The 2020-21 tax year is starting on the 6th of April. See below an update on the key changes regarding workplace pensions:
Earnings Thresholds
This change only applies to schemes where contributions are calculated on a Qualifying Earnings basis
From the 6th of April 2020, the lower level of the Qualifying earnings band will increase from £6,136 to £6,240. The upper level will remain capped at £50,000.
This means that contributions will be calculated on the worker’s gross annual earnings that fall between £6,240 and £50,000, known as “qualifying earnings”. For example, if a worker earns £20,000 their qualifying earnings will be £13,760.
Auto-enrolment pensions and Salary Exchange are set up and taken care of for you.
Husky will apply an automatic update to ensure all our clients are compliant.
Minimum contributions
There will be no changes to the minimum contribution levels.
Lifetime Allowance
For the 2020-21 tax year, the Lifetime Allowance will increase from £1.055 million to £1.073 million.
The Lifetime Allowance is the maximum amount that individuals can save into a pension while still enjoying the full tax benefits.
Tapered allowance
The two tapered annual allowance thresholds (threshold and adjusted) have each been raised by £90,000 for the 2020-21 tax year.
This means that the“threshold income” will increase from £110,000 to £200,000, so individuals with income below £200,000 will not be affected by the tapered annual allowance. The annual allowance will only begin to taper down for individuals who also have an “adjusted income” above £240,000 (previously £150,000).
The annual allowance for pension contributions will still be £40,000 for 2020-21.