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14/10/2010
Pensions Tax Relief Changes Announced
A shake up to restricting pensions tax relief was announced today by Financial Secretary to the Treasury, Mark Hoban.
The annual allowance for tax-privileged pension saving will now be reduced from £255,000 to £50,000, and the lifetime allowance will be reduced from £1.8 million to £1.5 million.
This will replace the complex proposal legislated for by the last Government in the Finance Act 2010.
The measure will raise £4 billion per annum in steady state and will help reduce the record Budget deficit. It will be targeted at those who make the most significant pension savings. An annual allowance of £50,000 will affect 100,000 pension savers 80% of those will have incomes over £100,000.
The Government is protecting individuals on low and moderate incomes as far as possible. To protect individuals who exceed the annual allowance due to one-off 'spikes' in accrual, the Government will allow individuals to offset this against unused allowance from previous years.
There will also be consultations on options enabling people to meet tax charges out of their pensions in November.
In order to protect the public finances it is necessary to introduce the reduced annual allowance from April 2011. The Government plans to introduce the reduction in the lifetime allowance from April 2012.
Mark Hoban said: "We have abandoned the previous Government's complex proposals and developed a solution that will help to tackle the deficit but not hit those on low and moderate incomes. We have taken a tough but fair decision."
(BMcN)
The annual allowance for tax-privileged pension saving will now be reduced from £255,000 to £50,000, and the lifetime allowance will be reduced from £1.8 million to £1.5 million.
This will replace the complex proposal legislated for by the last Government in the Finance Act 2010.
The measure will raise £4 billion per annum in steady state and will help reduce the record Budget deficit. It will be targeted at those who make the most significant pension savings. An annual allowance of £50,000 will affect 100,000 pension savers 80% of those will have incomes over £100,000.
The Government is protecting individuals on low and moderate incomes as far as possible. To protect individuals who exceed the annual allowance due to one-off 'spikes' in accrual, the Government will allow individuals to offset this against unused allowance from previous years.
There will also be consultations on options enabling people to meet tax charges out of their pensions in November.
In order to protect the public finances it is necessary to introduce the reduced annual allowance from April 2011. The Government plans to introduce the reduction in the lifetime allowance from April 2012.
Mark Hoban said: "We have abandoned the previous Government's complex proposals and developed a solution that will help to tackle the deficit but not hit those on low and moderate incomes. We have taken a tough but fair decision."
(BMcN)
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