again on 6 April 2023, which meant that some people were no longer affected by the taper, or affected to a lesser degree, and therefore have the ability to make increased pension savings.

For more information visit www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/tapered-annual-allowance

If you would like to know how much has been contributed into your pension in a given year, contact your Scheme administrator, visit Contact us

Lifetime Allowance

The Lifetime Allowance (LTA) charge is being abolished; meaning there’s no longer a limit on the amount of pension benefits you can build up without incurring a tax charge. The Lifetime Allowance charge will no longer apply on:

  • lump sums above £1,073,100
  • amounts above the previous lifetime allowance taken as income

However, the amount you can take as a tax-free lump sum remains capped at £268,275.

For more information visit www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/lifetime-allowance-for-pension-savings

Protections

If you were a higher earner, you may have in place protection (this could be in many forms such as Individual, Fixed or Enhanced Protection), that means your Lifetime Allowance is higher than the current government limit.

Protections are complex but if you believe you previously applied for and received confirmation from HMRC of your pension protection; you will need to let your administrator know. Visit Contact us.

For more information visit: www.gov.uk/guidance/pension-schemes-protect-your-lifetime-allowance.

© Copyright - Barnett Waddingham
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