Pensions – changes to the annual allowance
As our readers will be aware the annual allowance for tax relief on pensions is to be reduced to £50,000 (from £255,000) with effect from 6 April 2011.
There will be a three year carry forward rule that allows taxpayers to carry forward unused annual allowance from the last three tax years if they have made pension savings in those years. This means in certain circumstances if pension saving is more than £50,000 taxpayers may not have to pay the annual allowance charge.
HMRC have recently published a summary of responses which have been received on a discussion paper entitled ‘Options to meet high annual allowance charges from pension benefits’ that was published last November.
The full list of responses can be found at
Any revisions to the annual and lifetime allowance draft legislation published on 9 December 2010 will be reflected in the Finance Bill to be published on 31 March 2011.