Some of your higher earning clients may be facing a tax charge on their pension funding in 2017/18 as a result of the tapered annual allowance.
Some of your higher earning clients may be facing a tax charge on their pension funding in 2017/18 as a result of the tapered annual allowance. Also, many may be unaware of this as pension providers only have to inform those who paid in more than the full £40,000 annual allowance to their scheme.
Failing to include this in their self-assessment (or failing to notify if not registered for self-assessment) could mean further penalties and interest.
Only after the tax year has ended may the full picture become clear. So with the 2017/18 tax year over, now is the perfect time to:
- Assess what happened in 2017/18: finalising the figures as to what was saved, what was earned, whether there's an outstanding tax charge, and how that will be paid
- Plan for 2018/19: the sooner figures for 2017/18 are known, the easier it will be to plan for the current tax year. Income levels can be forecast and the amount of annual allowance available, including any unused allowance carried forward, can be gauged.
To assist planning for the current year, estimates of earnings and contributions may be known, giving an idea of what the annual allowance could be tapered to. This can give a heads up as to the scope for further contributions, potential carry forward, or even limiting contributions to fit within the reduced allowance.
Read our insight to:
- Assess your clients' annual allowance for 2017/18;
- Determine the tax charge, how it might be paid and by when; and
- Plan ahead for pension savings in the current tax year.
Standard Life Assurance Limited is registered in Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. Standard Life Assurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. www.standardlife.co.uk
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