Treasury consult on tax relief for pension contributions

Looks like the annual contribution allowance of £255k pa will be phased out in favour of a simpler but less generous limit of £30k - £45k per annum. The treasury will also consider the complicated issue of valuing defined benefit pension schemes. The changes are most likely to be implemented from April 2011.

The 250% tax on pension contributions

High earners with occupational pensions beware!

Ten ways to beat Alistair Darling’s big squeeze

An interesting article from The Times on Sunday.

Pre Budget Report - Pension contributions for high earners

My understanding of the latest change is that if you earn/ have income of £150k + the tax relief on contributions will be restricted if contributions exceed £20k or in certain circumstances £30k per annum. Employer pension contribution were not included in the calculation of earnings/ income.

The amendment in the PBR states that for those earning £130k + employer pension contributions will be included in calculating the £150k level.

Simple.

High earners and pension contributions

The 2009 Budget introduced changes which will affect high earners (earning £100,000 or more) and the pension contributions that they might make. The reduction in the personal allowance and increase in income tax rate make pension contributions an attractive planning option. However, contributions may need to be carefully planned to avoid tax charges under so-called "anti-forestalling" measures.

AEGON Scottish Equitable have produced one of the clearest and most user-friendly explanations of the changes and its implications we have found.

High earners - Pension amendments to the 2009 Finance Bill

If your income has been over £150k in the past two tax years or will be this year then your pension contributions may be restricted. More details can be found here or call us to discuss your particular case - 020 8209 9247