Watch for the PIPfalls

The reduction in annual allowance (AA) from £50,000 to £40,000 with effect from 6 April 2014 means care needs to be taken with pension savings made in the 2013/14 tax year to identify the end date of the pension input period (PIP) into which they fall. Savings made in PIPs ending in the 2014/15 tax year will be tested against the reduced AA of £40,000. For example: Consider a SIPP arrangement where the PIP runs from 1 June to 31 May. Contributions made by the member on or after 1 June 2013 will fall in the PIP ending 31 May 2014 and therefore will be tested against the £40,000 limit. ...