Annual Allowance and Lifetime Allowance


Making a contribution to your SSAS is an extremely tax-efficient way of funding your pension from your company. 

Contributions qualify for corporation tax relief and are not subject to Income Tax or National Insurance. 

The company can contribute up to the Annual Allowance for every member of the scheme. 

The maximum amount a member may accumulate is subject to the Lifetime Allowance.

The Lifetime Allowance is the value of pension plans a member can crystallise before potentially incurring tax charges. Benefits crystallised above the Lifetime Allowance generally incur tax charges, unless you have pre-2009 Primary or Enhanced Protection, or one of the 2012, 2014 or 2016 'Fixed' protections. In addition, individuals who had pension savings of greater than £1,000,000 on 5 April 2016 can apply for Individual Protection 2016, providing they don’t have existing Primary Protection or one of the earlier Individual Protections. Individual Protection 2016 gives individuals a protected Lifetime Allowance equal to the value of their pension savings on 5 April 2016, subject to an overall maximum of £1.25 million.  

Company contributions may need to be justified to the local Inspector of Taxes as being relevant to the members involvement in the business.

The Annual Allowance includes all of a member's pension contributions. Contributions to other pension arrangements need to be deducted from the Annual Allowance in order to calculate the maximum allowable contribution to the SSAS. As of 5 April 2021, the Annual Allowance is £40,000 and the Lifetime Allowance will remain fixed at £1,073,100.  The Lifetime Allowance will remain frozen at this level until 5 April 2026.

Higher earners need to be aware of changes from 6 April 2020. The amount they can invest in a pension and on which they receive tax relief may be as little as £4,000. This includes company contributions to a SSAS, or any other pensions, on their behalf. Earners are affected if their income is more than £240,000, although those with lower incomes could also be caught. There are two definitions of income. These are Adjusted Income and Threshold Income. Adjusted Income includes all taxable income (e.g. salary, bonus, BIK, self-employed earnings, pension income and investment income such as dividends, rent and interest) PLUS pension contributions. Threshold Income includes all taxable income as above but NOT pension contributions (unless paid under a salary sacrifice arrangement where an employee deliberately receives a lower income in exchange for pension contributions). Where Adjusted Income is £240,000 or more AND Threshold Income is over £200,000 then the Annual Allowance reduces. This means that when Adjusted Income reaches £300,000, the Annual Allowance reduces to £4,000. The Annual Allowance is £4,000 thereafter. 

Please note that if you take income from your pension (excluding tax free cash), other than via any relevant Capped Drawdown limits, your Annual Allowance will reduce to £4,000 regardless of earnings. 

            Tax Year                     Annual Allowance         

       Lifetime Allowance        

2018/19 £40,000 £1,030,000
2019/20 £40,000 £1,055,000







Note: The Lifetime Allowance will remain frozen at this level until 5 April 2026.


Please see 'Making contributions as physical assets (in-specie contributions)' for more information.