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Basic rules of relief for personal pension contributions
KEY POINTS
- Pension contributions themselves are unlimited but the tax relief relating to them is.
- Excessive contributions may also incur a liability in the way of the annual allowance charge.
- An age limit of 75 applies to pension contribution tax relief.
- Employer contributions to an employee’s pension scheme must satisfy the normal “wholly and exclusively” test for relief to be given against business income.
- An annual allowance charge can be paid by the pension plan under the “scheme pays” rules.
The initial effects of the new rules for accessing pension funds since 6 April 2015 are now being discussed in the media.
The chancellor recently announced that 60 000 people have withdrawn about £1bn from their funds since the start of the tax year and trouble is brewing...
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