The Pension Annual Allowance tax charge depends on your marginal rate of tax. Where their income exceeds £150,000 it would be at 45%. Thus if the pension input for 2018/19 was £40,000 and the limit is tapered to £10,000 the excess of £30,000 would incur a £13,500 tax bill on top of their normal tax liability.

You can ask your pension provider to pay HMRC out of your pension fund if you’ve gone over your annual allowance and the additional tax is more than £2,000. The deadline is 31 July 2019 for the 2018/19 tax year.

If  you would like assistance checking whether or not you have gone over your annual allowance, please contact us on 01295 477 250 alternatively you can email hello@progresswithassureuk.com.

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