top stories

The Chancellor announced in the 2009 Budget that, with effect from 6 April 2011, individuals with an annual income of £150,000 would have relief on their pension contributions restricted. Beyond this income level, tax relief will be tapered away until income reaches £180,000; at which point, the rate of relief is limited to the basic rate of 20%.

In anticipation of the new rules, Finance Act 2009 introduced 'anti-forestalling' provisions to apply from 22 April 2009, to restrict tax relief on certain pension contributions made between 22 April 2009 and 5 April 2011.

The new rules from 2001/12 do not form part of the 2009 Finance Bill but the anti-forestalling provisions are introduced by Clause 71 and Schedule 35 of the Bill, which introduce a 'Special Allowance Charge'.

HMRC have issued updated guidance on the application of the Special Allowance charge, which includes a number of useful worked examples.

Note: It was announced in the PBR that the income limit for the special annual allowance charge would be reduced from £150,000 to £130,00 and that the relevant legislation to reduce the limit will be included in finance bill 2010.

Back to top