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Budget
24 March 2010
At Budget 2009 and the 2009 Pre-Budget Report, the Government announced changes to pensions tax relief for high income individuals to ensure that it remains fair, affordable, and sustainable.
From April 2011 tax relief on pension contributions will be restricted for individuals with gross incomes of £150,000 and over (where gross income incorporates all pension contributions, including those provided by an employer). Tax relief will gradually be tapered away so that for those on incomes of £180,000 and over it is worth 20 per cent, the same rate received by a basic-rate income taxpayer. To provide more certainty for individuals around whether they are affected, and to reduce administrative burdens for schemes, this will be subject to an income floor at £130,000 of pre-tax income (excluding the value of any employer pension contributions).
Alongside the 2009 Pre-Budget Report the Government launched a consultation on the implementation of the restriction of pensions tax, including a consultation Impact Assessment. The consultation closed on 3 March 2010. Further information on the pensions tax relief consultation, including minutes from meetings, is also available.
Budget 2010 announced further decisions on how the restriction of relief will be applied and delivered, and that deemed contributions to defined benefit pension schemes will be valued using the age-related factors method.
Alongside Budget 2010, the Government has published 'Implementing the restriction of pensions tax relief: a summary of consultation responses'. This document sets out the views received during the consultation, and outlines the Government's response and the next steps for developing the restriction ahead of its introduction in April 2011.
'Implementing the restriction of pensions tax relief: a summary of consultation responses' is available in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website. For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.
