The start of the tax year is traditionally a time for financial planning. So, what should you be thinking about in relation to making contributions into your Hartsfield SSAS?
What can I pay into my SSAS?
The total amount that you can contribute into a pension in a tax year is limited by the annual allowance. For 2017/18 this is the higher of 100% of salary or £40,000. Contributions made within the annual allowance will qualify for tax relief.
However, if you are in receipt of a flexi-access pension drawdown, the annual allowance is reduced to £10,000 pa (this is known as the Money Purchase Annual Allowance – “MPAA”).
You may have read that the MPAA was due to be reduced to £4,000 pa but this is now on hold thanks to the recent General Election.
Both allowances include contributions made by you personally and by your employer and applies across all pension schemes of which you are a member. Additional allowances are available for high earners (i.e. in excess of £110,000) – please contact us for further information if this applies to you.
Can I pay in more?
In some circumstances, it is possible to exceed the annual allowance and still qualify for tax relief on the contributions.
This is done by using carry forward where any unused annual allowance from the previous three tax years can be utilised.
However, you can only use carry forward if you have contributed the maximum amount for the current tax year and carry forward cannot be used if you are subject to MPAA.
When shouldn’t I pay anything?
If you have applied for any type of protection from the Lifetime Allowance then please contact your scheme adviser before any contributions are made, either by you or by the company. On receipt of new contributions, the protection can be lost and you may end up exceeding the Lifetime Allowance which has tax implications or may affect the benefits you can receive on retirement.
To discuss the amount that can be paid into your SSAS Please get in touch with the team here at Hartsfield Trustee Services.