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Cash-in Brought Forward Pension Capacity |
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New pension contribution rules take effect from 6th April 2001, bringing to an end the generous carry forward rule which allowed taxpayers to use their spare previous 6 years' earnings capacity to substantiate current year pension contributions. |
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These new rules are relevant to personal pension plans (PPP) only. The carry forward rules remain in place for the older style retirement annuity contracts (RAC). |
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Many taxpayers, who make substantial annual contributions into their pension plans, will be aware of the current year's absolute earnings cap of £91,800 for PPP contributions, and the following net relevant earnings percentage limits: |
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| Age at beginning of tax year |
PPP
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RAC
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| 35 or less |
17.5%
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17.5%
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| 36 - 45 |
20%
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17.5%
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| 46 - 50 |
25%
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17.5%
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| 51 - 55 |
30%
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20%
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| 56 - 60 |
35%
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22.5%
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| 61 - 75 |
40%
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27.5%
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Clients should consider their pension payments history, before deciding whether any special contributions are made in 2000-01, to cash-in any spare tax capacity, before it is lost. |
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