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Restricting pensions tax relief: HMRC guidance on the reduced AA
On 14 October 2010 HM Revenue & Customs (HMRC) published draft legislation for implementation of the reduced AA and draft guidance to help individuals and the pensions industry to understand the announced changes.
As HMRC has since received a number of queries and comments on the draft legislation and guidance, it has provided some clarification on a number of the issues which have been raised.
HMRC’s latest guidance provides further information on:
- the carry forward provisions which allow individuals to set-off excess contributions due to one-off spikes in accrual against unused allowance from up to the three previous tax years; and
- the ability for schemes to align their pension input period or PIP (the period used to assess annual increases in the value of members’ benefits for the purpose of testing against the annual allowance) to the tax year.