Tax relief on pension contributions will be restricted from April 2011 for individuals with incomes of £150,000 or over. The government says that the restriction should apply as fairly as possible between individuals in different types of pension schemes and employment, and with different remuneration arrangements, while remaining targeted on those on the highest incomes. The restriction, therefore, will apply to those with gross incomes over £150,000 where gross income incorporates all pension contributions, including the value of any pension benefit funded by, or eventually funded by, an individual's employer. This will be subject to an income floor such that those with pre-tax incomes, excluding the value of any employer contributions, of less than £130,000 are affected. Sarah Pickering, managing director of tax advisers Alvarez & Marsal Taxand, said: 'The rise in national insurance combined with the increase in income tax rates and the removal of higher rate tax relief for pension contributions means that high rate taxpayers are being heavily penalised. Most are giving away more than they get to keep, which is hardly a motivation to be successful.'