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How To Use Your Pension Annual Allowance

Written by
Tom Lamb
Time to read
3 minutes, 31 seconds

The 2022/23 tax year is approaching its end, and now is the time to think about doing more with your money before deadline day on April 5.

What you do today could make a real difference to your future, particularly if you are investing in a Pension.

Why a Pension?

A Pension is a long-term investment that aims to grow your money towards funding a fulfilling retirement. The earlier you start investing in a Pension the better, as this gives your money more opportunity to grow.

Tax advantages of a Pension.

Before you’ve even thought about investment growth, you’ve already made your money go further by benefiting from tax relief on pension contributions. Basic rate taxpayers receive tax relief of 20% when saving into a Pension, with further tax relief being available to higher and additional rate taxpayers.

Use your Pension allowance before tax year end

Your annual allowance is the total amount you can save into your pensions, in a tax year, before you have to pay tax.

The Pension annual allowance for the 2022/23 tax year is normally £40,000*. You can contribute up to 100% of your annual earnings into your Pension each year or up to the annual allowance, whichever is lower.

The annual allowance is made up of any personal contributions, employer contributions and government tax relief received. Contributions that exceed your annual salary or the annual allowance, are subject to an annual allowance tax charge.

Your annual allowance will renew at the start of each tax year. Consider making the most of this year’s allowance by paying more into your Pension plan now. This gives you more time invested, and means you can start the 2023/24 tax year afresh on April 6.

Carry forward your allowance

Unlike an ISA allowance, you may be able to carry forward unused Pension allowance from previous tax years.  This allows you to use up any unused allowance from the three previous tax years, as long as you were a member of a registered UK Pension in those years. If you would like more information on this, please speak to a financial adviser.

Don’t forget your missing Pensions

 When thinking about your Pensions at tax year end, it is also a good opportunity to consider if you could have any lost or missing Pensions. Perhaps you know you have other Pensions but didn’t realise that you could potentially consolidate these into one. Consolidating can be quick and easy, get in touch with our Pensions team today at (number) to find out more. However, be aware that some Pensions you are invested in may have exit fees and certain Pensions can provide valuable guarantees, such as guaranteed annuity rates, protected higher tax-free cash percentages and protected retirement ages that would be lost on transfer.

Finding lost Pensions can be easy, simply give our missing Pensions team a call at True Potential Wealth Management on 0191 625 0350

Start again on April 6

Once you’ve got your finances in order for the end of the 2022/23 tax year, get yourself set to go again at the start of the new 2023/24 tax year.

From April 6, the start of the 2023 /24 tax year, you’ll be able to invest a fresh Pension allowance of up to 100% of your earnings or up to the annual allowance of £40,000*.

 Remember, the earlier you are invested, the more time you have to benefit from potential growth and subsequent compound growth, as well as the already discussed tax advantages.

*The annual pension tax allowance is £40,000 for most people and this depends on your circumstances. If you would like more information on how much you are able to contribute into your pension this tax year, please get in touch with us.

If you need financial advice or would like to open an account yourself visit or call our dedicated team on 0191 625 0350.


With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. Past performance is not a guide to future performance. Pension eligibility and tax rules apply. Tax is subject to an individual’s personal circumstances, and tax rules can change at any time. This blog is not personal financial advice or a personal recommendation.



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