Not long after Labour launched its assault on higher rate tax relief on pension contributions made by ‘super earners’ (prefaced by the introduction of the hideously complex interim ‘anti-forestalling measures’) the Coalition government has confirmed today that it will repeal these tax laws and replace them with a more simplified regime:
- £50,000 – annual pension contribution allowance for all
- unused pension allowance can be carried forward 3 years e.g. for ‘spikes’ in contributions
- enforced from 5 April 2011 (although it could impact on some people now depending on when the pension scheme period runs to).
- the lifetime allowance will also be reduced from £1.8m to £1.5m from 2012.
Although simplification of the previous rules is welcomed, it does feel like yet another kick in the teeth for successful owner managers and entrepreneurs who want to do the right thing in planning for retirement yet face severe restrictions on the amount of their hard earned cash that they can tuck away tax efficiently for future years.
- What are the pension changes and how will they affect savers? (guardian.co.uk)
- Pension tax benefits slashed for wealthy (independent.co.uk)
- Middle classes hit again with tax raid on pensions (telegraph.co.uk)