Skip to content
Curtis Banks Curtis Banks
  • About
    • Our People
    • Careers
    • ESG
  • SIPP
  • SSAS
  • Property
    • Property Videos
  • Investments
  • Literature
  • Insights
    • CPD On Demand
    • Adviser Insights
    • Adviser tools
    • Case Studies
    • News
  • Contact
  • Share Price:  267.92 p
  • Investors
  • Contact

Annual allowance fact sheet

Back to Case Studies

Share this article:

There's a limit to how much you can contribute each year while benefiting from tax relief: read about the annual allowance below.

Definitions

What is the annual allowance?

The annual allowance is the maximum value of pension savings you can make each year while benefiting from tax relief. If you’re unclear on the tax relief rules, you should read our ‘Contributions and Tax Relief’ fact sheet first.

Think of it this way: your income each year determines how much tax relief you can claim, and the annual allowance determines how much you can keep.

Rules

How much is my annual allowance?
The standard annual allowance for the 2021/22 tax year is £40,000. However, there are variations which may affect you.

If you haven’t fully used your annual allowance in previous tax years you may be able to use carry forward to get a higher annual allowance. If you are a high earner, or if you have already accessed some of your pension benefits, you may be subject to the tapered annual allowance or money purchase annual allowance (or both). Please read our separate fact sheets on these topics for more information.

What kinds of pension savings count towards the annual allowance?

If you are below age 75, your personal contributions and third party contributions (including the value of the tax relief) count towards the annual allowance. All employer contributions also count towards the annual allowance.

If you have a defined benefits scheme (where your pension benefits are based on factors such as your salary and years of service), the benefits built up during the year also count towards your annual allowance. Your defined benefit scheme provider will be able to confirm the value that will count towards your annual allowance.

Remember that the annual allowance does not apply per pension scheme; it applies to all of your pensions collectively.

What happens if I exceed my annual allowance?

If you exceed your annual allowance, you will incur an annual allowance charge on the excess amount. The annual allowance charge amount is found by calculating how much income tax would be due if the excess amount was added to your income for the year. If you exceed your annual allowance, you’ll need to tell HMRC by including the details on your Self Assessment tax return.

How do I pay an annual allowance charge?

There are two ways to pay an annual allowance charge. You can either pay the charge yourself by way of your Self Assessment tax return, or under some circumstances you can arrange for your pension scheme administrator to pay the charge and reduce your pension accordingly. Please read our guidance note, ‘Paying an Annual Allowance Charge from your Pension’, for more information.

Case Study

Annual allowance fact sheet

pdf | 112 KB
Download
  • Careers
  • Investors
  • Privacy
  • Modern Slavery Statement
  • Legal
  • Accessibility
Curtis Banks Curtis Banks
  • Curtis Banks Twitter
  • Curtis Banks Linkedin
© 2019 Curtis Banks Group. All rights reserved.
This website is aimed at professional advisers and firms rather than consumers. We do not offer advice on - or judge the suitability of – SIPPs or their investments. If you are a consumer interested in a SIPP you should seek the advice of a financial adviser.
Site by Mr B & Friends

Our secure
portal

Your Future SIPP

Log in

Curtis Banks

Log in

Suffolk Life

Log in
  • Please note: When creating a User ID, please do not use your email address as your User ID as this must be limited to 30 characters maximum.

  • Please note: New registrations for portal access for Advisers will take up to 1 working day to process and you will receive confirmation once your account has been activated. Please do not try and log in before your confirmation is received.

  • Advisers and Clients with previous Suffolk Life portal access should now log in to the Your Future SIPP or Suffolk Life portal. If this is the first time you have logged in to Your Future SIPP portal, simply login with your Suffolk Life details and for security reasons you will be prompted to change your password for future access.

  • Clients with no portal access please contact SIPP Support via phone 01473 296 969 or email sippsupportteam@curtisbanks.co.uk to request an account.

  • Curtis Banks users who have Curtis Banks SIPP or SSAS should continue to log in via the Curtis Banks portal. For any questions regarding Curtis Banks portal access please click here to contact the relevant team.
Tell us what you are
looking for?
    How can i help you today?

    How can I help you today?