Pension Allowances - Assessing your workforce
April is fast approaching and many organisations are keen to help their high earners avoid an unexpected tax bill due to their pension contributions. The first step to conducting this project is to identify who might be affected. You may think that there will be no one affected within your workplace - but it's best to be safe. So, how do you go about doing this?
You need three things:
An excel spreadsheet (or a piece of software which can do these calculations)
A list of your employees total earnings (this includes things like bonus payments)
A large cup of coffee - this isn't easy stuff, but it's important!
Here’s who might be affected by the rules:
However, with all things pension related, it's not quite that simple as a large part of the equation is what the employer and employee are paying into their pension. If you have a generous contribution structure, it's more likely people will be over the allowance, but this can also be true with modest contributions (Examples below).
We can see here how vital the carry forward option is and understanding this is a key part of the project. If you need to know more, click here to watch our video which explains the ins and outs of carry forward.
Carry forward calculations can be time consuming and once again means that pension teams need to get cracking on this project in order to avoid their high earners receiving unexpected tax bills.