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Pension premiums

There is no limit on the amount that may be contributed to a registered pension scheme. The maximum amount on which an individual can claim tax relief in any tax year is the greater of the individual's UK relevant earnings or £3,600.

If total pension input exceeds the annual allowance of £245,000 there is a tax charge at 40% on the excess. This limit does not apply in the year that full pension benefits are taken.

Maximum age for tax relief 74
Minimum age for taking benefits 50
Lifetime allowance charge - lump sum paid 55%
  - monies retained 25%
on cumulative benefits exceeding £1,750,000*
Maximum tax-free lump sum 25%*
*Subject to transitional protection for excess amount.

2010 and beyond

The annual allowance and lifetime allowances already announced up to 5 April 2016.

  Annual allowance Lifetime allowance
2010/11 to 2015/16 £255,000 £1,800,000

Budget 2009

Measures introduced in the budget will have an impact on the availability of tax relief for individuals with an income of £150,000 or more, change:

  • The pattern of normal regular pension contributions; or
  • The normal way in which pension contributions are accrued; and
  • Total pension contributions / benefits accrued (pension savings) exceed £20,000 a year

In these circumstances please contact us for advice.

Notes

  1. Transitional reliefs are available to protect pension rights built up before 6 April 2006 by registering and protecting those rights, including lump sum rights in excess of £375,000. A claim for this transitional relief must have been made by 5 April 2009. Certain pre-existing lump sum rights of more than 25% are automatically protected.
  2. The annual allowance and lifetime allowance are to be frozen for a five year period from 6 April 2010.