The Treasury has announced that significant reductions in the annual and lifetime allowances for tax-privileged pension contributions will replace the complex FA 2010 regime introduced by the previous Government. The change was the subject of a consultation paper issued in July.
The annual allowance will be reduced from £255,000 to £50,000 from April 2011, and the lifetime allowance will be reduced from £1.8 million to £1.5 million from April 2012.
‘An annual allowance of £50,000 will affect 100,000 pension savers – 80% of those will have incomes over £100,000,’ the Treasury said.
To protect individuals who exceed the annual allowance due to one-off ‘spike’ in accrual, the Government will allow individuals to offset this against unused allowance from previous years.
Mark Hoban, the Financial Secretary to the Treasury, said: ‘We have abandoned the previous Government’s complex proposals and developed a solution that will help to tackle the deficit but not hit those on low and moderate incomes. We have taken a tough but fair decision.’
The Treasury has announced that significant reductions in the annual and lifetime allowances for tax-privileged pension contributions will replace the complex FA 2010 regime introduced by the previous Government. The change was the subject of a consultation paper issued in July.
The annual allowance will be reduced from £255,000 to £50,000 from April 2011, and the lifetime allowance will be reduced from £1.8 million to £1.5 million from April 2012.
‘An annual allowance of £50,000 will affect 100,000 pension savers – 80% of those will have incomes over £100,000,’ the Treasury said.
To protect individuals who exceed the annual allowance due to one-off ‘spike’ in accrual, the Government will allow individuals to offset this against unused allowance from previous years.
Mark Hoban, the Financial Secretary to the Treasury, said: ‘We have abandoned the previous Government’s complex proposals and developed a solution that will help to tackle the deficit but not hit those on low and moderate incomes. We have taken a tough but fair decision.’
