These can be summarised in four short points:
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.
The bands and rates of Scottish income tax differ from the rest of the UK.
You can use redundancy payments to pay a pension contribution, this article explains how this can be done.
Sadly, many people were made redundant in 2020. Often they might have long service, so a large amount of the redundancy payment could be taxable. For individuals over 55 or in their 50s, paying a pension contribution is very attractive as access is close and it's very tax efficient.
Anyone can become or remain a member of a UK pension scheme, regardless of nationality and UK tax treatment. However, tax relief on member contributions will only be available to those who are 'relevant UK individuals'.
In specie transactions can involve pension schemes in two different ways - in specie transfers and in specie contributions. This article explains the difference.
The annual allowance is a limit on the amount of contributions that can be made without incurring a tax charge.
This article explains how pension tax relief for individuals with high incomes will be restricted by a tapered reduction in the amount of the annual allowance.
This article explains how scheme pays works and the conditions that apply.
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.
This policy paper sets out Royal London’s thoughts on how advisers can set about giving sound advice to clients in this space. In addition to providing a brief reminder on how the annual and lifetime allowances work, we examine the options for paying the charges, set out suggested processes for working out whether an individual is better off financially by being in or out of their scheme and explain the other relevant considerations and regulatory issues.
The reduction in annual allowance and tapered annual allowance has seen a rise in individuals facing an annual allowance tax charge. When this happens, the natural instinct is to avoid the charge – even if this means leaving the scheme. But is this the right thing to do?
There are potential ways that tax charges can be avoided, most notably by using 'carry forward'.
As well as carry forward, there are some other ways that tax charges can be avoided.
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