BOOST YOUR PENSION SAVING THROUGH CARRY FORWARD
In 2010 the annual pension contribution allowance was £255,000 per annum, this has since been cut to just £10,000 for higher earners in 2016. Could carry forward be next on the chancellor’s hit list?
We wanted to remind you that this tax year could be your last chance to contribute a large lump sum to your pension. The principle is simple – “Carry Forward” allows you to contribute more than your annual limit by using up any unused allowance from the previous three tax years. For those of you earning over £210,000 per annum, the annual allowance is limited to just £10,000, and so you especially shouldn’t miss the opportunity to boost your pension savings.
Below is an example assuming that the current annual allowance is £10,000 per annum and you have been contributing this amount historically. The total carry forward available in this example is £100,000. As an additional rate taxpayer, this would actually only cost you £63,250.
The importance of using carry forward this year is clear, as you can see from the example below, if you wait until next year you will lose the £50,000 annual allowance from 2013/14. This is likely to be the biggest contribution you could make before retirement.
So, there are still ways of funding your pension over and above the annual allowance. Please do get in touch and we will work out what you have available.