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SIPP contribution allowance

How much can I pay into a SIPP or other pension?

Just like any other pension, there are limits to the contributions you can make into a SIPP every year and over your lifetime. Under current rules you can contribute as much into your SIPP or other pension as you have earned each year, up to a maximum of £40,000 (for the tax year 2016/17). If you earn more than £150,000 your annual allowance is tapered down to a minimum of £10,000.

Pension allowance if you earn over £150,000

The usual £40,000 annual allowance is tapered down for people with annual earnings of more than £150,000. The allowance reduces by £1 for every £2 earned above £150,000, down to a minimum £10,000 pension allowance for those earning more than £210,000.

What is your pension lifetime allowance?

Over your lifetime you can make as many pension contributions as you like, but there is a limit to the amount of tax relief you will get. This means you will have to pay tax on any pension savings that you make in excess of the current lifetime allowance, which is £1 million. The excess will be taxed at 25% (on top of any Income Tax) if you draw it as an income such as annuity, or at 55% if you take the money as a lump sum.

55%


If you exceed the pension lifetime allowance you will pay 55% tax on any excess taken as a lump sum.

If you have already made substantial contributions or are worried about exceeding your pension lifetime allowance, you may be able to protect it up to £1.25 million. Contact us on 020 7189 2400 to find out more.

Do you want to protect your pension lifetime allowance?

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From time to time the annual and lifetime pension allowances are revised by HMRC:

Tax year Annual allowanceLifetime allowance

2016/17

£40,000 £1 million

2015/16

£40,000 £1.25 million

2014/15

£40,000 £1.25 million
2013/14 £50,000 £1.5 million
2012/13 £50,000 £1.5 million

Carry forward rules

Despite the £40,000 limit for the current tax year, under HMRC’s 'carry forward' rules you may be able to make additional contributions above your annual allowance.. If you have contributed less than your annual allowance in any of the past three tax years you can carry forward the unused allowance, as long as you had a pension in place for each of the three years and your total contributions don’t exceed your current earnings.

Find out more about pension carry forward

How can we help?

We offer in-house financial planning and investment management services to make your money go further. If you need assistance with pension contribution limits, pension carry forward or your wider financial needs, our nationwide team of qualified financial planners at Tilney would be happy to help. We work with you to understand your goals and create a bespoke financial strategy to achieve them. Call us on 020 7189 2400 for more information or to book a free consultation.

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Important Information

SIPPs are not suitable for everyone. If you don’t want to invest across different asset classes or don’t think you will make use of the investment choices that SIPPs give you then a SIPP might not be right for you. Self-directed investors should regularly review their SIPP portfolio, or seek professional advice, to ensure that the underlying investments remain in line with their pension objectives. Prevailing tax rates and the availability of tax reliefs are dependent on your individual circumstances and are subject to change. Please note the term Best is a brand name of the Bestinvest SIPP.

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