Band |
Taxable income |
Tax rate |
---|---|---|
Personal Allowance*† |
Up to £12,570 |
0% |
Basic rate |
£12,571 to £50,270 |
20% |
Higher rate |
£50,271 to £125,140 |
40% |
Additional rate |
over £125,140 |
45% |
We've outlined some information on the current taxation, legislation and HM Revenue and Customs (HMRC) practice which may affect you if you're saving, investing, or have a pension plan. Tax rules can change and the impact of taxation (and any tax relief) depends on your personal circumstances.
Paying into a pension plan attracts tax relief but there is a limit on how much you pay in before you face a tax charge known as the Annual Allowance tax charge. When you’re ready to take you pension benefits, there are limits on the amount of tax-free lump sums that can be taken across all your pension arrangements. These are known as the Lump Sum Allowance and Lump Sum and Death Benefit Allowance. You may also have to pay tax when you start taking an income from your pension.
More information on the allowances can be found below.
You can also get more information on the Lump Sum Allowance, Lump Sum and Death Benefit Allowance, Pension protections/enhancements, Annual Allowance, Money Purchase Annual Allowance and Tapered Annual Allowance by visiting gov.uk/tax-on-your-private-pension.
Before you make a decision, you might want to speak to a financial adviser. They can help you understand the tax rules and how they’ll affect you or visit HMRC or MoneyHelper for more information.
Our articles, guides and videos can help you learn more about saving in a pension and retirement planning.