Elaine McInroy, tax expert at accountants Saffery Champness warns that additional rate taxpayers need to review their pension arrangements in light of the proposed changes to the tax relief on pension contributions for those earning over £150,000
Prior to any Budget there is often speculation as to whether this will be the Budget to abolish the higher rate relief on pension contributions. Despite the speculation, successive governments have so far resisted abolishing the tax relief but have instead introduced a series of ever more restrictive limits over how much can be invested into the pension pots of high earners.
For the forthcoming budget, due from the Chancellor on 8 July, it appears there will be more of the same, with the Conservatives having made a manifesto commitment to cut pension relief for those earning over £150,000 or more each year.
The proposal is that the current annual allowance, ie, the maximum amount on which an individual can receive tax relief from investing in their pension scheme in a year, will be restricted by 50p for every £1 of income in excess of £150,000, to a minimum of £10,000 for those earning £210,000 a year.
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