Members and their employers may contribute to the scheme and it is also possible for third parties to make contributions. Rowanmoor’s Actuarial Department can provide guidance on the level of contribution necessary to fund for specific pension and tax-free lump sum benefits.
Contributions can be made on behalf of a minor by others, including family members.
The maximum contribution, which can normally be paid to all pension schemes in respect of a member and receive tax relief in one tax year, is known as the annual allowance.
There is no limit to the contributions members can make, which can include those from third parties, but tax relief will only be granted if the member is under the age of 75 and resident in the UK. If a member is or has been a Scottish resident, the tax relief they receive might be different. Contributions should be paid to the scheme net of basic rate tax. Tax relief will only be granted on contributions up to 100% of the member’s earnings in any tax year and cannot be claimed by third parties, making contributions on behalf of a member, as they will be treated for tax purposes as if it had been paid by the member. Tax relief is also limited by the annual allowance, which may include the total of the current annual allowance and any unused qualifying annual allowance carried forward from previous tax years. Members who do not have earnings may contribute up to £3,600 gross (£2,880 net) in each tax year.
We will reclaim basic rate tax relief on behalf of members. Members planning to invest or take benefits should bear in mind that it can take up to eleven weeks for reclaimed tax to be received. Tax relief above the basic rate should be reclaimed via the member’s annual self-assessment tax return. If a member benefits from contributions in excess of the annual allowance, or 100% of their earnings in a tax year, they must inform us immediately. In such circumstances they may need to declare this on their annual personal self-assessment tax return, or other tax-related forms, to HMRC and any excess tax we have reclaimed on their behalf will need to be returned.
Employer contributions are unlimited and will receive tax relief in the year they are made, provided they are wholly and exclusively for the purposes of the employer’s trade. In addition, tax relief on the employer’s total contributions to all registered pension schemes will be spread if they are over £500,000 and constitute an increase of 210% or more over the previous year’s contributions. The employer’s accountant should advise on these aspects.
If the total of the employer’s contribution for a particular member plus the member’s personal contributions exceeds the annual allowance and any unused qualifying annual allowance carried forward from previous tax years, then the member will have to pay tax on it. We will ensure that if any employer contributions, which are due, are not received in the specified time, members are advised of any non-payment in line with The Pensions Regulator’s code of practice.
Please note that a member’s total pension fund must be tested against the lifetime allowance when taking benefits and again at age 75. If the lifetime allowance is exceeded, there will be an additional lifetime allowance charge unless the member has the necessary pension fund protection.
This information relates to the Rowanmoor Family Pension Trust (Family SIPP). If you would like to know more details regarding the information provided on this page please send your questions via the enquiry box on the right hand side or email us. Alternatively please visit our Family Pension Trust literature library.