Pension reminder for 2016/17
It should be noted that the following changes to allowances have been introduced with effect from 6 April 2016:-
- Tax efficient upper limit fell to £1m.
- If fund value and age determine that lifetime allowance protection is suitable, you can obtain fixed protection at the current level of £1.25m but all pension contributions must stop without any payments being made in 2016/17 Tax Year.
- If you are intending to apply for fixed protection it is crucial to ensure that all contributions ceased before 6 April 2016.
This is the tax efficient limit on contributions that can be paid into a registered pension scheme. The allowance is currently £40,000, and will continue at this level for those with total income from salary, bonus, dividends, savings interest, rent of up to £110,000. Where the total exceeds this amount any employer pension contributions must be added to produce an “adjusted” income figure.
- If adjusted income exceeds £150,000 the annual allowance will reduce by £1 for every £2 of income above £150,000.
- If adjusted income exceeds £210,000 a flat annual allowance of £10,000 will apply.
For those affected, if may be possible to maintain contributions above the new limits by allocating payments against unused annual allowances from the last three tax years, where previous contributions did not fully utilise these.Talk to Barnes Roffe today