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Pensions
The cap on earnings, applied in calculating maximum contributions allowed for personal and occupational pension schemes, has been increased for 2004/05 from £99,000 to £102,000.
On 6 April 2006 the existing eight tax regimes for occupational and personal pension schemes will
be replaced by one new regime with two key features:
- a single lifetime allowance restricting the amount of pension saving that can benefit from tax relief. This has been set at £1.5 million on introduction and will rise in 2007 to £1.6m, in 2008 to £1.65m, in 2009 to £1.75m and in 2010 to £1.8m. Funds will be measured against the lifetime allowance when they are brought into payment, with a 25% charge on the excess, unless this is taken as a lump sum in which case the tax charge will be at 55%.
- an annual allowance, initially set at £215,000 but increasing each year, to £255,000 in 2010. There will be a charge at 40% on excess contributions or increases.
Transitional rules provide a measure of security for those whose pension savings already exceed the lifetime allowance.
More in formation on pensions is available here
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