| Pension contributions
made by an individual are usually paid
net of basic rate tax. Where the
individual is a higher rate taxpayer
further relief is due which
significantly reduces the net cost of
the contribution.
The government has announced its
intention to restrict tax relief on
pension savings with effect from 6
April 2011 for people with taxable
income of £150,000 or more. The relief
will be tapered down until it is 20%.
Legislation will be introduced to
prevent those potentially affected by
the new rules from seeking to
forestall this change by increasing
their pension savings in excess of
their normal regular pattern, prior to
that restriction taking effect.
The forestalling measures will
apply to individuals with incomes of
£150,000 or more who, from Budget Day,
change:
- their normal pattern of regular
pension contributions, or
- the normal way in which their
pension benefits are accrued, and
- their total pension
contributions or benefits accrued
exceed £20,000 a year.
Reacting to the Chancellor’s Budget
speech, Richard Lambert, CBI
Director-General, said:
‘Changing the higher-rate tax
relief on pensions weakens incentives
to save for retirement and is yet
another change to a system which
really needs stability.’
Internet link:
HMRC pensions changes |
