TREASURY ANNOUNCES CHANGES TO RESTRICTING PENSIONS TAX RELIEF
14 October 2010
Financial Secretary to the Treasury, Mark Hoban MP, announced today that the annual allowance for tax-privileged pension saving will be reduced from £255,000 to £50,000, and the lifetime allowance will be reduced from £1.8 million to £1.5 million. This will replace the complex proposal legislated for by the last government in the Finance Act 2010.
This measure will raise £4 billion per annum in steady state and will help reduce the record Budget deficit that this government inherited. It will be targeted at those who make the most significant pension savings. An annual allowance of £50,000 will affect 100,000 pension savers 80% of those will have incomes over £100,000.
The government is committed to protecting individuals on low and moderate incomes as far as possible. To protect individuals who exceed the annual allowance due to one-off “spikes” in accrual, the Government will allow individuals to offset this against unused allowance from previous years.
In order to protect the public finances it is necessary to introduce the reduced annual allowance from April 2011. The government plans to introduce the reduction in the lifetime allowance from April 2012.
Read the full press release from HM Treasury