SJP Pension allowances

Paying into a pension is a smart way to invest in your future and can help you achieve a comfortable retirement.

There is no limit on how much you can pay into your pension each year, however there is a limit of the total amount of contributions you can pay into your pension and claim tax relief, this is set by your ‘Annual Allowance’.

The pension allowance 2024/25

In the tax year (2024/25), the standard Annual Allowance is £60,000 per year.

This covers the amount that you can pay into your defined contribution pensions and receive tax relief, including your contributions, your employer’s, and anyone else who might pay in on your behalf.

The maximum amount you can personally contribute and receive tax relief on is restricted to the higher of £3,600 and 100% of your relevant UK earnings.

The Annual Allowance also covers your defined benefit pension (if you have one), and is calculated differently, based on increases in the capital value of the retirement benefits.

Annual Allowance

£ 60000

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

What if you want to pay more into your pension than your Annual Allowance?

If you wish to pay in more than your current Annual Allowance and still benefit from tax relief, you can ‘Carry Forward’ any unused allowance from the previous 3 years.

You must have been a member of a Registered Pension Scheme in the tax year you wish to carry forward unused Annual Allowance.

You will need to use up your current year’s allowance first, but this could be useful if your earnings vary from year to year, or if you are self-employed for example.

Be careful if you think you are going to exceed your Annual Allowance. Any excess contribution will be taxed in such a way as to effectively cancel out the tax relief you would have received on the excess amount.

The liability for this falls to the individual, which means that you must declare it through your self-assessment tax return.

Increase your pension allowance using Carry Forward

‘Carry Forward’ is a way that you can use up any remaining unused Annual Allowance for the previous three tax years.

Including the current tax year allowance means that you can potentially pay up to £200,000 into your pensions.

Carry Forward can be a really useful way to catch up on your pension contributions, especially if you are self-employed, or perhaps received a bonus, or inheritance in a particular year.

The rules can become more complex depending on your earnings, so it’s best to seek advice.

Frequently asked questions

How can I see my pension contributions?
What is the minimum pension contribution?
What is the maximum pension contribution?
What happens if the Annual Allowance is exceeded?
How do you know if you have exceeded the Annual Allowance?
Can I change the amount I contribute to my pension?
How are my pension contributions calculated?

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time Tax relief is dependent on individual circumstances.

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SJP Approved 05/04/2024