Pensions In The Budget And The Finance Bill

[tommyboy]

Just read this in the telegraph

http://www.telegraph.co.uk/finance/persona...udget-2009.html

"Although these changes will not come into effect for two years, the Government is introducing emergency legislation into this year’s Finance Bill to stop high earners making large contributions to their pension plans now to gain advantage of this higher tax relief."

Are there any details on what this emergency legislation is, and how it might affect a large contribution into a pension plan.

[tommyboy]

Just found this

http://www.ipe.com/news/UK_Budget_cuts_hig...ated__31502.php

"He confirmed the government will consult on the implementation of the change, but warned "measures to prevent forestalling" of the reduction will be introduced from today.

These will only affect individuals with incomes of £150,000 or more if they change:

* The normal pattern of regular pension contributions to a money purchase scheme;

* The normal way in which pension benefits are accrued in a final salary scheme, or

* If their total pension contributions/accrued benefits exceeds £20,000 a year.

"

how would this affect someone who has just been made redundant, and is looking to place their redundancy payment into their pension.

If they were not earning over £150k a year previously, and would not be earning £150k in the next financial year, but for this financial year was recieving an income of £200k due to the redundancy payment. Would they be recieving tax releif at this lower rate due to this legislation? as they have changed the regular pattern of contributions, and the contributions exceed £20k in the year

Edited April 22, 2009 by tommyboy

[porca misèria]

Just found this

http://www.ipe.com/news/UK_Budget_cuts_hig...ated__31502.php

"He confirmed the government will consult on the implementation of the change, but warned "measures to prevent forestalling" of the reduction will be introduced from today.

These will only affect individuals with incomes of £150,000 or more if they change:

* The normal pattern of regular pension contributions to a money purchase scheme;

* The normal way in which pension benefits are accrued in a final salary scheme, or

* If their total pension contributions/accrued benefits exceeds £20,000 a year.

"

how would this affect someone who has just been made redundant, and is looking to place their redundancy payment into their pension.

If they were not earning over £150k a year previously, and would not be earning £150k in the next financial year, but for this financial year was recieving an income of £200k due to the redundancy payment. Would they be paying tax at this higher rate due to this legislation? as they have changed the regular oattern of contributions, and the contributions exceed £20k in the year

Don't ask us ... I'm trying to figure this out myself. Surely anyone on £150k for more than a few years will hit the lifetime limit if they put enough into a pension scheme to avoid obscene amounts of tax?

I've already:

- topped up my last year's contribution, just before the end of the tax year

- suspended regular payments, in case the budget contained nasties affecting the financial year as a whole

- moved money to the current account, to be in a position to make a large one-off contribution within minutes of any announcement in the nature of "tax changes from midnight".

Does that put me right in his firing line?

[tommyboy]

have a read of this

http://www.hmrc.gov.uk/budget2009/bn47.pdf

[tommyboy]

I think i have answered my own question

"8. This new allowance and tax charge will not apply to the vast majority of individuals:

• anyone with income of less than £150,000 for the tax year, and for both of the preceding two tax years (‘the relevant tax years’) will not be affected; and

• for people with income of £150,000 or more in any of the relevant tax years, those who continue as normal with their existing pattern of regular pension savings and who do not make any additional pension savings will not be affected."

So a redundancy payment should not be subject to the lower rate of relief as the income was less than 150K in the preceding 2 tax years