14 October 2010
The Treasury has today announced that the annual allowance for
tax privileged pension saving will reduce from £255,000 to
£50,000 from April 2011.
The current tax rules limit the amount that can be contributed
to registered pension schemes each year as tax-relieved
contributions to £255,000, or 100% of UK taxable earnings,
whichever is lower. This is called the Annual Allowance. The Annual
Allowance will reduce to £50,000 or 100% of UK taxable
earnings, whichever is lower.
In determining whether or not an individual's contributions are
within the Annual Allowance, contributions to defined contribution
schemes by the individual and their employer are taken into
account, together with the capital value of the individual's annual
increase in their defined benefit pension rights.
The Treasury will consult on options enabling people to meet tax
charges out of their pensions in November. We will provide updated
news at that time.
The amount which can be saved in a lifetime without incurring
tax charges (the Lifetime Allowance) will reduce from £1.8
million to £1.5 million from April 2012.
