March 25th, 2019

How much can I contribute into my pension?

The short answer to this is that you have an annual allowance of £40,000.

Or less……………

Or more…………………

Confusing.

You should always take advice each year to make sure that you are not exceeding any limits or even missing out on any tax relief.

The ‘less’ answer comes into play if:

  1. You have adjusted income (normally total taxable income plus pension contributions paid by your employer) over £150,000.  ‘Tapering’ is applied where for every £2 of adjusted income over £150,000 your annual allowance is reduced by £1.  The taper can reduce your annual allowance from £40,000 to £10,000.
  2. You have flexibly accessed a pension.  Your annual allowance is then reduced to £4,000.

The ‘more’ answer comes into play if you can take advantage of any unused annual allowance from the previous three years.  This could be as much as £160,000 in one year.  You do have to have had a pension in place for each of the years that you carry forward from and you have to have earnings in the current tax year of at least the total amount that you are contribution.

Another allowance to keep an eye on also is the lifetime allowance which is currently £1,030,000.

Remember, you have until 5 April 2019 to make your pension contributions for 2018/19.

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Alison obtained a First class degree in Accountancy and Management at UCLAN University. She then went on to qualify as a certified accountant in 2006 and became a founder member in 2011.

Alison trained at a practice in Liverpool and, within her 10 years there, she developed as an accounts manager and obtained a varied portfolio of clients which has provided her with a range of experience in accounts, audit, VAT and taxation.
Alison specialises in giving sound jargon-free advice to a range of small and medium sized businesses.

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