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Current issues on pensions and tax

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The perfect mix?

Key points

  • Tax relief for occupational schemes depends on the method adopted by the employer with their registered pension scheme – a ‘relief at source scheme’ (RAS) or a ‘net pay’ arrangement (NPA).
  • The employer must ensure the pension scheme is set up correctly on its payroll system to avoid making errors in tax relief.
  • New measures are being introduced from April that will affect individuals who save into an occupational pension under NPAs but whose total taxable income is below the personal allowance.
  • Advantages to employer and employee of using salary sacrifice for pension contributions.

Tax and pensions are both undoubtedly complex subjects and combining them together can be challenging and fraught with danger.

In this article we will explore the general rules around tax relief the changes which are due to be in place by April 2024 and issues faced by employers.

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