Pensions - The Tapered Annual Allowance Conundrum

Over the years the annual allowance for pensions has changed many times. It’s difficult to keep up with the changes. Today it is possible to contribute up to £40,000 per annum into a pension. However, it may be possible to make even larger contributions using previous years’ unused allowances.

The introduction of the tapered annual allowance means that many high earners are only able to contribute £10,000 into a pension without incurring hefty taxes, normally making larger contributions unsuitable.

You can go through a ‘carry forward’ exercise to use some unused allowances, but once you have done this what can you do?

Here are some options:

• Venture capital Trusts

  • Provide 30% tax relief

  • £200,000 annual limit

• ISAs

  • £20,000 allowance per annum

  • You can also use your spouse’s allowance

• Investment bonds

  • No annual limit
    

For more information please contact us and have a free chat with an Adviser.