We’ve now been told exactly what the new rules are to be for contributions from 6 April 2011 – in place of the previously announced rules from the old government where in particular there were to be restrictions in the rate of tax relief available if your income exceeded £150,000. Simplicity is the name of the game here (that’s refreshing for a start), and tax relief will be available at your top tax rate subject to restrictions in what you can contribute as follows:
2010/11 £1.8 million
2011/12 £1.8 million
2012/13 £1.5 million
2010/11 £255,000 (subject to anti-forestalling measures)
The aim is to raise the same amount as under the previously announced rules – that was a somewhat ambitious £3.5 billion per year by way of loss of tax relief – but clearly still being able to get tax relief at your top rate on a maximum contribution of £50,000 is an attractive proposition.
Just one word of warning, but only if you are a member of a final salary pension scheme from a large employer where they have changed the way that an increase in your pension benefits can be measured in terms of the new and reduced contribution limit of £50,000. We will be pleased to advise on this.