The maximum annual allowance for pension contributions is currently £40,000 p.a. although it is possible to use up some past years’ reliefs. As indicated above, this may possibly change in the 2021 Budget.
However, as with most things’ “tax”, it is not that simple. Levels of income and the contributions to the pension scheme can affect the amount of the allowance, and it could taper down to just £4,000 being allowable. Excess contributions can give rise to an income tax charge.
Over 34,000 people reported to HMRC an excess in 2018/19 – and the actual figures are probably in reality much higher due to non-reporting by those that were not aware!
If you are considering making substantial pension contributions, either personally or having them made by your employer, please ensure you talk to us first!
