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Home » News & Insights » Annual limits for pension payments

Annual limits for pension payments

Posted on 9th November 2021

From 6 April 2014, the annual allowance for tax relief on pension savings in a registered pension scheme was reduced to £40,000. This includes contributions made by anyone else into your pension such as your employer. If your pension savings exceed this amount you may have to pay a tax charge and give details of this on a Self-Assessment tax return.

You will have a reduced (‘tapered’) annual allowance in the current tax year if both:

  • your ‘threshold income’ is over £200,000
  • your ‘adjusted income’ is over £240,000

The tapered annual allowance was introduced from 6 April 2016. For the taper to apply, the limits on threshold income and adjusted income must both be exceeded.

The £40,000 annual allowance will be reduced by £1 for every £2 of adjusted income over £240,000. The minimum annual allowance reduced in this way will be £4,000.

Prior to the 2020-21 tax year lower limits applied and for every £2 of adjusted income over £150,000, an individual’s annual allowance was reduced by £1. With the minimum annual allowance being £10,000.

Source: Informanagement

MJB Avanti | 08000 388799

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Filed Under: News Tagged With: Pensions, Self Assessment, Tax Return

Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

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