New Forest Ribbon
New Forest

05/02/2018

Exceeding the annual pension allowance

If your pension savings exceed the annual pension input limit (generally £40,000) then there is an annual allowance charge. The effect of the annual allowance charge is to reduce tax relief on any pension saving over the annual allowance.

The annual allowance charge is not at a fixed rate but will depend on how much taxable income an individual has and the amount of their pension saving in excess of the annual allowance. Hence for a higher rate taxpayer the charge would be 40% on the excess over the annual pension allowance. Note that annual pension input includes any contributions made by the employer and it may be those contributions that trigger the charge.

You can ask your pension provider to pay HMRC out of your pension pot if you’ve gone over your annual allowance and the tax is more than £2,000. You must tell your pension provider before 31 July if you want them to pay the tax charge for the previous tax year.

For further information on the Annual Pension Allowance, please contact Arthur Bell on 023 8046 1258.

We have established a strategic alliance with a firm of Independent Financial Advisors who are authorised and regulated by the FCA. Personal financial and pension planning matters will be referred to them to help you preserve and enhance your wealth.

Latest Tweets

Even though it is still unclear, the UK will leave the EU at 11pm on 31 December 2020 and businesses need to be ready for changes in the way they trade with the EU http://ow.ly/76V450BR8Ze

It's been reported that ministers are considering halting plans to implement the planned national living wage (NLW) increase next Spring, as a result of the pandemic http://ow.ly/fEX450BR8Ge

Let’s Talk

Why not arrange a FREE consultation and find out what we can do for your business.