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Don’t miss out over carry forward and PIP rule
Last year HMRC updated its carry forward rules regarding pension contributions. It clarified that investors who had contributed more that £50,000 in 2009/10 or 2012/11 would not be deemed to have used some of the annual allowance from 2008/09.
The end of the 2011/12 tax year could be a bumper year for pension tax relief, because of the combination of HM Revenue & Customs (HMRC) carry forward rules with pension input periods (PIPs).
The rules were brought in after the government scrapped plans for a complex taper on pension tax relief, instead imposing a flat £50,000 a year limit.
A three-year carry forward facility has now been introduced to enable people to make contributions they would have made had they not been put off by the previous government’s anti-forestalling legislation.
However, while the carry forward is calculated according to tax year, pension schemes contributions use the PIP.
The carry forward rules affect the tax years 2008/09, 2009/10 and 2010/11. Clients may have more carry forward than they think if they have not already used the allowance from 2008/09.
For advice on your pension fund please contact Paul Bradshaw at McEwan Wallace Wealth Management on 0151 647 6682 or email enquiries@wallace.co.uk.
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