Pension Premiums Tax Rates

Winters Chartered Accountants and Registered Auditors
29 Ludgate Hill
London EC4M 7JE
England, UK

Tel:
+44 (0) 20 7919 9100

Fax:
+44 (0) 20 7919 9019

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Tax Rates

Pensions - SIPPs and SSAS

Maximum personal contributions are equal to the higher of:

- £3,600; and
- 100% of Net Relevant Earnings, subject to the annual allowance, which for 2006/07 is £215,000

Personal contributions can be paid in excess of 100% of net relevant earnings, though no tax relief will be available for any excess. In addition, personal contributions exceeding the annual allowance will be subject to a tax charge of 40%.

Employer contributions are not subject to the 100% of net relevant earnings limit, only the annual allowance but any contributions must still be justified as a legitimate expense of the business in the usual way. Any employer contributions in excess of the annual allowance will result in a 40% tax charge on the member.

It is worth noting that the annual allowance does not apply in the year you begin drawing benefits from all of your pensions, allowing high earners and/or employers to fund significant contributions immediately prior to retirement.

At retirement the fund is subject to the lifetime allowance, which for 2006/07 is £1,500,000.. Funds in excess of this may be subject to a 55% tax charge unless Enhanced or Primary Protection has been arranged.

See also related Wealth Management articles:

Disclaimer
The information on these tax rates is based upon the 2006 Budget and The Finance Act 2006.

If you would like to find out more about our services and how we might be able to assist you, please complete the tax contact form .
We can then have the relevant specialist contact you to briefly discuss your needs. Any such telephone discussion, and of course, any further initial consultation is entirely complimentary.