HMRC has been forced to withdraw a pensions calculator after it was discovered to be giving incorrect information. The online service was designed to advise people how much they can save into their pension within tax relief limits.
Royal London discovered that the calculator was giving incorrect results for people looking at their carry forward allowance for the tax years 2017/18 and 2018/19. You can normally contribute £40,000 a year into your pension with tax relief and the carry forward rules allow you to bring unused allowances forward from previous years.
Recent changes to the law have meant that anyone earning over £150,000 has a lower annual allowance, and it was these people who potentially received incorrect advice from the calculator. Some were informed that they had already exceeded their annual allowance for contributions. The example given by Royal London was a customer who was advised they had a contributions limit of £10,000, when they actually had £35,000.
The calculator only went live at the start of the tax year, which means there is still a lot of time left for people to make the most of their annual allowance. So whilst the issue is embarrassing for HMRC, it shouldn’t have serious consequences for the individuals affected.
However, it also serves as a reminder that it is important to update your finances regularly, instead of just reviewing matters at year end. Pension contributions are a tax-efficient way of saving money for high-earners.
The calculator has now been withdrawn, but if you have been searching for such information recently please get in touch to discuss your situation.