Protected pension contributions
From April 2010 tax relief on all pension contributions, including employers’ contributions, will be restricted on a tapered basis for those with annual total incomes of more than £150,000.
To prevent taxpayers making substantial additional pension contributions prior to April 2010 a new personal tax charge on pension savers known as the ‘special annual allowance charge’ was introduced. This charge negates the tax benefit of making additional pension contributions for taxpayers whose income exceeds £150,000 per annum.
New legislation comes into force on 19 March 2010 which extends protection against the pension special annual allowance charge in the following three situations:
- Where there was a change in pension provider on or after 22 April 2009;
- For contributions which an individual or an individual’s employer was contractually committed to at 22 April 2009 but which had not actually commenced on that date;
- For certain lump sum contributions made on 22 April 2009.
The legislation aims to protect from the special annual allowance charge those regular contributions that were ongoing at Budget Day, 22 April 2009. The legislation will have retrospective effect to 22 April 2009.