RPSM15101090 - Technical Pages: Special annual allowance: £130,000 limit: Amount of relevant income

This guidance only applies for the 2009-10 and 2010-11 tax years.

The amount of relevant income

The amount found after Step 6 (see RPSM15101080) is the ‘relevant income figure’.

If the amount is £130,000 or more, the special annual allowance provisions will apply for the tax year in question. If total adjusted pension input amounts exceed the individual’s available special annual allowance for the tax year, the special annual allowance charge will apply in respect of that excess amount.

An employer pension contribution which is not linked in any way with a salary sacrifice is not included in the individual’s total income amount.

The first £30,000 of a redundancy payment that is not subject to income tax is not included as part of the individual’s total income. However, the amount of a redundancy payment over the first £30,000 does have to be included as part of the individual’s total income.

When they were introduced at the 2009 Budget on 22 April 2009, the special annual allowance provisions applied only in respect of individuals with relevant income of £150,000 or more and, where they did apply in respect of such an individual, the provisions had practical effect from 22 April 2009.

However, in the 2009 Pre-Budget Report on 9 December 2009, the relevant income threshold was reduced to £130,000.

As a result of the reduction in the relevant income threshold the special annual allowance provisions have practical effect from 9 December 2009, rather than 22 April 2009, for individuals who have relevant income of £130,000 or more but do not have relevant income of £150,000 or more for the tax year 2009-2010.

For details about when the special annual allowance provisions have practical application from 22 April 2009 see RPSM15101093.

For details about when the special annual allowance provisions have practical application from 9 December 2009 see RPSM15101096.