What restrictions are there on tax relief?
There are restrictions to:
- Your annual allowance: the maximum tax-free build-up of pension savings you can make each year
- Your lifetime allowance: the overall value of pension savings that you can build up over your entire working lifetime before a tax penalty applies
Whether this is an issue for you will depend on a range of factors such as how much you earn, how long you have been a member of the Telefónica UK Pension Plan, any pay rises you may have received and the extent to which you pay additional voluntary contributions (AVCs) or make extra payments into personal pensions. The guidance note tells you more.
Latest allowances and restrictions
From 6 April 2016 the allowance values are:
- Annual allowance - when your adjusted income (total taxable income less certain tax relief), exceeds £150,000 your annual allowance will not be £40,000 (as it was for the 2015 tax year). Instead this will be tapered down to as low as £10,000 (depending on your income).
- Lifetime allowance - £1 million (changed from £1.25 million)
What does this mean?
For 6 April 2016, any pension saving over the course of your life over £1m will be subject to a tax charge of up to 55% when your benefits are put into payment. For more details click here.