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This guidance note considers the legislative and practical limits on member’s and employer’s contributions to registered pension schemes.

Though in principle, there is here is no limit on the amount that can be invested in a registered pension scheme by a member or by their employer, in practice contributions will normally be restricted to the amount on which tax relief is available.

Following abolition of the lifetime allowance from 6 April 2024, a number of factors impact this decision:

1. •

   there is an annual maximum to the tax relieved contributions which can be invested (and/or the value attributed to increases in scheme benefits for defined benefits pensions). This is called the annual allowance

2. •

   where the value of a fund (or the scheme benefits for defined benefits pensions) exceeds the lump sum and death benefit allowance, the tax payable on withdrawals/ benefits may be increased

3. •

   there can be restrictions on the maximum tax-deductible employer contribution, if these exceed amounts wholly and exclusively for the purpose of the trade. Such considerations are particularly like to affect owner managed businesses

Before