Pension tax allowances

The DC Plan gives most members plenty of scope to save for retirement, but there are tax allowances that affect how much you can save tax efficiently each year. We've provided an overview below. 

You’re responsible for monitoring how your retirement savings from all pension schemes measure up against these allowances. ITV Pensions can help you understand how your savings are building up, but if you’d like advice about saving tax efficiently for retirement, you’ll need to speak to an independent financial adviser.  

A tax effective way to save 

  • The DC Plan is a tax-registered pension scheme. You can save as much as you like into any number and type of registered pension schemes.
  • If you pay income tax, you can get tax relief on your contributions up to 100% of your earnings each year (or £3,600 a year if greater), provided you pay the contributions before age 75. However, there is an allowance on the amount of retirement savings you can build up tax efficiently over a 12-month period.

Annual Allowance

  • This is the amount of retirement savings you can build up tax efficiently in any tax year. The standard Annual Allowance is £60,000 for the 2024/25 tax year (up until the tax year ending 5th April 2023, the standard Annual Allowance was £40,000).
  • The standard Annual Allowance will reduce if your ‘Adjusted Income’ exceeds £260,000 in a tax year. Your Adjusted Income includes all your UK taxable income (such as salary, bonus and other taxable benefits, bank interest, dividend income and taxable rental income), plus any contributions made by you and your employer to a pension scheme. For every £1 of Adjusted Income over £260,000, the Annual Allowance will reduce by 50p from £60,000 to a minimum of £10,000 (up until the tax year ending 5th April 2023, the reduced Annual Allowance was a minimum of £4,000). If you think you may be affected, please contact ITV Pensions to discuss further.
  • Currently, any allowances you do not use in one year can be carried forward for up to 3 years.
  • All retirement savings made into UK registered pension schemes for the period 6th April to 5th April are measured against the Annual Allowance. This includes: 
    • any contributions you and your employer make to the DC Plan, including extra contributions;
    • any contributions you or any employer have made to any registered defined contribution pension arrangements such as personal pensions or the ITV Auto-Enrolment Plan; and
    • broadly, the increase in the capital value over the 12-month period of any defined benefit (DB) pension you may have, although not all increases in value count. For example, increases to any deferred ITV DB pension would not count.
  • Any retirement savings you make above the Annual Allowance will be subject to the Annual Allowance charge. The amount of tax you would have to pay depends on the income tax rate that applies to you.

Money Purchase Annual Allowance

  • If you take any defined contribution savings (including savings you’ve built up by paying extra contributions) flexibly, for example as cash (other than the 25% tax-free cash sum) or through flexible income, or you exceed the income limit for capped drawdown, you’ll have a lower Annual Allowance. This is known as the Money Purchase Annual Allowance (MPAA) and is £10,000 (previously £4,000 for the tax year ending 5th April 2023). This limit applies to the total of your own contribution, ITV’s contribution and any other contribution you might make to another pension scheme or that are paid on your behalf. You won’t be able to carry forward any unused Money Purchase Annual Allowances from the previous 3 tax years.
  • If you’re currently contributing to the ITV DC Plan and access defined contribution savings from another DC scheme in this way, you need to let ITV Pensions know within 91 days of accessing your benefits that the Money Purchase Annual Allowance applies.

Lump Sum Allowance

  • The Lump Sum Allowance is a limit on the tax-free cash you can take from all registered pension schemes.
  • It’s currently £268,275, although you may have a higher Lump Sum Allowance if you have a protection from the former Lifetime Allowance.
  • Tax-free lump sums (also called pension commencement lump sums) and the-tax free part of certain lump sums which you can take from defined contribution arrangements (also called uncrystallised funds pension lump sums) count towards this allowance.
  • We can only pay you tax-free cash up to your available Lump Sum Allowance. If you’ve previously taken any of these types of lump sums from the DC Plan or from any other registered pension schemes, you’ll already have used up some or all of your Lump Sum Allowance.

Lump Sum & Death Benefit Allowance

  • The Lump Sum & Death Benefit Allowance is a limit on the total tax-free cash you can take, and the tax-free lump sums that can be paid when you die, across all registered pension schemes.
  • It's currently £1,073,100, although you may have a higher Lump Sum & Death Benefit Allowance if you have a protection from the (former) Lifetime Allowance.
  • Any tax-free lump sums (or tax-free parts of certain lump sums) that count towards your Lump Sum Allowance also count towards your Lump Sum & Death Benefit Allowance. Also, the tax-free parts of serious ill-health lump sums and most lump sums payable to your dependants when you die count towards your Lump Sum & Death Benefit Allowance.
  • If any part of a lump sum paid when you die exceeds your Lump Sum & Death Benefit Allowance, the person who receives the lump sum may have to pay income tax on the excess.