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Last Minute Pension Contributions

Example of the Tax Benefits of Late Contributions to Pension Funds 

Paid in

£2,808  £7,800
Tax relief £ 792  £2,200


£3,600  £10,000
Tax Free Cash 25% 
£ 900-  £2,500
Residual Pension fund £2,700 £7,500
Net cost £1,908 £5,300
to achieve 
a Pension Fund of £2,700      or £7,500

Means41.5% growth from the Inland Revenue. 


If you are sitting on cash and have ‘earned income’ the Inland Revenue will allow you to make a personal pension contribution of £3600 with or with out earnings and up to you entire income if your earnings are below £130,000 or if you own a company your company can contribute up to £255,000 as a full business expense. 

If you are a higher tax payer the advantage is even greater!!! An extra 18% tax relief   

Make sure you have sufficient emergency funds and have accounted for all planned expenditure prior to making a contribution of this nature.



Higher rate taxpayers funding larger contributions  

The complex anti-forestalling provisions are set to remain with us until 5 April 2011 and               so those clients earning more than £130,000 will still be restricted in the amount of     contributions they can make. However, the government has announced that it does not        believe that the Finance Act 2010 provisions, due to take effect from 6 April 2011, are               the best way to restrict pensions tax relief for high earners.                                                 Subject to further industry consultation, the government believes it may be better to            reform the existing allowances, mainly the Annual Allowance. Its provisional analysis           suggests that the current Annual Allowance of £255,000 should be reduced to somewhere between £30,000 and £45,000. 


This provides an opportunity for clients with relevant earnings of less than £130,000 to             make larger contributions into their pension arrangements before the new Annual                     Allowance is set. Similarly, those clients with earnings of £130,000 or                                     more in this tax year/any of the previous two tax years should make contributions up to          their special annual allowance, or in line with any protected pension input amount, whilst             the opportunity still exists.                                                                                                      Care needs to be taken for those members of Final Salary Schemes – annual increases in pension are multiplied by a factor for the purposes of testing against the Annual Allowance (currently the factor is 10:1 but this may change for April 2011). This could potentially take a number of clients over any new restricted Annual Allowance and result in a 40% tax charge on any excess.                                                                                                           



Independent Financial Services 4 You Ltd of  201 Rodbourne Road Swindon SN2 2AA, is Authorised and regulated by the Financial Conduct Authority. FCA Registration No. 518498.  

Registered in England and Wales No. 7120714. Registered address: 201 Rodbourne Road, Swindon SN2 2AA



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In order to provide the best quality financial advice, we need to fully understand your financial circumstances and objectives.We therefore offer an entirely free, and without obligation Financial Review.

We will discuss your current circumstances, review your existing plans and investments and advise you of their continued suitability. We will discuss any shortfalls in your provisions, and taking into account your wants and needs,  your affordability and attitude to risk, we will come up with solutions to your needs researched from the entire market and with no product bias.