Tax Year End Planning: Pensions

Higher Rate (50%) Tax Payers: Tax Relief on Pension Contributions could be at risk. 

Recently, there has been much comment regarding the potential alteration to Higher Rate Pension Tax Relief.

To be on the safe side it might be an idea to ensure all top-up pension contributions for this tax year are processed before the next Budget is announced on Wednesday 21st March 2012.

So, if you typically make a year-end top-up contribution to your pension and you are a higher rate taxpayer (gross income over £150k)…………

***** Make Tuesday 20th March 2012 your Tax Year End *****  


Carry forward pension rules change – use your 2008/2009 allowance now.
5th April 2012 marks the last chance to pick-up any unused 2008/2009 allowance. If you wish to make aggregate gross  contributions (including employers’) into your pension of more than £50,000 this tax year, then utilise carry forward. Don’t lose the past allowance from  2008/2009 pension annual allowance in your carry forward calculations. 


Lifetime Allowance (LTA) and Fixed protection
If you believe your pension may be greater than the new reduced £1.5m LTA value coming April 6, 2012 when you come to take benefits, you should act now. By applying for fixed protection by 5th April 2012 you can retain an LTA of £1.8 million, and protect your pension from future excess tax charges.  Final Salary pensioners would multiply their expected pension figure by 20 and add any cash lump sum in calculating whether they risk breaking the limit. The LTA is not due to be increased for some time, it is rumoured.