6 Apr 2020
Pension tax allowances
The Lifetime Allowance (LTA) is the maximum amount of pension savings that you can have at retirement from all pension schemes without incurring an additional tax charge. It will increase from £1.055m to £1.073m as at 6 April 2020.
The Annual Allowance (AA) is the limit on the amount of tax-free pension savings you can make in each tax year (including both yours and the Company’s contributions). It remains at £40,000 for most people, although the Chancellor, Rishi Sunak, announced changes to the tapered Annual Allowance.
The tapered Annual Allowance gradually reduces the amount of tax-free pension savings that people on high incomes can make. Mr Sunak has raised the point at which the tapered Annual Allowance kicks in from £150,000 to £240,000, as of 6 April 2020. The Chancellor also announced measures to reduce the minimum Annual Allowance to £4,000 for those with incomes above £300,000 (the previous minimum Annual Allowance which applied to the highest earners was £10,000).
The table below shows how the tapered Annual Allowance is changing:
| Adjusted income | Annual Allowance for tax years 2016/17 to 2019/20 | Annual Allowance for tax years 2020/21 onwards |
£150,000
| £40,000 | £40,000 |
£160,000
| £35,000 | £40,000 |
£170,000
| £30,000 | £40,000 |
| £180,000 | £25,000 | £40,000 |
| £190,000 | £20,000 | £40,000 |
| £200,000 | £15,000 | £40,000 |
| £210,000 | £10,000 | £40,000 |
| £220,000 | £10,000 | £40,000 |
| £230,000 | £10,000 | £40,000 |
| £240,000 | £10,000 | £40,000 |
| £250,000 | £10,000 | £35,000 |
| £260,000 | £10,000 | £30,000 |
| £270,000 | £10,000 | £25,000 |
| £280,000 | £10,000 | £20,000 |
| £290,000 | £10,000 | £15,000 |
| £300,000 | £10,000 | £10,000 |
| £310,000 | £10,000 | £5,000 |
| £312,000 | £10,000 | £4,000 |
| £320,000 | £10,000 | £4,000 |