Finance Bill 2009 – limited relaxation of transitional provisions


On 22 April 2009, Alistair Darling surprised the pensions industry by announcing that, from 2011, the country’s highest earners will no longer benefit from tax relief on all pension contributions at their marginal rate. The Government’s proposal is to restrict the tax relief available for individuals with an annual income of £150,000 or more. Relief will taper away so that it is orth just 20% for those earning over £180,000 (equivalent to basic rate tax). Transitional measures were also announced which, from noon on Budget day, prevent affected individuals from making significant additional contributions in the interim. However, recognising that the transitional measures are fraught with complexity and have the potential to scupper many existing arrangements, the Government has this week responded to industry concerns by making limited amendments to a couple of the more draconian aspects of the Finance Bill 2009.

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