The Annual Allowance limits the amount of tax privileges on a member’s ‘pension input’ each year. If the value of a member’s pension input exceeds the Annual Allowance, the excess will be subject to a tax charge. ‘Pension input’ includes:
The capital value of any benefit accrual in defined benefit pension schemes (such as this Scheme). The capital value is calculated by multiplying the increase in the level of your pension entitlement during the tax year by a factor of 16; and
Any other contributions to defined contribution schemes, such as Additional Voluntary Contributions (AVCs) or contributions to any other HMRC Registered Pension Scheme. This may include any pension arrangements that you contribute to on a private basis.
The Annual Allowance for the 2018/2019 tax year is £40,000.