Saving in a tax efficient manner towards your retirement is always desirable and pensions make this possible, along with the added benefit of additional flexibility.
When it comes to your retirement, you want the reassurance that you’ll be able to live comfortably and enjoy the things you want to do in later life. Despite the ever-changing pensions landscape, saving for your retirement and planning ahead is still as vital as ever. Even if you already have a private pension scheme, it’s important to review your plan to make sure it’s on track to give you the lifestyle you want in later life.
At McMillan Financial Advice, we can advise on the following:
Tax relief on pension contributions
Tax relief may be given on personal contributions up to the higher of £3,600 and 100% of relevant UK earnings earned in the tax year in which the member contribution is paid.
Tax relief may be given on employer contributions that meet wholly and exclusively requirements by allowing a deduction in the calculation of taxable profit.
Annual Allowance
The annual allowance is the maximum amount of pension savings in a tax year that can benefit from tax relief. The standard annual allowance for the 2025/26 tax year is £60,000.
Where the annual allowance is exceeded, an annual allowance charge will arise.
Carry Forward
Unused annual allowance from the three previous tax years may be carried forward to the current tax year. In the 2023/24 and 2024/25 tax year, the annual allowance was also £60,000 but in the 2022/23 tax year, the annual allowance was £40,000.
Tapered Annual AllowanceFor high-income individuals, the annual allowance may be tapered to a minimum of £10,000 in the 2025/26, 2024,25 and 2023/24 tax years and to a minimum of £4,000 in the 2022/23 tax year.
Money Purchase Annual Allowance
Individuals that have flexibly accessed retirement benefits will be subject to the money purchase annual allowance that caps tax relief on money purchase pension contributions to £10,000 per tax year.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
