Annual allowance to be reduced to £10000

madeinireland_2

Did I hear this correctly in the budget ?

If this is true it's going to be quite a big impact or was it just for very high earners.

Anyone have clarification on this ?

DesG

Annual tax relief on pension contributions to be limited to £10,000 a year

dunstonh

Its a tapered reduction from those earning £150k to £210k.

Paul_Herring

madeinireland wrote: »

Did I hear this correctly in the budget ?

If this is true it's going to be quite a big impact or was it just for very high earners.

Anyone have clarification on this ?

http://www.professionaladviser.com/professional-adviser/news/2416833/summer-budget-confirms-high-earner-pension-tax-relief-cut

Chancellor George Osborne (pictured) confirmed those earning more than £150,000 will no longer qualify for an annual allowance of £40,000.

Instead, they will see their allowance curbed gradually from £40,000 to £10,000.

For every £1 of earnings over £150,000, the annual allowance will reduce by 50p so that those earning £210,000 and above would have an allowance of £10,000.

hugheskevi

As part of the change, there is a change to pension input periods.

For the technically minded, here is the HMRC material about that.

To summarise, the financial year 2015/16 will be split into two mini-tax years. These run 6 April 2015 to 8 July 2015, and 8 July 2015 to 5 April 2016.

There is a £80,000 Annual Allowance for the first mini tax-year, of which up to £40,000 can be carried into the second mini tax-year.

Triumph13

DesG wrote: »

Annual tax relief on pension contributions to be limited to £10,000 a year

That's clearly taken from the same BBC website that gave me a heart attack until I realised it was just shoddy writing.

DesG

Triumph13 wrote: »

That's clearly taken from the same BBC website that gave me a heart attack until I realised it was just shoddy writing.

Yeah, had me delving into the budget statement to get more details.

madeinireland_2

Phew - yep - I thought it was a limit on everyone

Paul_Herring

Triumph13 wrote: »

[...] BBC [...] shoddy writing.

Hmmm.... :shocked:

kidmugsy

I had rather hoped that the £3600 p.a. allowance for non-earners might have been raised. How long has it been at that level?

DesG

1.223 Therefore, from April 2016 the government will introduce a taper to the
Annual Allowance for those with adjusted annual incomes, including their own and
employer’s pension contributions, over £150,000.
62 For every £2 of adjusted income over
£150,000, an individual’s Annual Allowance, the limit on the amount of tax relieved pension
saving that can be made by an individual or their employer each year, will be reduced by £1,
down to a minimum of £10,000.
1.224 To ensure this measure is focussed on the higher and additional rate tax payers who
currently gain the most benefit from pensions tax relief, those with income, excluding pension
contributions, below a £110,000 threshold will not be subject to a Tapered Annual Allowance.