PR HartleyFCA

Chartered Accountant & Registered Auditor

Pensions


Annual Tax Free Allowance

added 3 March 2016

From April 2016, the government will restrict the annual tax-free amount that higher earners can pay into their pension. The current £40,000 annual contributions limit will be reduced by £1 for every £2 of 'adjusted income' over £150,000. For those earning over £210,000, the annual contributions limit will not fall below £10,000.

Adjusted income includes an employee's salary, the value of their employer's pension contributions, and other non-employer-related income. It is certain, therefore, that the changes will affect some individuals on lower salaries. Calculations by PwC suggest that anyone earning over £90,000 a year could potentially be affected.

More information on the changes to the Annual Tax Free Allowance can be found on the gov.uk website.


Savings Limit

added 3 March 2016

From April 2016 the lifetime allowance for retirement savings drops from £1.25 million to £1 million.

Retirement savers already exceeding the cap can apply for protection - those that do not make the application will pay fines if their pension funds grow above the lifetime allowance limit.

More information on the changes to the Reduced Savings Limit can be found on the gov.uk website.