Item Welcome to the NHS Business Services Authority Knowledge Base, the place to ask us anything you need to know

Document What is Annual Allowance?

Annual Allowance, introduced on 6 April 2006 as part of the Finance Act 2004, is the maximum amount of pension growth a person can have during a ‘pension input period’ that will benefit from tax relief.

This includes pension savings that the person makes themselves plus any made on their behalf by a third party. The Annual Allowance applies to pension benefits across all registered pension schemes.

The Annual Allowance reduced significantly from £255,000 to £50,000 on 6 April 2011. The Annual Allowance since 6 April 2011 has been:
 
            Tax Year                                Annual Allowance
            2011/2012                             £50,000
            2012/2013                             £50,000
            2013/2014                             £50,000
            2014/2015                             £40,000
            2015/2016                             £80,000*
            2016/2017                             £40,000
            2017/2018                             £40,000
               
From 6 April 2015, individuals using HMRC’s benefit flexibilities will trigger the Money Purchase Annual Allowance rules.

From 6 April 2016 if you have a threshold income of over £110,000 you must calculate whether your Annual Allowance is reduced to an amount lower than £40,000. The reduction will be tapered, with the result that the Annual Allowance is reduced by £1 for every £2 of adjusted income you have over £150,000.

*Transitional Annual Allowance rules applied for tax year 2015/2016. For Annual Allowance purposes only, the 2015/2016 tax year was split into two ‘mini’ tax years - the ‘pre-alignment tax year’ and the ‘post-alignment tax year’. Each mini tax year has its own amounts of Annual Allowance.

More information about Annual Allowance can be found on our website.
Fields
Description:
aa, annual allowance, 
See also...

Need more help?

If this doesn't answer your question please contact us directly or search again. Search Again

Rate this answer