Tax limits

Watch ​our short video clip to learn how you benefit from tax-free savings into the Fund.

But remember the limits!


There are limits on how much you can save towards your pension tax-free. You will be charged tax on any pension savings you make that go over these limits...  
 

Annual Allowance = £40,000

The Annual Allowance is the total amount you can pay into all of your pension arrangements each tax year before tax will be charged. Each £1 of annual defined benefit pension built up is treated as £16 for this purpose. The lump sum you have built up is then added to this defined benefit.
 
You’ll get a statement from your pension provider telling you if you go above the Annual Allowance.
 
You can carry forward any unused Annual Allowance for up to three years. 
 
 

Tapered Annual Allowance = between £10,000 and £40,000

Your Annual Allowance will only be tapered if you are a high earner and your ‘adjusted income’ (your taxable income plus your Pension Input Amount) is £150,000 or more and your taxable income is over £110,000. 
 
For every £2 of adjusted income over £150,000, your Annual Allowance reduces by £1 (down to a possible minimum of £10,000).

If your total taxable income is over £110,000, you should find out more information to check if the Tapered Annual Allowance applies to you. 

Money Purchase Annual Allowance = £4,000

This is the total amount you can pay into any defined contribution pension arrangements (such BRASS or AVC Extra) each tax year before tax will be charged.
 
The Money Purchase Annual Allowance only ​affects you if you have already taken some of your defined contribution savings as taxable cash or a short-term annuity from a flexi-access drawdown fund, cash from a pension pot (‘uncrystallised funds pension lump sums’) or if you have taken more than the limit from a capped drawdown fund.    
 
  

Lifetime Allowance = £1.03 million (increasing to £1,055,000 from 6 April 2019)

The Lifetime Allowance is the total amount you can pay into your pension arrangements over your lifetime before tax will be charged.
 
Each £1 of annual defined benefit paidup is treated as £20 for this purpose. Any lump sum paid is then added to this. You ​may be able to apply to protect your Lifetime Allowance and you can learn more by visiting www.gov.uk/tax-on-your-private-pension/lifetime-allowance.       

Scheme rules

You're responsible...

... for monitoring how much Annual and Lifetime Allowance you have used and reporting any excess to Her Majesty’s Revenue & Customs (HMRC) using a Self assessment tax return form