Finance Act 2009 – this time it’s personal
This year’s Finance Bill received Royal Assent on 21 July 2009. The new Act brings into force new tax relief restrictions on pension savings for high earners, which were announced in the Budget on 22 April 2009. Firstly, from 2011, individuals with an annual income of £150,000 or more will face a reduction in their tax relievable pension contributions. Relief will be tapered away, so that for those earning over £180,000 it will be worth 20% (equivalent to basic tax rate). Secondly, transitional measures take effect from 22 April 2009 to prevent affected individuals from taking advantage of available tax relief in the interim by making significant additional pension savings. Whilst the Treasury anticipates that these measures will protect an estimated £2 billion of tax, they may also have unintended consequences for existing arrangments.