Drewberry™ provide pensions, investment and insurance advice for Money to the Masses readers throughout the UK.

annual allowance calculator 2016

Pension Annual Allowance Calculator 2018

Given the state’s desire for us to save adequately for retirement, personal pension contributions attract tax relief at your marginal rate of income tax.

Naturally, this tax relief provides a great incentive to save into pensions, but to prevent abuse of the system there’s an annual pension allowance of £40,000.

This means that you can receive tax relief on annual contributions of up to 100% of your salary or £40,000, whichever is lower.

You can actually contribute as much as you like to your pension – you just won’t receive tax relief on any contributions above the £40,000 ceiling.

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Reducing annual allowance for high earners

In order to help keep a lid on the cost of pension tax relief, the government announced in the Summer Budget of 2015 that as from April 2016 the annual pension allowance will taper down from £40,000 to a minimum of £10,000 per annum for those with combined taxable income and pension contributions that amounts to over £150,000 a year.

On this basis, anyone with an annual income of £210,000 or more will receive the maximum reduction of £30,000 pa and be left with an annual allowance of £10,000.

If you enjoy a pension-adjusted taxable income of over £150,000, you can use our calculator below to work out what your annual pension allowance will be from April 2017.

 

Pension Annual Allowance Calculator

Simply follow these quick steps to work out your annual pension allowance and receive a free expert guide to pension planning.
1
Annual taxable Income What is your annual taxable earnings less any charitable donations?
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2
Monthly gross employer pension contributions How much does your employer contribute to your pension each year, if any?
£
OR
%
3
Monthly employee pension contributions
Gross contribution The figure which is on your pension statement.
Net contribution The figure which is on your bank statement or your payslip.
£
OR
%
You receive basic tax relief on your pension contributions at source. You have declared gross employee pension contributions of , is made up via the tax relief which means your personal contribution is only . You receive basic tax relief on your pension contributions at source. This means you have only had to contribute into your pension to receive an additional via the tax relief which uplifts your personal contribution to (%). You will also qualify for higher-rate tax relief on your contributions. This must be applied for via your annual self-assessment tax return. You will receive this tax relief in one of three ways: 1) as a tax rebate; 2) as a change to your existing tax code; or 3) as a reduction in the tax you might already owe to HMRC You will also qualify for higher and additional-rate tax relief on your contributions. This must be applied for via your annual self-assessment tax return. You will receive this tax relief in one of three ways: 1) as a tax rebate; 2) as a change to your existing tax code; or 3) as a reduction in the tax you might already owe to HMRC.
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Your pension annual allowance results

Your gross pension contributions are per year or of your Annual Taxable Income. With this level of pension contributions your adjusted annual income for the year is .

Taking account of any tapering of the annual allowance for high earners, the annual allowance available to you this year is:

£32,375.00 / £40,000.00 Maximum Annual Allowance

Due to the level of your Adjusted Annual Income your personal
Pension Annual Allowance will be reduced to .

Due to the level of your Adjusted Annual Income your personal
Pension Annual Allowance will be £10,000.00.

Given your Adjusted Annual Income is below the threshold you will still recieve 100% of your
Pension Annual Allowance ().

Due to the level of your Adjusted Annual Income your personal
Pension Annual Allowance will be reduced to £10,000.00.

As you're flexibly accessing your pension, you have a reduced annual allowance known as the Money Purchase Annual Allowance. Note that this is currently £10,000.00 but is set to fall to £4,000 after June 2017.

Your Contributions 2017-2018

Given the pension contributions you are making of this year it looks like you will use % of your available annual allowance ().

  -      - Tax Free Pension Contributions
  -      - Taxable Pension Contributions
It is important to note that given your pension contributions this year are greater than your annual allowance, you will be taxed on the excess contributions at your highest marginal rate.

Include unused allowance from previous years

Enter the total pension contributions you have made in the previous 3 tax years and calculate to see if there is any unused annual allowance you can carry forward to this tax year.

2014 / 2015:
2015 / 2016:
2016 / 2017:

This carry forward calculation for 2016/17 assumes your earnings were the same last tax year as they are in the current tax year. If your earnings have changed, this could affect the calculation.

Including your Carry Forward

You can potentially carry forward any unused Annual Allowance from the past three years and add this to your current year’s allowance. However, remember that tax relief is only available on pension contributions of a maximum of 100% of your annual taxable income in any given tax year.

Based on your current year’s Annual Allowance and your unused Annual Allowances from the past three tax years, the maximum permitted pension contribution you could make this year is:

+ =

  • this year's annual allowance
  • carry forward

Combining your Carry Forward with this years Annual Allowance you are able to make tax efficient pension contributions of up to .

