Bedfordshire Pension Fund Website

You are here: Home Page > Active Members > Annual and Lifetime Allowances

Pensions Tax - Annual and Lifetime Allowances

 

The Summer 2015 Budget introduced changes to the rules governing taxation and pension savings.  Please see our factsheets on the annual and lifetime allowances for more information

 

Annual Allowance

Annual Allowance factsheet (PDF 85KB) April 2017

The Annual Allowance, which is set by Her Majesty's Revenue and Customs (HMRC), is the amount by which the value of your pension benefits may increase in any one year without you having to pay a tax charge.

The assessment covers any pension benefits you may have in any tax registered pension arrangements where you have been an active member of the scheme during the tax year.

The Government reduced the Annual Allowance limit from £255,000 to £50,000 from 6 April 2011 and then reduced it again to £40,000 from 6 April 2014.  Further changes to the Annual Allowance were made from 6 April 2016, which resulted in special transitional rules for the 2015/16 tax year.

You are usually only subject to an annual allowance tax charge if the value of the pension growth in a tax year is more than £40,000, although for high earners the allowance may be lower.  Please contact Bedfordshire Pension Fund if you think you may be affected by this.   

There is also a three year carry forward which allows you to carry forward unused annual allowance from the last three years. More information can be found here http://www.hmrc.gov.uk/pensionschemes/aa-ps.htm

Bedfordshire Pension Fund will inform all active members of the Local Government Pension Scheme of the amount of the Annual Allowance within the Bedfordshire Pension Fund.  It is the responsibility of the member to include this information on their Self Assessment tax return together with any other pension arrangements e.g. the value of an Additional Voluntary Contribution (AVC).

 

Lifetime Allowance

Lifetime Allowance factsheet (PDF 67KB)  April 2017

The Lifetime Allowance is set by HMRC and is the total value of all pension benefits a person can have without  triggering an excess tax charge.  In April 2014 there was a reduction to the Lifetime Allowance (LTA), from £1.5 million to £1.25 million and a further reduction to £1 million from April 2016.   

 

LGPS Tax Limits from April 2016 (PDF 312KB) March 2016

Pension Tax Changes Newsletter (PDF 2MB) September 2015