UK and International Tax news
Pensions Tax Relief
Monday 18th October 2010
Financial Secretary to the Treasury, Mark Hoban MP, has recently announced that the annual allowance for tax-privileged pension saving will be reduced from £255,000 to £50,000, and the lifetime allowance will be reduced from £1.8m to £1.5m. This will replace the complex proposal legislated for by the previous Government in FA2010.
This measure is estimated to raise £4bn per annum, and will be be targeted at those who make the most significant pension savings. The new annual allowance of £50,000 is likley to affect 100,000 pension savers; 80% of those have incomes over £100,000.
The Government has added that it is committed to protecting individuals on low and moderate incomes as far as possible and to protect individuals who exceed the annual allowance due to one-off “spike” in accrual, the Government will allow individuals to offset this against unused allowance from previous years.
There will be further consultation on options enabling people to meet tax charges out of their pensions in November.
The reduced annual allowance will apply from April 2011 and the reduction in the lifetime allowance is likely to apply from April 2012.
If you would like further information on the above, please contact Keith Rushen on 0044 (0)20 7486 2378.Contact Us