In theory there is no longer a limit on the amount that can be contributed to a pension scheme for the benefit of a member either by the member or an employer. However, HMRC has set various limits that in practice will limit the amount that members and/or employers will wish to contribute to the pension schemes.

The Annual Allowance

If the gross amount contributed in any twelve month period, "the input period", to any one or more pension schemes for a member exceeds the Annual Allowance for the tax year in which the pension input period ends, the member will incur an Annual Allowance Charge of 40% of the excess.

The pension input period for The Taylor Patterson SIPP is the tax year and for SSAS, the employer's accounting year. If there is no employer, it is the tax year.

There is no limit to the Annual Allowance in the year a member fully crystallises benefits in a particular scheme.

Member Contributions

A member can contribute the greater of £3600 and 100% of UK relevant earnings and obtain tax relief.

Member contributions to a SIPP will be paid net of basic rate tax which will be reclaimed by Taylor Patterson and credited to the member's SIPP account. If the member is a higher rate taxpayer, tax relief at the member's marginal rate of tax can be claimed through the member's self-assessment return.

Taylor Patterson does not accept direct contributions to a SSAS from a member. Member contributions to SSAS are paid by the employer and deducted from the member's pay.

Employer Contributions

There is no limit to the amount an employer can contribute to pension arrangements for directors and other employees provided they are made "wholly and exclusively for the purposes of the employer's trade or profession". As to whether or not a contribution will meet with this requirement is a matter for HMRC. Employers are advised to seek guidance from their accountant who may wish to refer to HMRC guidance on employer contributions in the Registered Pension Scheme Manual at http://www.hmrc.gov.uk/manuals/rpsmmanual/rpsm05102000.htm and the Business Income Manual at http://www.hmrc.gov.uk/manuals/bimmanual/BIM46000.htm

This is particularly relevant in respect of controlling directors and connected persons.

Contributions by Third Parties

Persons or organisations other than the member or employer can contribute to a member's SIPP and such contributions will be treated as net contributions and Taylor Patterson will claim a refund of tax at the basic rate for the member's SIPP. The contributor will not, however, receive tax relief and the gross contribution will count against the Annual Allowance.

The Rules of the Taylor Patterson SSAS do not permit such contributions.

In-Specie Contributions

It is possible for assets such as commercial property and market investments to be transferred to a pension scheme by members, employers and others in lieu of a cash contribution.

Such transfers from members are treated as net of basic rate tax which will be reclaimed by Taylor Patterson. Company and contributions from others are gross but an employer will be able to treat the transfer as a normal employer contribution and claim tax relief.

Transfers of property will be at market value and have to be supported by an independent professional valuation.

Transfers of market securities will be at market value determined in accordance with HMRC regulations and supported by a professional valuation and stamp duty will be payable.

All such transfers will be disposals for tax purposes and stamp duty and, if applicable, VAT will be payable. The usual due diligence applicable to any property transaction will have to undertaken in accordance with Taylor Patterson's requirements.