When to review your UK pension annual allowance
High earners and company directors often trip the annual allowance without realising. Here is how to spot the risk early.
If your adjusted income sits near the taper thresholds, employer pension contributions that felt generous last year can create an unexpected tax charge. The first practical step is to list every contribution your company and any personal schemes made in the tax year, including salary sacrifice.
Carry-forward from unused allowances in the previous three years can still help, but only if you were a member of a registered pension scheme in those years. Keep scheme statements and P60 figures together before you instruct a large one-off company contribution.
Directors who extract mostly dividends sometimes forget that the taper calculation looks at more than salary alone. A short conversation with your adviser and accountant before year-end is usually cheaper than an annual allowance charge letter.
See our director remuneration review if this sounds familiar.