The annual allowance is the amount which an individual can contribute towards registered pension scheme in a tax year and gain tax relief. This document also includes: tapering of annual allowance; Exemption from the annual allowance rules; Pension input period; Calculation of pension input amounts; Carry forward of unused annual allowance and annual allowance charge.
Points discussed within this guidance note:
> Amount of the annual allowance
The maximum amount that an individual can build up in tax-relieved pension savings is limited in two ways. The first is an annual allowance which limits the amount that can paid into pensions and benefit from tax relief. The pension annual allowance is £40,000. (The second is the lifetime allowance which limits the total tax-relieved value that can be accumulated into registered pension schemes.).
>> Tapering of annual allowance ― high income individuals
>> Money purchase annual allowance
> Exemption from the annual allowance rules
The annual allowance rules do not apply in certain situations. This is because the legislation deems the pension input amount to be nil. This note sets out these exemptions.
> Pension input period
>> Aligning the pension input period to the tax year ― transitional arrangements applied to 2015/16
> Calculation of pension input amounts
> Carry forward of unused annual allowance
>> 2016/17 tax year onwards
>> Advising on unused annual allowance carried forward
> The annual allowance charge
>> Paying the annual allowance charge
> What do you need to do?
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