Don’t delay – Maximise your Pension Contributions before the deadline of 6 April 2016!

In July 2015’s Budget George Osborne confirmed that tax relief on pension contributions for high earners would be restricted from 6 April 2016 by introducing a tapered Annual Allowance in line with the following table:


Annual Allowance

£0 – £150,000












£210,000 or more


Under the new rules there will be a reduction in the Annual Allowance of £1 for every £2 of ‘adjusted income’ over £150,000 down to a minimum Annual Allowance of £10,000.

Whilst on the surface, this change looks relatively straightforward to understand, it brings with it a level of additional complexity not least because income, here, is based on adjusted income which can include the value of pension contributions. This means that salary sacrifice is not an effective way of avoiding this. Similarly, changes were also made to Pension Input Periods (PIPs) with immediate effect.

Although HMRC estimate that only 300,000 people have income of more than £150,000, the inclusion of pension contributions in the definition of adjusted income may mean that people with income much closer to the £110,000 ‘threshold income’ figure will be affected by this change and could see their tax relief on pension contributions reduced next tax year.

Individuals who are affected by these changes have a limited opportunity, therefore, to maximise their pension contributions now, making best use of the tax relief available, and pay up to £180,000 (depending on the level of contributions already paid in the last three years) before 6 April 2016.

After 5 April 2016, individuals will lose any unused Annual Allowance from 2012/13.

Don’t let it be you.

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