FYE, Tips Pension – Earner OVER £130,000

FYE, Tips Pension – Earner OVER £130,000

Anti-Forestalling rules will restrict the level of tax relief for individuals with ‘relevant income’ of £130,000 or more (in this or one of the previous two tax years)

This blog post will show you how some people could actually pay up to 12x more than they thought (£255,000 instead of £20,000) into a pension and still obtain full tax relief

Two options are:
1.
Reducing relevant income by making
a) a pension payment of up to £20,000
b) a gift aid payment

2.
Closing the pension input period (see yesterday’s blog for a jargon buster on pension input periods) before tax year end – then making higher payments as soon as the new tax year begins

Case Study
Brian Jenkins earns £149,999. He could make a gross pension payment of £20,000, thus reducing his total relevant income to £129,999. At this level the anti-forestalling rules don’t apply so Brian can now make full use of the £255,000 annual allowance!