Pension tax allowances
The Annual Allowance
The Annual Allowance is the amount of pension saving you can make in a single year and receive full tax relief. This includes the pension saving you make in RPF, as well as any benefits you have built up in any other employers’ pension plans or personal pension arrangements.
From 6 April 2023 the Annual Allowance has been set at £60,000. It was previously £40,000. You may be able to carry forward any unused Annual Allowance from the three previous tax years without paying additional tax to help offset any large one-off pension savings which would otherwise take you over the Annual Allowance.
The Lifetime Allowance (LTA)
The Lifetime Allowance charge which was previously set at £1,073,100 has effectively been abolished. Nobody will face an LTA charge from 6 April 2023 (although benefits will still be subject to income tax). Pension savers will not have to pay penalty tax charges for going over the LTA in the 2023/24 tax year, and the LTA will be abolished altogether from April 2024 (subject to a new Finance Bill being passed).
Please Note: The information above has not been provided as financial advice. If you require advice on how this may affect you, you should consider speaking to an independent financial adviser.