Download 2015/16 Tax Year Pension inPuT Period changes

2015/16 Tax Year
Pension Input Period
changes
FOR FINANCIAL ADVISERS ONLY
Background
The Finance Act (No2) 2015 changed the way in which an individual’s annual allowance for pension savings would in future be tested.
The pension input periods for ALL registered pension schemes will run on a tax year basis i.e. 6 April to 5 April.
Transitional rules
To achieve this objective the Government introduced transitional provisions for the 2015/16 tax year in terms of pension input periods that
existed at the start of that tax year and the allocation of existing funding in terms of testing against available annual allowances. Although
potentially complex in nature the basic principles that applied were:
• A total annual allowance of £80,000 was created for the 2015/16 tax year
• A
ny pension input period that had either already ended in the 2015/16 tax year, or which had started on or after 6 April 2015 which,
under the transitional legislation was automatically terminated on the 8 July 2015, is treated as a pre-alignment input period. The total
pension input in that period is then deducted from £80,000 to identify the scope for any potential remaining annual allowance funding for
the rest of the 2015/16 tax year.
• A new pension input period started on the 9 July 2015 and automatically ended, for ALL registered pension schemes on the 5 April 2016.
The maximum contribution that could of been funded in that period in respect of the 2015/16 annual allowance was limited to £40,000
but may be less for some individuals, depending on what had been funded up to 8 July 2015.
Key messages from these changes are:
• No client was worse off as a result of these changes
• A
wareness of these changes remain important where advice is being given regarding the potential use of carry forward of an unused
annual allowance from the 2015/16 tax year. Identifying what the unused annual allowance might be will require information to be
obtained as to pre-alignment and post alignment period inputs that may have already taken place
How to establish the additional funding opportunity that may apply for
your clients
For many clients there will be a need to obtain information about the levels of funding made in previous tax years and which annual
allowances they have been set against before the level of funding opportunity in the remainder of this tax year can be identified.
Click here to access a step by step guide to help with that process.
Click here to access templates of letters for both money purchase and defined benefit schemes to enable the the relevant information of
previous funding to be provided.
What might the funding opportunity be for different clients ?
Once the information as to previous funding, both in the current and previous tax years, is known you’ll be in a position to identify the
additional opportunities that will exist for the remainder of the current tax year.
Click here to access a flowchart that provides an at a glance summary of where the opportunity, on a client-specific basis exists, and the
overall scope of that opportunity.
You can also download a calculator from our Knowledge Direct website that will enable you to complete client-specific calculations as and
when you have the funding information available by clicking on the following link:
https://www.oldmutualwealth.co.uk/globalassets/documents/tools/maximum_funding_calculator.xlsm
Your investment may fall or rise in value and you may not get back what you put in.
This document is based on Old Mutual Wealth’s interpretation of the law and HM Revenue and Customs practice as at April 2017.
We believe this interpretation is correct, but cannot guarantee it. Tax relief and the tax treatment of investment funds may change.
The value of any tax relief will depend on the investor’s individual circumstances.
www.oldmutualwealth.co.uk
Calls may be monitored and recorded for training purposes and to avoid misunderstandings.
Old Mutual Wealth is the trading name of Old Mutual Wealth Limited which provides an Individual Savings Account (ISA) and Collective Investment Account (CIA)
and Old Mutual Wealth Life & Pensions Limited which provides a Collective Retirement Account (CRA) and Collective Investment Bond (CIB). Old Mutual Wealth
Limited and Old Mutual Wealth Life & Pensions Limited are registered in England and Wales under numbers 1680071 and 4163431 respectively.
Registered Office at Old Mutual House, Portland Terrace, Southampton SO14 7EJ, United Kingdom.
Old Mutual Wealth Limited is authorised and regulated by the Financial Conduct Authority. Old Mutual Wealth Life & Pensions Limited is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Their Financial Services register numbers are 165359
and 207977 respectively. VAT number 386 1301 59.
SK11774/217-0322/April 2017