How to pay into your Personal Pension before the tax year ends

What is my annual allowance?

For many investors, it can be a good idea to maximise the use of the pensions annual allowance. When you pay into a pension, the government normally adds a top-up payment in form of tax relief.

However, each tax year, you can only get tax relief on your ‘relevant’ earnings or on up to £60,000 – whichever is lower. This £60,000 cap is known as the annual allowance. If you earn less than £3,600, you can still contribute to a pension and benefit from tax relief. In this case, contributions are capped at £2,880 which tax relief would bring up to £3,600.

Your annual allowance includes all contributions made by you, your employer, and anyone else who pays into your pension(s), as well as any tax relief you receive from the government.

The allowance applies across all pensions you have – it’s not a ‘per pension limit’. The annual allowance is not impacted by pension transfers.

Relevant earnings usually include salary and any bonuses, but not dividend income or rental income. If you earn more than £260,000 per year, your annual allowance could fall to an amount between £10,000 and £60,000. This is known as the tapered annual allowance.

You may be able to pay more than just this year's allowance into your pension by using your carry forward allowance from the three previous tax years. You must have been a member of a registered pension scheme and earned the amount you are carrying forward.

Key pension contribution deadlines

While the tax year ends on 5 April, you’ll need to make your final contribution to our pension well in advance of this deadline if you’re to take advantage of your annual allowance during the current tax window. If you would like to contribute to your J.P. Morgan Personal Investing pension, payments can only be made via Direct Debit at this time.  You can't pay into a J.P. Morgan Personal Investing pension by bank transfer.

If you do not have an active Direct Debit, a new one must be requested by 12 March to make a contribution during this tax year. 

If you have an active Direct Debit and would like to make an additional one-off contribution, the deadline is 17 March.

Existing monthly contributions: To make sure that your monthly Personal Pension contribution counts towards this tax year’s annual allowance, you'll need to change your Direct Debit collection date to have payments collected on or before 31 March.

If you’re making your first Direct Debit payment into your pension, we may need to ask for documents to verify your identity or support your set-up. This could mean it takes longer to get your contributions set up, so it’s a good idea not to leave it to the last minute to make sure your contributions arrive on time.

For all other J.P. Morgan Personal Investing tax-efficient products, it’s possible to pay into your account on 5 April and take advantage of this year’s allowances.

How to contribute towards your pension

1. Personal contribution

You can pay into your pension as often as you like, or you can set up regular payments, both via a Direct Debit mandate. Either way, to pay into your Personal Pension with us you will need to create a Direct Debit mandate between your bank account and our pension administrator Embark’s bank account. That does not mean you are obliged to set up a monthly pension contribution – simply, the Direct Debit mandate exists as the bridge between your bank account and our pension administrator.

This Direct Debit mandate is set up the first time you initiate a pension contribution. The first pension contribution may take up to ten business days to arrive. Please note that in some cases we might need to ask you to provide additional documentation to enable the Direct Debit mandate to be established. Once the mandate is set up, further contributions (monthly or one-off contributions) usually take up to three business days. It is worth bearing these timelines in mind ahead of the deadline for tax year end.

It is only possible to change your scheduled contribution day via our website, and not via the mobile app.

2. Employer contribution

If your employer makes contributions to personal pensions, it’s likely they can contribute to your Personal Pension with us.

Employer contributions to us are made gross by Direct Debit, which means that they are taken from your pay before it's taxed. If you’re a higher or additional rate taxpayer this also avoids having to claim tax relief back on your tax return.

You can either register your employer as part of the pension account setup process if you’re a new customer, or register your employer through your J.P. Morgan Personal Investing account if you’re an existing customer. 

Please note that we only accept limited companies for employer contributions. If you, or an employer, are contributing as a "Sole Trader" this must be done via personal contributions.

It is not possible to change your scheduled contribution day for an employer contribution. You would need to stop this contribution schedule and set up a new Direct Debit schedule.

3. Transfer in your pension from another provider

Tax year end is a good opportunity to organise your finances, part of which can involve consolidating your pensions. For example, consolidating your pensions into a J.P. Morgan Personal Investing Personal Pension could make it easier to manage your retirement planning and could also reduce your spending on fees. Before transferring your pension, it’s a good idea to check that you won’t lose any benefits or pay any unexpected charges from doing so.

As your existing pensions would already have been subject to tax relief, you don’t need to rush to get this done before the end of the tax year and any amounts transferred will not count towards this year’s annual allowance.

You can find more information on how to pay into your Personal Pension via our support page.

Speak to a wealth expert

We’re aware that pensions can be tricky to understand, and that it can be useful to speak to someone for support. Our free guidance offering can provide support on opening a Personal Pension with us and how to contribute towards it.

Alternatively, by booking a call for our paid advice offering, a J.P. Morgan Personal Investing wealth expert can help you maximise your pension contributions ahead of tax year end and advise you on retirement planning.

Risk warning

As with all investing, your capital is at risk. The value of your portfolio can go down or up and you may get back less than you invest. Pension eligibility rules apply. If you are unsure if a pension is right for you, please seek financial advice. Before transferring, check you won't lose any benefits or pay any unexpected charges. During a transfer, your investments will be out of the market. Seek financial advice if you're unsure if a transfer is right for you. Tax rules vary by individual status and may change. This is general information, not personalised tax advice.