29th August 2018
Royal London: Could your clients fall into the taper trap?
Jim Grant looks at how the tapered annual allowance could affect your clients with higher incomes.
Individuals with adjusted income over £150,000 in the tax year could have their annual allowance reduced.
Employer pension contributions are included in the definition of adjusted income so for those affected by taper, it can become very difficult to calculate the maximum employer contribution that can be paid as the contribution paid affects the adjusted income. As a result, whatever maximum contribution is paid reduces the tapered annual allowance which reduces the maximum contribution that can be paid!
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