Reminder: Top-Up Your Pension Funds Before the End of the Tax Year

As we approach the end of the tax year, I wanted to remind you to review your pension contributions to ensure you're making the most of your yearly allowance for tax purposes. Topping up your pension funds before the deadline can help benefit from the tax and also help with your future.

The annual allowance is the maximum amount you can contribute to your pension pots in a tax year (from 6 April to 5 April) before you must pay tax. For the tax year 2024 to 2025, the standard annual allowance is £60,000. This includes contributions made by you, your employer, and any third parties.

Carry Forward Unused Allowances

If you haven't used your full annual allowance in the previous three tax years, you can carry forward any unused allowance to the current tax year. This can be particularly beneficial if you have a higher income this year and want to maximize your pension contributions.

To carry forward unused allowances, you don't need to notify your pension provider or HMRC directly. Instead, you simply include the carried forward amount when calculating your total pension contributions for the current tax year. When you complete your self-assessment tax return, you include the total pension contributions made during the tax year, including any carried forward amounts.

For those with a high income, the annual allowance for pension contributions may be reduced. If your threshold income exceeds £200,000 and your adjusted income exceeds £260,000, your annual allowance will be tapered down.

Why Top-Up Now?

Topping up your pension before the end of the tax year ensures you make the most of your annual allowance and avoid any potential tax charges. It's a smart move to boost your retirement savings and take advantage of the tax relief available on pension contributions.

Next Steps

Review your current pension contributions and consider making additional payments before the tax year ends which is the 5th of April 2025.

If you have any questions or need assistance, please don't hesitate to contact us. We're here to help you make the most of your pension savings and secure a comfortable retirement.