02 December 2010
According to Professional Pensions, a Treasury consultation
paper proposes allowing individuals that exceed the annual
allowance to pay the tax charge from their pension savings rather
than their salary.
Exceeding the annual allowance is especially likely for high
earners and long servers in final salary pension schemes with
generous pension build up rates.
The Treasury said: "In some instances, where there is a
significant uplift to the pension in a given year, the resulting
tax charge could be substantial. Although these individuals will
generally be high earners, it is feasible that the charges will not
be manageable from current income in a small number of cases. In
these exceptional situations, the government has committed to
consult on options to enable individuals to meet the charge out of
their pension benefits, rather than current income."
The government is proposing that the tax charge is met either at
the time the charge arises, or at the time benefits are taken.
