How to get the most out of pension tax advantages
By Cristian Angeloni, 3 Feb 22
Personal finance experts share 10 tips savers should be aware of
“The pension annual allowance was £255,000 in 2010/11. As it is now £40,000, it is affecting a lot more savers than it used to.
“Pensions ‘carry forward’ rules allow you to use unused allowances from up to the three prior tax years in the current tax year – provided you have already maximised your current annual allowance and were a member of a pension scheme in the tax year you are carrying forward from,” Lowery said.
“Notionally, you could potentially carry forward up to £120,000 of unused allowances and add them to this year’s £40,000 allowance. Tax relief would be applied at your current marginal rate and so carry forward can be particularly attractive to someone whose earnings have risen significantly.
But Higham warned that “it is worth noting that you are still limited to 100% of your salary in the tax year you are making the contribution, regardless of how much you have available from previous allowances”.
Tags: Pension
