This is particularly important if your taxable income exceeds £110,000.
In simplified terms, the Annual Allowance is the maximum amount of tax free growth an individual's pension savings can grow by in any one year (this also includes the value of payments into a private pension). The annual allowance limit is set by HMRC and is currently £40,000. If an individual exceeds this limit they may have additional tax to pay.
From 6 April 2016 where an individual has “adjusted income” (basically, taxable income plus pension growth) between £150,000 and £210,000 their annual allowance will be tapered down from £40,000 to £10,000 on a sliding scale. This change could increase your tax liability by £13,500! It may be possible to avoid this by changing your business structure. If your taxable income is expected to exceed £110,000 then you may benefit by reviewing this. With the onset of Brexit and an increase in the Consumer Price Index, many doctors may face unexpected tax liabilities. If your taxable income exceeds £110,000 and you are an active member of the NHS Pension Scheme then contact us today on 01625 527 351 for a free no obligation discussion.