The annual allowance for pension contributions is £40,000 for 2016/17. However there are two circumstances in which the allowance is reduced to a minimum of £10,000:
A) Where the taxpayer has flexi-accessed their defined contribution pension scheme or SASS;
B) Where the taxpayer has net income of £150,000 o more for the tax year.
Situation A) can only apply if the taxpayer is aged 55 or over, and it wont apply if the funds taken from the pension scheme were restricted to the tax-free cash payment. If your client has accessed his pension fund already, check with their pensions adviser whether this restriction to the annual allowance applies.
Situation B) can apply to taxpayers of any age. The annual allowance is tapered down by £1 for every £2 of the taxpayers net income which exceeds £150,000, down to a minimum of £10,000.
It is difficult to assess whether you may be affected, as an accurate calculation of his net income cant be made until all his income and benefit figures are known for the full tax year. But the client may want to make pension contributions within the current tax year, to achieve the tax relief due.
Note this definition of net income doesn’t include an adjustment for gift aid, but it does include payroll giving and gifts of assets to charities. The income figure must also include all pension contributions made by the taxpayers employer on his behalf.