TAX AND YOUR BENEFITS
There are controls on the total amount of contributions you can make into all pension arrangements and receive tax relief and on the pension savings you can have before you become subject to a tax charge. This is in addition to any tax due under the PAYE system on pension payments.
You can, if you wish, pay up to 100% of your taxable earnings in any tax year (or £3600 if greater) into any number of concurrent pension arrangements of your choice and be eligible for tax relief on the contributions.
There are TWO main allowances for pension savings – an Annual Allowance and a Lifetime Allowance. There are also protections for benefits earned up to 5 April 2006 if you are a high earner affected by the introduction of the Lifetime Allowance from
6 April 2006.
Most people will be able to save as much as they wish with full tax relief as their pension savings will be significantly less than the allowances.
Are there any limits on how much I can pay in contributions?
At the present time there is no overall limit on the amount of contributions you can pay, although there is a limit of £5,000 on the extra LGPS pension you can buy and the amount you can pay to the Scheme’s Additional Voluntary Contribution (AVC) arrangement is limited to 50% of your earnings. Although there is no overall limit on the amount of contributions you can pay to all schemes, tax relief will only be given on contributions up to a total of 100% of your taxable earnings.
What are the tax controls on my pension savings?
The Annual and Lifetime allowances cover any pension benefits you may have in all tax-registered pension arrangements – not just the LGPS – but exclude the State Pension.