Tax Relief

You benefit from tax relief

You get tax relief on your contributions (including your AVCs). This means that if you pay basic-rate tax, every £100 you pay into your retirement account only costs you £80. If you pay higher-rate tax, you may receive additional tax relief. You don't have to do anything to benefit from tax relief, as it happens automatically through payroll.

Limits on tax relief

Both your regular contributions and your AVCs benefit from tax relief. There is no limit on the amount you can save in a pension plan, but there is a limit on the amount of contributions that can get tax relief each year.

This limit is known as the Annual Allowance and is £40,000. Please note:

• If you have a taxable income (including any pension benefits you’re already receiving) of over £150,000, your Annual Allowance will decrease from £40,000 using a sliding scale.
• If your taxable income (including any pension benefits you’re already receiving) is over £210,000 a year, the Annual Allowance will be limited to £10,000.

The Annual Allowance is measured over a 12-month period known as the Pension Input Period (PIP). The PIP for the Plan runs from 1 April to 31 March 6 April to 5 April, in line with the tax year. Any savings above these limits in this period will face a tax charge.

The Money Purchase Annual Allowance

If you decide to take some of your pension savings (from the Benefit Builder or another pension plan you have elsewhere) as income drawdown or as cash, your Annual Allowance will reduce to £4,000. This is known as the Money Purchase Annual Allowance.

If you want to make more contributions to your pension savings once you’ve accessed some of your money in this way, you and your employer will only be able to pay £4,000 in over a tax year without paying a tax charge.