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Paying over £50,000 into stakeholders pension

Hi there,

I wonder if you can help.

I have just realised that this year I have paid more that the £50K allowed via salary sacrify. The reason is that in my company I need to decided what percentage of my salary and bonuses needs to go to pension a priori (a year in advanced), I did my best guess to ensure that I will pay below the £50K but my salary increased and I got bigger bonuses than expected, so a % of that income has gone automatically to my pension and it is more than £50K.

What are the consequences of that? my pension provider will not give me any information.

Many thanks


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16th Mar 2012 10:11

Possibly none

Firstly, the £50K annual allowance doesn't apply to contributions made in the tax year, it applies to pension contributions made in scheme "pensions input periods" ending in the tax year.

Before you can determine which tax year you've breached the £50k threshold, you need to know the pensions input period for the scheme (and any other schemes).  If the scheme was in existence before 6 April 2006, it could very well be that it has a pensions input period of 7th April - 6th April.

Secondly, you're able to use the unused annual allowances of the pensions input periods ending in the preceding three years (which are deemed to be restricted to £50K for this purpose).  These previous annual allowaces may avoid a tax charge.

If, as a matter of fact, you have exceeded the annual allowance, then you will need to self-assess a charge to tax on the excess as if it is additional income for the tax year concerned.  You may be able to take advantage of "scheme pays", which does what it says on the tin; in effect the contributions you have made will then be reduced by the tax charge.

You ought to get an IFA to look at this, particularly before you decide to go down the "scheme pays" route.

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16th Mar 2012 18:21

thank you


I have exceded my annual allowance for 11-12 by a mear £30. I guess I am able to use previous years allowance as my pension contributions has always been below £50K in previous years. Does it apply to everyone? If so, does it mean that because of that, I do not have to do anything about it or do I need to pointed it out in my tax returns self assessment.


Many thanks

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