Contributions and tax relief

This section covers various aspects of contributions paid to UK Registered pension schemes, which can be summarised in four short sentences: Contributions are unlimited. But there are restrictions on the amount of tax relief that will be given. And there are further restrictions which could potentially lead to a tax charge. Fortunately there are ways to try and avoid such a charge.

The basics

This analysis focuses on pension contributions, who can pay them and if there are any restrictions.

Tax relief - employer & member contributions

The tax relief on contributions is arguably the major selling point of pensions.

An employer can pay any amount of contribution for one of their staff but it's up to their local tax office to decide whether the whole contribution receives tax relief. A member can pay as much as they like into a pension but there's a limit on the amount of tax relief they will be given.

For higher earners, further tax relief may be given. In some scenarios, up to 60% tax relief is available.

Annual allowance and pension input periods and amounts

The annual allowance is a limit on the amount of contributions that can be made without incurring a tax charge.

These articles explain how pension tax relief for individuals with high incomes will be restricted by a tapered reduction in the amount of the annual allowance.

These articles explain the transitional pension input period rules for DC and DB arrangements.

This article explains how pension input amounts operated since the 8 July 2015 budget announcements. 

This article explains how pension input periods operated prior to the 8 July 2015 budget announcements. Since then pension input periods are aligned with tax years for all registered pension schemes.

Carry forward

There are potential ways that tax charges can be avoided, most notably by using 'carry forward'.

In specie

In specie transactions can involve pension schemes in two different ways - in specie transfers and in specie contributions. This article explains the difference.

Other ways to avoid (or mitigate) tax charges

As well as carry forward, there are some other ways that tax charges can be avoided.

And here are a few related topics:

Last updated: 01 Nov 2017

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