At a glance
GAD Rate (Government Actuary's Department annuity rate)
This is the annuity rate set by the Government Actuary's Department for determining the maximum level of Unsecured Pension and Alternatively Secured Pension. It is fixed on the first day of each month based on the 15 year Gilt yield published in the Financial Times on the 15th of the previous month. The rate of the current month is 4.00%.
Lifetime Allowance
This is the upper limit on the total value of an individual's combined pension arrangements which can qualify for tax exempt treatment.
The Lifetime Allowance has been fixed through to the tax year 2010/11 as follows:
| Tax Year | Lifetime Allowance |
|---|---|
| 2006/07 | £1.50m |
| 2007/08 | £1.60m |
| 2008/09 | £1.65m |
| 2009/10 | £1.75m |
| 2010/11 | £1.80m |
For the period 2011/12 to 2015/16, the Lifetime Allowance will remain at £1.80m.
Annual Allowance
This is an overriding limit to the annual amount of tax relievable pension contribution which can be paid by, or on behalf of, each individual.
The Annual Allowance has been fixed through to the tax year 2010/11 as follows:
| Tax Year | Lifetime Allowance |
|---|---|
| 2006/07 | £215,000 per member |
| 2007/08 | £225,000 per member |
| 2008/09 | £235,000 per member |
| 2009/10 | £245,000 per member |
| 2010/11 | £255,000 per member |
For the period 2011/12 to 2015/16, the Annual Allowance will remain at £255,000 per member.
In the year of vesting benefits, it is possible to make a contribution in excess of the Annual Allowance without incurring a tax charge.
Special Annual Allowance
This applies only to those individuals with "relevant income" in excess of £130,000 per annum for the tax year in which the contribution is being made and the previous two tax years. These rules apply until 5 April 2011 when new regulations will be introduced.
| Protected Pension Input | Maximum Gross Pension Contributions (either personal or employer maximum but not both) | Tax Relief (either personal or employer relief not both) | ||
|---|---|---|---|---|
| Personal | Employer | Personal | Employer | |
| No Protected Pension Input | up to £20,000 | up to £20,000 | 40% | Full corporation tax relief No personal tax charge on the member |
| £20,001 - 100% of earnings subject to the Annual Allowance | £20,001 up to the Annual Allowance provided the contribution is wholly & exclusively for the purposes of trade | 20% | Full corporation tax relief 20% personal tax charge on the member |
|
| Protected Pension Input: Regular contributions are greater than £20,000 | 100% of Protected Pension Input | 100% of Protected Pension Input provided the contribution is wholly & exclusively for the purposes of trade | 40% | Full corporation tax relief No personal tax charge on the member |
| Protected Pension Input limit - 100% of earnings subject to the Annual Allowance | Protected Pension Input limit - Annual Allowance provided the contribution is wholly & exclusively for the purposes of trade | 20% | Full corporation tax relief 20% personal tax charge on the member |
|
| Protected Pension Input: Irregular contributions between £20,000 and £30,000 | 100% of Protected Pension Input between £20,000 and £30,000 | 100% of Protected Pension Input between £20,000 and £30,000 provided the contributions is wholly & exclusively for the purposes of trade | 40% | Full corporation tax relief No personal tax charge on the member |
| Protected Pension Input limit - 100% of earnings subject to the Annual Allowance | Protected Pension Input limit - Annual Allowance provided the contribution is wholly & exclusively for the purposes of trade | 20% | Full corporation tax relief 20% personal tax charge on the member |
|
| Protected Pension Input: Irregular contributions of more than £30,000 | 100% of £30,000 Protected Pension Input | 100% of £30,000 Protected Pension Input provided the contribution is wholly & exclusively for the purposes of trade | 40% | Full corporation tax relief No personal tax charge on the member |
| £30,001 to 100% of earnings subject to the Annual Allowance | £30,001 - Annual Allowance provided the contribution is wholly & exclusively for the purposes of trade | 20% | Full corporation tax relief 20% personal tax charge on the member |
|
Tax Charges on Payments from Registered Pension Schemes
These tax charges were introduced at A Day and apply to certain payments made from registered pension schemes.
| Charge | Rate |
|---|---|
| Lifetime Allowance Charge | 55% where the amount exceeding the lifetime allowance is taken as a lump sum 25% where the amount exceeding the lifetime allowance is taken as income |
| Annual Allowance Charge | 40% |
| Unauthorised Payments Charge | 40% |
| Unauthorised Payments Surcharge | 15% |
| Special Lump Sum Death Benefits Charge | 35% |
| Authorised Surplus Payments Charge | 35% |
| Scheme Sanction Charge | 15-40% |
| De-registration Charge | 40% |