In the run up to the March 2016 budget it was feared that the current pension tax relief regime would be overhauled, however the fears were shortlived as the Chancellor announced ‘Now is not the time to make radical changes’.

It is important not to be complacent as an overhaul of the current regime could happen in the future. The current regime works in such a way that savers receive tax relief at the same rate as their marginal income tax level. This means basic rate tax payers receive relief at 20% and higher rate taxpayers at 40% or 45% for additional rate taxpayers.

The maximum annual pension contribution for tax year 2016/17 is capped at £40,000 unless you have already flexibly accessed your pension benefits and as such would be limited to £10,000 per annum.

It is possible to contribute greater amounts using carry forward of the previous 3 years unused pension contributions. Saving in Pensions is tax efficient and funds benefit from tax free growth whilst invested. A tax free sum of 25% of the fund value is available from age 55.