Pension Contribution Limits

Your company can make payments into your personal pension fund - assuming the pension fund accepts Employer contributions and they are informed that this payment has come from the company.

Annual Allowance

The contributions will be tax-free as long as they do not exceed the annual allowance (currently capped at £40,000 p/a for 2019-20).

You can also take advantage of the carry-forward rule if you have unused allowance from the previous 3 years, provided that you were a member of a registered pension scheme in these years.

If you would like to carry forward, you must first use your annual allowance for the current tax year before using any unused allowances from the previous three years.

Lifetime allowance

You should also take into account your lifetime allowance. The lifetime allowance is a limit on the amount that can be withdrawn from your pension (through either lump sums or through retirement income) without incurring extra tax. The lifetime allowance is currently £1,055,000 (2019-20).

Company Income Cap

The other limit to consider is that the amount invested should not exceed your company’s income for that year. Exceeding this limit could raise questions from HMRC as to whether the amount has actually come from your company’s activities.