A curb to pensions

For many years, there has been a maximum allowance for tax relief that you can put into a pension – more recently, this has been called the ‘annual allowance’.

But despite successive governments encouraging pension saving, we are now in a position where many consultants may be exposed to tax liabilities from their pensions which could come as a shock to them. Ian Tongue recaps on these issues and other areas for consideration.

The headline annual allowance is £40,000, but, unfortunately, during the summer 2015 Budget, this was reduced from 6 April 2016 for those with earnings in excess of £150,000.

This reduction is referred to as ‘annual allowance tapering’ and is basically a reduction of your £40,000 allowance down to as low as £10,000 for those with earnings in excess of £210,000.