Saving for Retirement
Making the most of the annual pensions allowance is a particularly attractive option for higher earners as we approach the end of the tax year.
Personal tax relief applies to pension contributions, although this may be restricted by the annual allowance or net-relevant earnings.
The annual allowance for 2023/24 is £60,000 for those with an adjusted annual income from all sources, including pension contributions, of £260,000 or under a threshold income of £200,000 or less.
An individual’s annual allowance reduces by £1 for every £2 of adjusted income over £260,000 – down to a minimum of £10,000, although this usually applies to those with a total income of £312,000 or more.
Provided you had a pension fund during a previous tax year, it is possible to carry any unused allowances forward, up to a maximum of three years.
If you earn £50,000- £100,000 annually, contributing to a relief at source pension through your employer, you have probably overpaid income tax to HMRC.
Key Considerations
- If you’re over 55, consider the potentially serious tax implications of accessing your pension early – and always seek advice before you do this.
- Do you have unused allowances from previous tax years that are due to expire soon?
- Have you reviewed both your and your partner’s pension contributions?
- Can you afford to pay more into your pension?
- Are you aware of the potential inheritance tax benefits of maximising your pension fund?
- Review your letter of instruction to the trustees of your pension fund.
- If you earn £50,000-£100,000 annually, contributing to a relief at source pension through your employer, you have probably overpaid income tax to HMRC. Given the 40% income tax bracket for your salary range, the default 20% relief at source on your pension contributions means you're missing out on 20% tax relief.
Year-End Tax Guide 2023/24
If you would like to access our full year-end tax guide, simply click here to view the PDF.
Alternatively, you can view an area specific mini blog from the list below:
1. Personal Allowances and Reliefs
2. ISAs
6. Business Asset Disposal Relief
8. Tax-Efficient Staff Benefits
10. VAT
11. Penalties
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