As the end of the tax year approaches, it’s important to take a close look at your pension contributions and ensure you are maximising your pension allowance. Many people are unaware of the potential benefits of making additional contributions before the deadline, which could result in significant tax relief and a healthier retirement fund.

What is the Pension Annual Allowance?

The pension annual allowance is the maximum amount you can contribute to your pension each year while still receiving tax relief. For most people, this allowance is £60,000 for the 2024/25 tax year or up to 100% of your earnings, whichever is lower. Contributions that exceed this allowance may incur a tax charge, so it’s vital to stay within this limit or utilise carry-forward rules if eligible.

Even if you’re not working or have already retired you can still contribute £2,880 a year and get £720 in tax relief from the government up to age 75.

Why Act Before the Tax Year Ends?

The UK tax year runs from 6th April to 5th April, and any unused allowance cannot be carried over unless you are eligible to use the carry forward option. By contributing to your pension before the end of the tax year, you could:

Maximise Tax Relief: Pension contributions receive tax relief at your highest marginal rate. Higher and additional rate taxpayers can benefit particularly well from this.
Boost Your Retirement Savings: Every additional contribution helps grow your pension pot, providing more financial security in retirement.
Avoid Wasting Allowance: If you do not use your allowance, you could miss out on valuable tax benefits that you won't get back.

Utilising the Carry Forward Rule

If you have not used your full pension annual allowance in the last three years, you may be able to carry forward the unused allowance to the current tax year. This can significantly increase how much you can contribute tax-efficiently, but you must have been a member of a registered pension scheme during those years.

Understanding the Tapered Annual Allowance

High earners need to be mindful of the tapered annual allowance, which reduces the amount you can contribute to your pension if your adjusted income exceeds £260,000. For every £2 of income above this threshold, your allowance is reduced by £1, with a minimum allowance of £10,000. If this applies to you, careful planning is essential to avoid unexpected tax charges.

How to Make the Most of Your Allowance

Review Your Current Contributions: Check how much you have contributed this tax year and calculate how much more you can add.
Speak to a Financial Advisor: At SLG Financial Solutions, we can help you understand your allowance, carry forward opportunities, and how to optimise your contributions.
Act Early: Avoid the last-minute rush by reviewing your pension situation now and making any necessary contributions well before the 5th April deadline.

Don’t Miss Out—Act Now!

With the tax year ending soon, now is the perfect time to ensure you are making the most of your pension allowance. Contact SLG Financial Solutions today to discuss your retirement planning and how we can help you achieve your financial goals.

If you’re unsure about your pension contributions or want to explore opportunities to maximise your tax relief, we can guide you every step of the way. Let us help you make the most of your money, both now and in the future.

Make the Most of Your Pension Allowance Before the End of the Tax Year