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Act Now – Maximise your pension contributions while you can?

By August 19, 2015February 12th, 2019No Comments

In George Osborne’s first budget of a conservative government he announced that any individual earning above £150,000 from April 2016 will only have an annual pension allowance of £10,000 compared to the current allowance of £40,000.

Anyone earning between £110,000 and £150,000 will have their annual allowance tapered from £40,000 to £10,000.

Due to the changes proposed by George on the 9th July, everyone will have an annual allowance of £80,000 for the tax year running from 6th April 2015 to 5th April 2016 compared to the current £40,000. This represents a significant tax planning opportunity for all, but specifically high earners who will be subject to much smaller allowances from next year.

The £80,000 allowance for this period has been split equally into two periods; one running from 6th April 2015 to 8th July 2015, and the second from 9th July 2015 to 5th April 2016.


If an individual contributed £13,000 in the period between 6th April 2015 to 8th July 2015, then potentially an individual will be able to make a contribution of £40,000 for the period from 9th July 2015 to 5th April 2016.

In addition, any unused annual allowance from the previous 3 years can be added to these amounts in the normal way.

There is still some uncertainty over the final rules and we will have to wait for the Finance Bill 2015 to be passed by the government, but it is increasingly likely that most individuals will be able to take advantage of the additional £40,000 allowance running from 9th July 2015 to the 5th April 2016.

The rules around allowances in this transition period to next year are extremely complicated; we would recommend that you take advice before making any contributions in excess of the standard £40,000 allowance. Punitive Tax charges apply for anyone exceeding their allowances.

If you would like to discuss how you can maximise your pension contributions, please contact your usual consultant or call us on 0161 975 6700.