Tax Relief on Pension Contributions and Pension Input Periods
On 6 April 2006, the concept of pension input periods was introduced. For the avoidance of doubt, your obtaining tax relief on a pension is determined by the pension contributions made in a tax year.
The pension input period has no relevance whatever in claiming tax relief on pension contributions. The pension input period's sole relevance is in testing to see if the annual allowance has been exceeded, which would result in an annual allowance charge. |
Tax Relief on Pension Contributions made by an Individual:
You will get tax relief at the highest rate at which you pay tax in the tax year in which the pension contributions are made. (For example, If your gross pension contribution falls wholly within the 40% higher-rate tax band, you will receive 40% tax relief on the whole contribution.)
This is also providing your gross pension contribution is no more than £3,600 or 100% of your relevant UK earnings, whichever is the greater.
Tax Relief on Employer Pension Contributions:
The £3,600 or 100% of your relevant UK earnings limitation for getting tax relief on pension contributions made by an individual does not apply to pension contributions made by an employer.
If an employer contributes into an employee's pension, the Local Inspector of Taxes will apply the 'wholly and exclusively' test in deciding whether to allow tax relief on the employer contribution.
