High Earner Limits

Where a pension scheme member has total taxable earnings above £210,000, including their own pension contributions or deductions, an assessment to what is called pension contribution tapering is required.

Taking total taxable income, the pension contributions of the Employer need adding and if that grand total then breaches £240,000, the Annual Allowance (AA) is reduced.  The AA is reduced by £1 for every £2 that the total exceeds £240,000.

There is a lower limit collar within the rules of £4,000 for pension contributions.  This means that, in effect, for those with total taxable income of £312,000 or more, their AA is just £4,000.

In addition to the lower AA, the higher earner in this situation can add any unused AAs from the previous three tax years.

However, those limits may also be less than the standard AA of £40,000 and so great care must be taken to calculate this right amount available to the Member.  Please contact the Scheme Advisers at Patterson-Mills for further advice in making these calculations, this service is paid for by Currencycloud as part of the service to Members.