If you earn above £240,000, be careful! Similarly the Annual Allowance (AA rules) and the rules on pension tax relief have remained unchanged for 2021/22. For more information, check out this article on the pension tapered annual allowance. The £6,000 unused AA from 2017/18 would cover the £6,000 excess in 2020/21 leaving £24,000 unused AA available for 2021/22. *Usually tapered down, to a minimum of £4,000, when adjusted income exceeds £240,000. The impact of Nicola making the following additional gross personal contributions to her SIPP before the end of 2020/21, is shown in the table below: All the action in todays’ Budget 2021 lay elsewhere as the small print revealed ISA annual subscription limits remain unchanged for 2021-22. Annual allowance* £40,000 £40,000 Annual allowance charge on excess is at applicable tax rate(s) on earnings ... Tapered tax charge on lifetime gifts within 7 years of death Years between gift and death 0–3 3–4 4–5 5–6 6–7 However, for each £2 of adjusted income over this figure, your annual allowance is reduced by £1. Adjusted income is your total taxable income – so salary, dividends, rental income, savings interest, plus employer pension contributions. Annual level of benefit cap (rest of Great Britain) Rates 2020 to 2021 (£) Rates 2021 to 2022 (£) Couples (with or without children) or single claimants with a child of qualifying age Registered Pensions 2021/22 2020/21 Lifetime Allowance (LA) £1,073,100 £1,073,100 Annual Allowance (AA)* 40,000 40,000 Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600. Tax planning 03 March 2021 As had been reported the Lifetime Allowance (LTA) for pension savings was frozen at £1,073,100. For the 2021/22 tax year, the Annual Allowance will be income related, making it difficult for you to plan your pension saving. The amount you can earn before your pension allowance reduces remains at £240,000 for 2021/22. The increase in the personal allowance and basic rate bands for 2021-22 means that, in the short term, most taxpayers will be better off and should see a small increase in their net income, with the £70 personal allowance increase worth an extra £14 to a basic rate taxpayer and £28 to a higher rate taxpayer. Under the current regime this minimum annual allowance is reached when adjusted income is £210,000 or more. This is known as the ‘tapered annual allowance’. Tax Rates 2021/22. Up to an adjusted income of £240,000 you receive the full annual allowance. Chances are that you will face an unexpected tax bill. What is the annual allowance taper and who is affected? Tapered Annual Allowance Modeller. Tapered annual allowance. People with very high income have a reduced annual allowance. Minimum annual allowance under the taper: The tapered annual allowance cannot reduce below this amount. Pension lifetime allowance State pension (per week) 2021/22 2020/21 The Annual Allowance is the maximum amount of pension saving you can make in the tax year before you incur an additional tax charge.