RPSM15200080 - Member Pages: Special annual allowance: Overview: What are infrequent contributions?
This guidance only applies for the 2009-10 and 2010-11 tax years.
What are infrequent contributions and why are they important?
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Contributions are infrequent if
- they are paid to an other money purchase arrangement and are either
- relievable pension contributions paid by you or on your behalf (other than by your employer) or
- contributions paid by your employer; and
- they have not been paid on a quarterly or more frequent basis.
The amount of infrequent contributions that is used to help calculate your special annual allowance is the 3 yearly average amount of those contributions paid in tax years 2006/07 to 2008/09. Where the amount of infrequent contributions paid in a tax year is more than the annual allowance for that year the amount of infrequent contributions being used to calculate the 3 yearly average amount is capped at the level of the annual allowance
In 2006/07 Trevor paid a one off contribution to his personal pension scheme of £250,000. This is more than the annual allowance for the year so in calculating the 3 year average only £215,000 (the annual allowance for the year) will be used.
In 2007/08 no contributions were paid by Trevor, by his employer or by someone else on Trevor’s behalf.
In 2008/09 Trevor paid a one off contribution of £50,000 to his personal pension scheme. His employer also paid one contribution of £50,000 to Trevor’s personal pension scheme.
All these contributions are infrequent contributions. The 3 yearly average that is used to find Trevor’s special annual allowance is calculated as
[£215,000 + £0 + £100,000]/3
Trevor’s special annual allowance is based on an amount of £30,000 as he has made average infrequent contributions of more than £30,000