The 8 July 2015 Budget included changes to the ‘pension input period’ rules which relate to your annual allowance entitlement. The timing of these changes may give you the opportunity to contribute, or build up benefits, above the annual allowance limit which applied on 8 July 2015, if you act by 5 April 2016. Therefore, we strongly recommend that you discuss the changes with your financial adviser.
Pension input periods and the annual allowance
A ‘pension input period’ is the period of time used to measure contributions paid, or benefits built up, which are tested against the annual allowance in a tax year. Under the rules before the Budget on 8 July 2015, a pension input period didn’t have to coincide with the tax year (6 April to 5 April). However:
- any pension input period in force on 8 July 2015 automatically ended on this date;
- a new pension input period started on 9 July 2015 and will run until 5 April 2016; and
- from 6 April 2016, all pension input periods will run in line with the tax year (6 April to 5 April).
These changes are complex, so speak to your financial adviser about whether there’s an additional funding opportunity for your pension before the end of the tax year.