High Earners & Restricted Contributions

You may be aware of the new pension contributions restrictions for high earners which affects those who have overall income of £130,000 or more in this tax year or either of the previous two tax years. If you feel that you may fall into this category and are either making contributions to pension or intend to do so please contact this office immediately so that we may investigate your situation and provide you with tailored advice.

 

What constitutes earnings under the new rules?

HMRC now take account of all income including dividends, interest, pension income and rental income when calculating the overall earnings figure. If an individual is a 'high earner' and makes payment to pension (or contributions are made on their behalf) of more than £20,000 in any one year then the individual could be subject to penalties.

 

Existing Contributions

If your existing contributions to pension follow a proven pattern which can be tracked over a number of years then it may be classified as ‘Protected’. Protected Pension payments can be above the £20,000 limit but no further contributions can be made without incurring a penalty.

If you feel you may be affected by the new legislation please provide us with a note of your total income from all sources for the last 3 tax years (including your earnings todate in the current tax year).