| In the Pre-Budget Report
last month, changes were announced to the
complex rules for the Special Annual
Allowance (SAA) charge which affects those
with substantial income who make
significant pension contributions. The
current rate of the SAA charge is 20% on
excess pension contributions. The aim of
the charge is to discourage individuals
from making significantly higher pension
contributions in anticipation of the
removal of higher rate tax relief which
will occur in 2011. The main features of
the charge are:
- It applies for 2009/10 and 2010/11
to individuals with relevant income in
excess of £150,000 in either of those
years or the two preceding years and
where increased pension contributions
have been paid after 22 April 2009.
- The total pension contributions paid
exceed £20,000 (the ‘SAA threshold’). A
higher threshold of up to £30,000 may be
possible depending on the level of
contributions in previous years.
- The SAA threshold is reduced by the
amount of so-called ‘protected’
contributions which are sums being paid
at least quarterly under arrangements
put in place before 22 April 2009.
It is now proposed to lower the
threshold for triggering the SAA charge by
reducing the relevant income limit to
£130,000 with effect from 9 December 2009.
Individuals will be affected by this if
their relevant income in 2009/10 or either
of the two preceding years exceeds
£130,000. For 2009/10 only, protected
contributions will include any
contributions paid up to and including 8
December 2009.
The rules will catch one-off
contributions made by employers as well as
lump sum payments made by the scheme
member. In either case the charge is on
the individual.
If you think you may be affected by
this change in the rules please do get in
touch.
Internet link:
HMRC pbrn18 |
