Pensions

Question 1

What is the annual allowance on pension contribution (by both employees and employers totalled)?

Answer 1

£60,000.

Question 2

If pension contributions exceed £60,000 - what happens to the excess?

Answer 2

It is taxed after all other income (non-savings, savings & dividend) has been taxed using the marginal rate of tax.

Question 3

What is the maximum tax-free lump sum that can be drawn out of the pension?

Answer 3

25% of the pension but this is capped at £268,275.

Question 4

What is the maximum gross pension contribution made by an individual that will attract tax relief?

Answer 4

Higher of:
- 100% x relevant earnings (taxable trading profits + employment income)
- £3,600

Question 5

What is considered relevant earnings?

Answer 5

Taxable trading profits + employment income