Employer Pension contributions and the Annual allowance

[Patcherdog]

I work in financial services. A query has come up about how much a director can pay into their pension.

My colleagues say an employer pension contribution is basically unlimited apart from having to be wholly and exclusively for the purposes of the business and they don't think it is restricted by the annual allowance.

I think that it is restricted by the annual allowance and everything I have read indicates that it is. Am I wrong - my colleagues think so.

I know there may be scope for carry forward but that aside, does the annual allowance apply to an employer contribution or not?

Thanks Mumsnet!

It's restricted at a threshold before tax kicks in

Yeah annual allowance for tax relief definitely applies to all contributions regardless of source

It just isn’t limited by salary. The company can pay in more than the director is paid in salary and it won’t be taxed so long as it’s under the annual allowance

They CAN pay in more than the annual allowance, but the director would be taxed on it

Yes this. Same as any pension contribution if you go over annual allowance then it’s subject to tax. There must be some way you can pay it out of the contributions going over threshold vs as an on top payment when you do your tax return as one of my managers was saying recently they had been emailed by our employer scheme to offer that option.