Annual allowance
In April 2006 the government changed many of the laws that related to pension schemes and the benefits that could be paid from them. One of these changes was the introduction of the annual allowance.
The annual allowance will apply on any increase in your scheme benefits during the year. This is called pension input and also includes any contributions you have made to money purchase plans such as the AVC policy, or a stakeholder pension. We will measure the increase in value of your fund benefits for each pension input period, which in this case is the year ending 31 March.
If your pension input is greater than the annual allowance tax of 40% is payable on the excess.
The annual allowance has been fixed by HM Revenue & Customs (HMRC) up to and including the 2015/2016 tax year as follows.
2007/08 |
£225,000 |
2008/09 |
£235,000 |
2009/10 |
£245,000 |
2010/11
to 2015/16 |
£255,000 |
You must decide whether you have exceeded the annual allowance. If you have, you must tell HM Revenue and Customs (HMRC) and pay the tax due on the excess.