Additional annual allowance
This tax year you might be in the lucky position of being able to make more pension contributions than you were expecting.
Due to complex transitional arrangements which apply for 2015/16, your annual allowance could be anything between the normal £40,000 and £80,000. It all depends on your pension input period and the level of contributions that you have already made for 2015/16 before Summer Budget day – 8 July.
From 2016/17, pension input periods will be aligned with the tax year. To implement this change, all input periods are treated as ending on 8 July 2015, with the next period running from 9 July 2015 to 5 April 2016
. You could therefore have two or even three input periods ending during 2015/16.
To protect against an annual allowance tax charge arising, the transitional arrangements provide for an annual allowance of £80,000 for 2015/16
– but only £40,000 of this can be used against contributions made during the 9 July 2015 to 5 April 2016 period.
Yes, it’s complicated. And it will be much worse if you have different pension schemes with different input periods. So if you normally like to maximise your pension contributions, please get in touch soon.
020 7376 9333
– Pensions freedom
– HMRC guidance available on new pensions
– Pensions – How to apply to protect your pension tax allowances