½Û×ÓÊÓƵ

Annual allowance charge

Produced by Tolley in association with
Employment Tax
Guidance

Annual allowance charge

Produced by Tolley in association with
Employment Tax
Guidance
imgtext

Introduction

There is no limit on the amount that can be invested in a registered pension scheme by a member or their employer, but there is a limit on the amount that is eligible for tax relief each year which is dealt with through the process associated with the annual allowance. See the Annual allowance guidance note for current rates.

A pension input amount (PIA) beyond the annual allowance may result in a tax charge known as the annual allowance charge unless there is carry forward from previous years available as detailed in the Annual allowance guidance note. The purpose of the annual allowance tax charge is to remove tax relief on any PIA that has been made which exceeds the member’s available annual allowance in the relevant tax year.

The annual allowance charge is defined in FA 2004, s 227 as:

“(1) A charge to income tax, to be known as the annual allowance charge, arises where ―

  1. a)

    the total pension input amount for a tax year in the case of an individual who is a member

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+â„¢
David Everett
David Everett

Partner, Lane Clark & Peacock , Employment Tax


David Everett, is the head of the Pensions Research team at LCP. One of his key roles is to analyse and communicate regulatory and professional developments to audiences both within and outside LCP.David has built up many years of experience in the occupational pensions regulatory field covering a broad spectrum including government policy and legislation, particularly that emanating from the Department for Work and Pensions, the Pensions Regulator, the Pension Protection Fund and other compensation schemes, the Pensions Ombudsman and the Courts and the technical and ethical regulation of actuaries through the Financial Reporting Council and the Institute and Faculty of Actuaries respectively.He also assists the ACA in responding to government consultations.He's the editor of LCP's weekly Pensions Bulletin and undertakes other technical writing for the firm, as well as contributing to TolleyGuidance Employment taxes for the Pensions module.

Powered by
  • 22 Oct 2024 09:11

Popular Articles

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more Read more

Special rate pool and long life assets

Special rate pool and long life assetsSpecial rate poolExpenditure on some types of plant or machinery must, if neither annual investment allowance (AIA) nor first year allowances (FYAs) are available, be allocated to a ‘special rate pool’. Expenditure to be allocated to the special rate pool

14 Jul 2020 13:41 | Produced by Tolley Read more Read more

Payments to trust beneficiaries

Payments to trust beneficiariesThis guidance note considers the trustees powers to make payments and whether the payment made is income or capital.This guidance note is designed to give outline and background for accountants and tax advisers who deal with clients establishing trusts. It is not

14 Jul 2020 12:52 | Produced by Tolley Read more Read more