Better late than never

The annual allowance sets out the maximum amount of pension input that may be made by or in respect of an individual to registered pension schemes in a tax year without resulting in a tax charge.

From tax year 2011/12 the government reduced the annual allowance from £255 000 to £50 000. To help address the concerns particularly of members of defined benefit schemes who may be adversely affected by this change it also introduced new carry forward rules.

These rules permit unused annual allowance to be carried forward for up to three tax years. Special rules apply to tax years 2008/09 2009/10 and 2010/11 where the maximum annual allowance in those years is deemed to be £50 000 for this purpose.

Where an individual’s pension input in the current tax year is at least £50 000 he can then take advantage of carry forward...