Pensions Changes

For those earning less than £130,000 this is the last tax year when contributions as high as 100% of earnings can be paid upon which tax relief is available at the highest marginal rate. As a result of the loss of Personal Allowances, it is possible to get tax relief of up to 62% for income between £100,000 and £117,000.

Accordingly, if cash flow allows, every effort should be made to pay as near to the maximum as possible.

Meanwhile, from 2011-12 the maximum contribution will be capped at £50,000 with 'carry forward' of unused relief, being allowed for up to three years. By changing input periods for pension this could mean a maximum contribution of £100,000 where contributions have already been paid up to £50,000 is the last three years or £250,000 if they have not.

So far the Coalition Government is retaining higher rate tax relief on the above amounts so it is important to benefit from this savings subsidy whilst it is available.

As the tax year end fast approaches, if you would like to consider your options or review your arrangements, please e mail info@lycetts.co.uk