Claire Trott: Start your tax year-end planning now

Now is a great time to start to consider any available unused annual allowances and making the most of them for clients, writes Claire Trott

With the deadline for the Mandatory Pension Savings Statements having just passed (6 October) now is a great time to start to consider any available unused annual allowances and making the most of them.

If your client is an active member of a defined benefit pension scheme and they haven’t received a Pension Savings Statement for the tax year 2019/20 then one should be requested immediately. These can take up to three months to arrive, so you don’t want to be doing this near the end of the tax year.

Schemes must provide the data for all their active members, and for all those that have pension input amounts in excess of £40,000 in that scheme they will receive one automatically. However, for those subject to the tapered annual allowance or contributing to more than one scheme, your client could still easily exceed their personal annual allowance.

For defined contribution pension schemes, if you don’t have a full contribution history for this and the previous three tax years, again, now is the time to start collating this information.

If you can acquire more information then, all the better, because if your client has exceeded the annual allowance at any point in the last three tax years you will need to go back three more tax years from that point.

This is why when you have a new client compiling as much historical data you can is crucial and very often more time consuming than it should be. I spend a lot of time asking for more and more information, especially in cases where the client hasn’t had an adviser before so doesn’t understand the importance of something that may have happened many years ago.

Earnings Data

Although it may feel a little premature to be getting income data from your client for the current tax year, in most cases getting historical data will give you a good idea of what the client is likely to receive later in the year. In addition, it gives you time to question the data your client provides.

Unless the client provides you with full tax returns there is often questions that need to be asked, about things such as salary sacrifice and how contributions are paid. Most clients won’t understand the difference between net pay contributions and relief at source contributions. All these need to be factored into tapered annual allowance calculations and can have a significant impact on even the starting figures for the calculations, what the client thinks they get paid, versus what their actual taxable earnings are can be very different.

The tapered annual allowance calculations have not only added complexity to the annual allowance but also what people understand with regards to what earnings are “pensionable” and what aren’t. It is since the introduction of the taper that we have started to see more people just considering their income as the amount they can put into a pension personally; for those that have significant dividends and low salary, this can cause ongoing issues with tax relief.

Carry forward

Hopefully, if you have managed to extract all the correct data from your client and their accountant, you will be in a good position to conduct the carry forward calculations.

Don’t forget to factor in any reduced annual allowance because of Taper in this or previous years. The increase in the threshold and adjusted income figures are only applicable from 2020/21 onwards.

Tax relief

As mentioned above, clients often don’t understand the implications of the way in which they pay their pension contributions, especially if they are a new client. It is important that your client understands how their contributions are paid, either “relief at source” or “net pay”. If they get it wrong, they could be missing out on tax relief they are due.

If your client has been making personal contributions under a relief at source scheme, they may need a reminder to ensure they have reclaimed any higher or additional rate tax relief they are due. This should be done even if they have exceeded their annual allowance and can be done for previous years if they had forgotten.


Every year we see clients leaving paying contributions to the last minute, but for those taking advice there is no need in most cases to leave it that late. The hassle of trying to ensure contributions are paid at the right time and allocated correctly is a worry that can usually be easily avoided.

Give yourself and your client the time to make informed and calm decisions, as we all know you can’t just ask for the money back and unused reliefs also have a time limit.

Claire Trott is head of pensions strategy at St. James’s Place Group