Tax relief

Contributions to registered pension schemes receive tax relief from the government up to certain limits.

Before April 2006, you were limited to receiving tax relief on pension contributions of no more than £15,000 a year.

This limit was abolished and replaced with a new Lifetime Allowance and Annual Allowance.  The new allowances only affect very high earners (people on £100,000 a year or more).

The Lifetime Allowance is the amount of pension benefits you can build up with tax relief over your working life.  In 2010/11, the Lifetime Allowance is £1.8 million.

The Annual Allowance is the amount of pension benefits that you can build up with tax relief in a single tax year.  In 2010/11 the Annual Allowance is £255,000.

In a single tax year, you may contribute 100% of your earnings towards your pension up to the higher of the Annual Allowance or £3,600.

Individual pension schemes may be more restrictive than the above allowances.