The end of the tax year is fast approaching, and if you are considering making personal pension contributions, it is important to plan ahead to avoid missing the deadline.
To benefit from tax relief on your contributions for the 2024/25 tax year, your pension provider must receive your payment by 5 April 2025.
Why contribute before the deadline?
Contributing before the deadline can offer several benefits. First and foremost, you can make use of your £60,000 annual allowance.
If you have not used the full allowance in the past three tax years, you may be able to carry forward unused amounts.
You will also receive Income Tax relief based on the highest rate of tax you pay.
That means basic rate taxpayers get 20 per cent relief, while higher and additional rate taxpayers can claim up to 40 or 45 per cent, respectively, giving you more value from your contribution.
Watch out for reduced allowances
However, not everyone has access to the full £60,000 allowance.
If you have flexibly accessed your pension, your annual limit may be restricted to just £10,000 under the Money Purchase Annual Allowance (MPAA).
Likewise, if your adjusted income exceeds £260,000, your allowance may be tapered down to a lower amount.
Act early to avoid missing out
It is important to check the position early, as different pension providers have cut-off dates before 5 April to ensure payments are processed in time.
Leaving it until the last minute could mean missing out entirely on this year’s tax benefits.
Need help understanding your limits?
If you are unsure of how much you can contribute or whether the annual allowance rules apply to you, our team is here to help.
We can work with you to understand your options, make the most of available reliefs, and connect you with regulated financial advice where appropriate.
Speak with our team today to discuss your pension contribution strategy and avoid missing the deadline.
