For tax years up to and including 2015/16 (i.e. up until 5th April 2016), individuals with taxable income in excess of £150,000 pay income tax at 45% (or 37.5% for dividends), and receive tax relief at their marginal rates on money purchase pension contributions up to the Annual Allowance of £40,000 (assuming that the lower “Money Purchase Annual Allowance” does not apply due to the individual having accessed flexible pension benefits).
From 6th April 2016, there will be a tapering of the Annual Allowance for those with “Adjusted Income” over £150,000. “Adjusted Income” includes a taxpayer’s own and employer’s pension contributions.
To read more about how this may impact on you, please click here
