Higher earners: the tapered annual allowance

Following the recent 2015 Summer Budget, there will be a new tapered annual pension allowance brought in from April 2016 for higher earners. This will potentially have the impact of reducing the current £40,000 annual pension allowance to £10,000.

This change will mainly affect those who have “adjusted annual income” over £150,000, but those who earn over £110,000 may also be affected.  All personal and employer pension contributions paid count towards the definition of adjusted income.

For every £2 of adjusted income over £150,000 an individual’s annual pension allowance will be reduced by £1, down to a minimum of £10,000. The level of adjusted income at which the maximum reduction in the pension annual allowance is reached would be £210,000.

Further information will follow in advance of this coming into effect in April 2016, however should you have any questions in the meantime please contact kevinottley@williamduncan.co.uk or jillianriddell@wdwm.co.uk.

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