New rules for Pension Annual Allowance
The reduction in the Annual Allowance from £255,000 to £50,000 takes effect from 6th April 2011, which is less than 2 months away. Clients should be considering, whether it is in their interests (should they be in the lucky position to afford this) to maximise contributions in the 2010/11 tax year.
We remind you that from 6th April 2011 anyone who has not used their full Annual Allowance in any tax year can “carry forward” that unused allowance for up to 3 years. So if someone makes a contribution of £50,000 in 2008/09, £50,000 in 2009/10 and £30,000 in 2010/11, they could make a contribution of £70,000 in 2011/12 and get full tax relief on the £70,000. Note though that for years prior to 2011/12 the “Annual Allowance” for this “carry forward” will be £50,000 (not £255,000 etc).
