As the new year beckons, so does a pension deadline that should not be ignored - pensions' carry back.

With only 5 weeks until the end of January deadline, individuals can elect to use their previous tax year's pension contributions allowance. Insurer, Legal and General is reminding people to avail of the opportunity to make 'carry back' contributions into personal and stakeholder plans.

Carrying back works by paying a pension contribution into a personal or stakeholder pension on or before January 31st 2005 and elects to have it treated as if it was paid in the 2003/2004 tax year.

Contributions automatically receives basic-rate tax relief of 22% and higher-rate tax payers can claim even more tax relief through their tax return. Higher-rate tax payers subject to self assessment can also use carry back to reduce any balancing tax payment due on January 31st 2005.

The insurer is highlighting the importance of this facility because new rules that become effective in April 2006 will mean that individuals will no longer be able to benefit from this flexibility.

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