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How much can I contribute into my pension?
The amount an individual can contribute to your pension is unlimited. However there are limits on the amount that is eligible for tax relief. Pension contributions by a ‘relevant UK Individual’ are unlimited but there are limits on how much of the pension contribution will receive tax relief. The total contribution (includes the tax relief ) can not exceed the higher of £3,600 or your 100% of your relevant UK earnings.
| Relevant Earnings | Max Net Contribution | Tax Relief Claimed | Total Contribution |
|---|---|---|---|
| £0 | £2.880 | £720 | £3,600 |
| £20,000 | £16,000 | £4,000 | £20,000 |
| £40,000 | £32,000 | £8,000 | £40,000 |
Contributions made that are higher than your relevant UK earnings will not receive tax relief.
Who is a ‘relevant UK individual’?
An individual under the age of 75 is a relevant UK individual for a tax year if they:
- have relevant UK earnings chargeable to income tax,
- are resident in the United Kingdom,
- were resident in the UK at some time during the five tax and they were also resident in the UK when they joined the pension scheme, or
- has earnings from overseas crown employment (or is the spouse or civil partner of such a person).
What are UK relevant earnings?
Relevant UK earnings means any one or more of the following types of income:
- employment income, such as: pay, wages, bonus, overtime, or commission and other P11D benefits.
- income from self-employment or a partnership
- redundancy payment above the £30,000 tax exempt threshold
- income from a UK and/or EEA furnished holiday lettings business
- patent income, where the individual alone or jointly devised the invention
- Pension income, Capital Gains, rental income and investment income is not classed as earnings and cannot be included in the definition of relevant UK earnings.
| Relevant UK earnings are: | Tax Relief Claimed |
|---|---|
| Employment income, such as salary, wages, bonus, overtime or commission | Dividends and other investment returns |
| Sole trader or partners Net Profit | Rental income |
| Income arising from patent rights and are treated as earned income | Capital gains from selling assets |
| General earnings from an overseas Crown employment, which are subject to UK tax | Pension income |
Types of contributions
Personal contributions employer contributions and third party contributions can all be made into your pension. For more information on Tax please see the Tax Benefits section or for more information please look at our technical section.
Annual Allowance
If you contribute more than the Annual Allowance (currently £40,000) you may face a tax charge. Please see our technical section for more information on Annual Allowance.