An update on the £50k limit rule in the Pension Proposals

The only point on the new proposed rules on which we are currently awaiting clarification is the position if you are looking for unused allowance from a year in which you paid no premiums.

On the face of it, you might think if you paid nothing you would have £50,000 of unused allowance, but in fact the opposite can be true – you must have a “pension input amount” to a registered pension scheme in the year to have an allowance. Clearly, if you do not have a pension scheme, you cannot have a pension input amount – the doubt arises about the situation if you have a scheme but chose not to invest anything in the year.

One part of HMRC’s draft guidance suggests that this may give you a pension input amount of £zero and you would therefore have £50,000 of unused allowance. We await confirmation on this point with interest.