Tax Relief on Pension Contributions

The Chancellor has announced that, starting in 2011-12, tax relief on pension contributions will be restricted to basic rate for individuals with an annual income of £150,000 or higher.

In anticipation of this change, there will be special rules which will apply from Budget Day (22 April 2009) to prevent people from making large additional contributions to their pensions before then in order to benefit from higher rates of tax relief while it is still available.

These changes do not affect the vast majority of individuals. They affect only those who have a total annual income of £150,000 or higher in the current tax year or in either of the preceding two tax years. More information is in Budget Note 47 and in the guidance notes:

• Pension Schemes - Limiting Tax Relief for High Income Individuals (Guidance for Industry)
• Pensions - Limiting Tax Relief for High Income Individuals (Guidance for Individuals)
• Pension Schemes - Limiting Tax Relief for High Income Individuals Special Annual Allowance (Technical Guidance)
• Pensions - Special Annual Allowance Charge (Draft Legislation and Explanatory Note)
• Pensions - Ministerial Statement - 22 April 2009 (opens in a new window)
• Pensions – Additional questions and answers – July 2009 (PDF 25K)