Given your current pension contributions and including any carry forward you are using % of your available Annual Allowance.

/

neiladamsportraitround

Calculators like these are always helpful but they don’t beat talking through your situation with an experienced adviser. If you need any support and would like to talk through how an Drewberry adviser can help improve your tax position, don’t hesitate to call us on 02084327334.

Neil Adams
Pension Specialist at Drewberry

IMPORTANT NOTES

You need to have a UK registered pension plan to be eligible for your annual pension allowance

Tax relief on pension contributions is at your highest marginal rate, this calculator takes account of the basic rate tax relief at source only.

If you've flexibly accessed your pension, you're subject to the money purchase annual allowance (MPAA). You cannot use previous years' annual allowance (referred to as pension carry forward) to increase your annual allowance once you're subject to the MPAA. You also can't carry forward any unused MPAA to following tax years.

To make the most of your Annual Allowance it may be wise to consider your personal circumstances before deciding upon your level of pension contributions in any given tax year. If you need financial advice please do not hesitate to contact us on 02084327334.

calculating your pension annual allowance

Lost some of your annual pension allowance?

If you’ve lost some of your annual pension allowance it’s important to review how much you still pay into your pensions. It usually makes good sense to use all of your annual allowance to make the most of the tax relief on offer; but how should you invest any excess income that was previously earmarked for your retirement years?

Make use of the carry forward rules

Before considering the range of alternative tax-efficient products that are out there, the first stop is to make use of the pension carry forward rules.

These allow you to make use of any previously unused annual allowance from the preceding three tax years (starting with the tax year three years ago) and to receive tax relief on these contributions at your highest marginal rate.

This means that, assuming you didn’t use any of your allowance in the previous three tax years and that you have the earnings to support it, you could potentially invest up to £130,000 in your pension in the 2016 tax year, on top of whatever annual allowance you may still have (at least £10,000, even for the highest earners).

This is because the annual allowance was still set at £50,000 in the 2013/14 tax year before declining to £40,000 in the 2014/15 and 2015/16 tax years.

Remember: In addition to the annual pension allowance, all UK pension investors are also subject to the lifetime allowance.

In April 2016 the lifetime allowance fell from £1.25m to £1m.

 

What other tax-efficient investment are there?

If you’ve used all of your annual pension allowance, it makes sense to look at the other tax-efficient investment options that are out there.

The most common options are:

Individual Savings Account (ISA)

With an ISA you can invest in cash or investment funds. Although you pay into an ISA from post-tax income, there’s no tax to pay on any subsequent capital gains or dividends you might receive.

The 2017 tax year will see the ISA allowance raised to £20,000 from its previous level of £15,240.

It will also see the launch of the new Lifetime Isa (LISA) which offers under 40s the opportunity to save £4,000 a year tax free with a 25% annual bonus until age 50.

Venture Capital Trusts (VCT)

Here you invest in a venture capital fund investing in a portfolio of very small companies. You receive 30% tax relief on your VCT investment and, as with ISAs, there’s no tax to pay on dividends or capital gains, subject to a minimum holding period.

Enterprise Investment Scheme (EIS)

These schemes allow you to invest into a smaller company and receive 30% tax relief on your investment. There’s no capital gains tax to pay and loss relief is available if you have to dispose of the shares at a loss, as well as inheritance-tax relief.

Such investments are also subject to a minimum holding period.

Seed Enterprise Investment Scheme (SEIS)

These allow you to invest seed capital in small, early stage companies and to receive 50% tax relief.

There’s no capital gains tax to pay and loss relief is available if you have to dispose of the shares at a loss, as well as inheritance-tax relief.

Such investments are also subject to a minimum holding period.

Key considerations

The government has granted extensive tax incentives on the last three investments listed above in order to help provide capital to small and start-up businesses.

However, as these investments are in very small companies there is significant risk. You should only consider these options if your capacity for loss is very high ie it wouldn’t cause you any financial difficulties if you lost your entire investment.

Need Help? Start Live Chat with our Experts  

Neil
Pensions Advice

Robert
Income Protection
Pensions Advice UK by Drewberry

Need Pensions Advice?

Nothing is ever straightforward when it comes to retirement planning, if you are making contributions beyond your Annual Allowance and want to know what you can do or simply want some pensions advice we are here to help.

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“If you’d like to find out more or to discuss any of these options with a regulated financial adviser then don’t hesitate to call us on 0208 432 7333.”

Tom Conner
Director at Drewberry

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