🟩 Tax Relief on Contributions

When you contribute to a pension, you receive tax relief based on your income tax rate. This effectively means some of your contribution comes from the government, helping your pension grow faster.

🟩 Annual Allowance

There’s a limit to how much you can contribute into pensions each year and still receive tax relief — this is called the Annual Allowance. Contributions above this limit may trigger a tax charge.

🟩 Lifetime Allowance (Now Removed)

The previous Lifetime Allowance (which capped the total value of pensions before extra tax applied) has been abolished. However, there are still some transitional protections in place for larger pension pots.

🟩 Tax When You Take Income

When you start drawing income, 25% of your pension is usually tax-free. The remaining withdrawals are taxed as income, and how much tax you pay depends on your total taxable income for the year.

🟩 Planning to Stay Tax-Efficient

With careful planning, you can manage how much taxable income you draw each year, make use of allowances, and minimise unnecessary tax. Professional advice can make a big difference.