new tapered annual allowance 2020/21

However, largely as a result of the pressure put on the Government by NHS consultants, the amount that most high earners will be able to contribute to a pension will substantially increase for the 2020/21 tax year (6th April 2020 – 5th April 2021). Because of this, many employers redesigned remuneration packages for high earners, and higher-earning employees have had to make difficult decisions about saving for their retirement. Privacy & Cookie Policy – © Copyright – SG Wealth Management Ltd. This will affect those with taxable income plus pension contributions above £300,000. But this new limit will mean that the reduction in the taper minimum will only begin at £300,000 of adjusted income. Alternatively, for all new enquiries please contact us at hello@sgwealthmanagement.co.uk or call on 01603 760866. The net effect of the changes to the TAA mean that Kathy can maximise her pension contributions in the current tax year in a highly tax-efficient manner. Threshold income is broadly similar to adjusted income except that pension contributions that entitle the member to Relief at Source and employer contributions resulting from a salary sacrifice (or similar arrangement) made before 9 July 2015 are excluded. Paraplanner profile December - Rob Kingsbury talked to Kirsty Stone, CISI Paraplanner of the Year 2017, about being a Law graduate, volunteering for Citizens Advice Bureau, working at Pension Wise and becoming senior paraplanner at Dart Capital. In turn, this will simplify the management of these remuneration packages for HR and payroll teams. The threshold income figure was increased from £110,000 to £200,000 and the adjusted income figure was increased from £150,000 to £240,000. While the general principles of the Tapered Annual Allowance remain the same, the threshold levels will both increase by £90,000. However, the Tapered Annual Allowance is a reduced pension contribution allowance which applies on a sliding scale for those with high total taxable income. Please let us know if you need any more information about the topics covered here or have any specific questions about your employee benefits… While the general principles of the Tapered Annual Allowance remain the same, the threshold levels will both increase by £90,000. pensions contributions since 9 July 2015. The reduction was capped at £30,000 and hence the maximum reduction was from £40,000 to £10,000. If in the 2020/21 tax year your Threshold Income is over £200,000 and your adjusted income is over £240,000, you will be subject to the Tapered Annual Allowance. The minimum tapered annual allowance was set at £10,000 – this would apply if an employee’s total combined taxable income and employer pension contributions exceeded £210,000. While the general principles of the Tapered Annual Allowance remain the same, the threshold levels will both increase by £90,000. This will only affect those earning over £300,000 including pension accrual. Those with adjusted income of more than £240,000 in 2020/21 will be affected by the taper. Some employers have taken a blanket approach, making contributions on qualifying earnings and paying the excess entitlement as cash. Registered in England and Wales - company number: 2135876. These increases mean that only individuals with total taxable income in excess of £200,000 and total taxable income plus employer pension contributions above £240,000 during the tax year will now be affected. Brewin Dolphin Limited is a member of the London Stock Exchange. For tax year 2020/21, the total income levels that apply to the tapered annual allowance’s ‘threshold’ and ‘adjusted’ income measures have been increased to £200,000 and £240,000, respectively.

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