Lifetime Allowance

Lifetime allowance is a statutory limit which caps the total savings within your pension funds. Fund values above that limit can be subject to punative tax charges. The Lifetime Allowance limit was set at £1.5 million when it was introduced in 2006.

The Lifetime Allowance Limit is set at £1.8 million for 2011/2012 (for those without transitional protection).

From 6th April 2012 Lifetime Allowance will be reduced to £1.5 million.
In conjunction with this is a new form of protection called 'fixed protection'.
Fixed protection will be available to people who expect their pension savings to exceed £1.5 million when they come to take benefits. Those with existing primary or enhanced protection will continue to be unaffected by the reduction in Lifetime Allowance.

Unsure if you have protection on your pension funds? Let us assist you.

Should you have a seven figure pension fund value, you should speak to one of our Lifetime Allowance experts to ensure you avoid excessive taxation.

Annual Allowance

Whilst an individual may contribute up to 100% of annual earnings into a pension scheme, total contributions are limited by an annual allowance.
Annual allowance means that there is a limit to the amount any individual can fund their pension or SIPP in a single tax year and obtain full tax relief. That figure was originally set at £215,000 when it was introduced in 2006, and has rose in stages unitl 2010.

Annual Allowance for tax year 2011/2012 is £55,000.

This was dropped from an annual allowance of £255,000 for tax year 2010/2011. The intention is for annual allowance to remain at £50,000 until 2015/2016, after which it may be indexed.

Where pension savings exceed £50,000 in any tax year, an individual may 'bring forward' unused relief from the previous three tax years.
(For the purposes of this benefit annual allowance for previous years will be considered £50,000.)

Contributions in excess of the annual allowance may be made but will be subject to a tax charge at the individual's marginal tax rate.

Unsure how much to contribute to your pension this year? Let us assist you.

Should you have an amount you wish to contribute to your pension scheme you should speak to one of our Annual Allowance experts to ensure you claim maximum tax relief.

Childrens pensions

It is possible to contribute to a pension scheme on behalf of a child as any individual (even those without income) may contribute up to £3,600 per annum into a registered pension scheme.

SIPPs Contributions

Contributions to SIPPs fall under the personal pension contribution rules.

This means major tax advantages for you.

Pension contributions are eligible for tax relief. This means that a £100 contribution will mean a cost of just £80 to you. If you are a higher rate tax payer you can claim another 20% tax relief on your contribution. Therefore a £100 contribution will cost a higher rate tax payer just £60. In any single tax year you may contribute up to 100% of your earnings.

If you don’t pay tax you can still obtain basic rate tax relief on the first £2,880 you contribute each tax year. Therefore the Government is adding £720 to top up your pension fund contribution to £3,600. This means you can also make contributions on behalf or spouses or children and obtain the same tax relief for them. If you fund a pension for your child at £2,880 per year until they are aged eighteen they will have a fund of £64,800 plus growth, of which you will have contributed just £51,840.