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Annual Limits on Pension Contributions

HMRC have been publicising the threat of imposing tax charges on excessive pension contributions, so I thought this was a good time to revisit just how much you can put in in any one year.

The limit for 2013/14 is £50,000.

From 2014/15 it will be £40,000.

These are subject to an overriding limit of £3,600 or 100% of net relevant earnings.

They are also capable of being increased by any part of your annual allowance not used for the last three years in which you were part of a qualifying pension scheme.

These are the limits of contributions into your scheme, so include amounts paid in by an employer.

These limits are not measured in tax years, but instead in what are known as input years.  The input year is the period to which your pension scheme runs its own accounts.  The end of your scheme’s input year determines which tax year your contribution counts towards for the purposes of the annual limit.  So, if your scheme runs a calendar year, then anything paid in after 1st January 2014 counts towards the £40k limit.

So, don’t go getting clever and putting £50k on 5th April.  You will need to get much cleverer than that and ask your scheme administrator what your input period is.

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