How much can I contribute into my pension?

The short answer to this is that you have an annual allowance of £40,000.

Or less……………

Or more…………………

Confusing.

You should always take advice each year to make sure that you are not exceeding any limits or even missing out on any tax relief.

The ‘less’ answer comes into play if:

1. You have adjusted income (normally total taxable income plus pension contributions paid by your employer) over £150,000.  ‘Tapering’ is applied where for every £2 of adjusted income over £150,000 your annual allowance is reduced by £1.  The taper can reduce your annual allowance from £40,000 to £10,000.
2. You have flexibly accessed a pension.  Your annual allowance is then reduced to £4,000.

The ‘more’ answer comes into play if you can take advantage of any unused annual allowance from the previous three years.  This could be as much as £160,000 in one year.  You do have to have had a pension in place for each of the years that you carry forward from and you have to have earnings in the current tax year of at least the total amount that you are contribution.

Another allowance to keep an eye on also is the lifetime allowance which is currently £1,030,000.

Remember, you have until 5 April 2019 to make your pension contributions for 2018/19.

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