Pensions Remember you can personally make a pension payment equal to 100% of your earned income (not including dividends or rental income) into a pension subject to the £40,000pa annual allowance. Earned income is essentially salary, bonus, P11D benefits or net profit. As a basic rate taxpayer this means you could invest £32,000 net and you would receive tax relief of £8,000 directly into the pension and as a higher rate taxpayer you would get another £8,000 in tax relief by claiming through self-assessment, this means the £40,000 contribution has only cost you £24,000 (higher rate taxpayer) or £32,000 (basic rate taxpayer). So make sure you claim! The tax relief is even better if you have income above £100,000 and if your income is heading even higher, use it now before you are subject to the tapered annual allowance (see below). If you haven’t used your previous three tax years allowances, you can potentially carry some of this forward, assuming you have total income of more than your actual contribution when you make it and you go back to the oldest year, after you have used the current year: For example: • Client A Earns £30,000 in the tax year but has £100,000 in cash which they would like to put into a pension, they can only put in 100% of their earnings which is limited to £30,000 gross pa. • Client B Earns £100,000 in the tax year and has £100,000 to put into a pension. They can invest £40,000 gross to use this year’s allowance and if they have £60,000 of unused allowance from the previous 3 years, they can invest the remaining £60,000. • Client C Earns £200,000 per annum and hasn’t invested into a pension in the previous 3 years. They can invest £40,000 for this year, plus the three previous years’ allowances, meaning an additional £120,000 can be invested equating to a total of £160,000 gross as they have earnings of more than the total payment in the year that the payment is made. What does this mean? If you have cash available and are a higher earner, consider putting it into your pension. On th the 6 April 2023, we will lose the ability to top up the 19/20 tax year. Use it or lose it. You have to maximise this years’ £40,000 first, and then go back to the 19/20 tax year, so unless you are putting more than £40,000 (or your annual allowance if less) in, you won’t be th able to go back to that tax year and it will be gone forever as of the 6 April. Don’t forget the Lifetime allowance for Pensions is now frozen and currently stands at £1,073,100 for the 2022/23 tax year. This lifetime allowance includes pension benefits from defined benefits schemes and money purchase schemes. This allowance is now frozen until