If you have gross annual income of at least £180,000 you will only receive tax relief at the basic rate on pension contributions from 6 April 2011. If your income is likely to be between £150,000 (the level at which the 50% income tax rate comes in) and £180,000 there is a complex calculation of the rate of tax relief you will get, under draft legislation recently published.
For forward planning on your pension contributions you need to know that for every £1,000 that your gross income exceeds £150,000, the normal rate of tax relief will be restricted by 1%. So for gross income of £155,000 the relief will be reduced by 5% and for gross income of £170,000 it will be reduced by 20%.
Complex rules also apply in the run-up to 6 April 2011 where “anti-forestalling” rules can restrict the rate of tax relief in certain circumstances. Please contact us for details by reference to your particular level of income and past record of pension contributions.