News On Pension Contributions Tax Relief

Consideration is being given to abolishing the previously announced rules whereby from 6 April 2011 those with income of at least £150,000 in the tax year concerned, suffer a loss of some or all of the higher rate tax relief otherwise available.

The aim is to raise at least the same amount of revenue (£3.5 billion annually), however, and this may be achieved by drastically reducing the annual allowance to in the region of £30,000 to £45,000. Clearly, therefore, this will impact on many people.

A Discussion Document raised a number of issues, including the possibility of capping tax relief at 40% and what should be the appropriate level of the lifetime allowance which currently stands at £1.8 million and may well be reduced. We will have to wait to see what transpires, but clearly there are to be some severe restrictions applying from 6 April 2011.

If you need to talk about your pension please call us and we will be delighted to help you plan for a more comfortable retirement!