Here at Green Accountancy we are not independent financial advisers, and cannot recommend anyone should or should not make a pension contribution. We can advise on the tax consequences of pension contributions.
It is widely being speculated in the tax press that this year’s budget may reduce the scope or extent of tax relief on pension contributions. For example, it may be that higher rate tax payers only get tax relief up to the basic rate of tax. Whereas currently all tax payers get full tax relief on pension contributions (up to certain limits).
Of course, we can’t predict the budget. Some commentators are suggesting that tax relief could be more generous after the budget.
If you are thinking of making a pension contribution prior to this years budget on 16 March 2016 then you should act now. To be effective on a certain date, pension contributions must actually be paid by that date (not just intended or even contracted).
Pensions can be paid up to the lower of earnings*; £40,000 annual allowance (accumulates over up to four years); £1.25m lifetime allowance (reducing to £1m from 6.4.16). Note that the Chancellor has already announced that for very high earners, the £40,000 limit will be reduced from 6.4.16.
*Generally employer contributions are are not limited to salary as the “earnings” figure effectively includes the employer pension contribution.
If you would like to discuss pensions with an IFA, one that you may wish to contact is:
Investing Ethically Ltd
33 Whiffler Road
Norwich, NR3 2AW
Office: 01603 309020
Fax: 01603 405862