The Government announced in the Summer 2015 Budget their intention to cut pensions tax relief for
Download ‘Tax relief on pensions 2015/16 and beyond’ here
high earners by introducing a tapered annual allowance from April 2016 for individuals with income (including the value of any pension contributions) of over £150,000, and who have an income (excluding pension contributions) in excess of £110,000. The rate of reduction in the standard annual allowance of £40,000 is by £1 for every £2 that the adjusted income exceeds £150,000, up to a maximum reduction of £30,000.
Although this measure may not directly apply to you, in advance of its implementation, a change is to be made to align ‘pension input periods’ with the tax year replacing the complex rules which have applied until now. This change could affect many individuals and therefore transitional rules will operate during 2015/16 to protect savers who might otherwise be affected by the alignment of their pension input periods. The impact of these transitional changes is that it may provide a one off additional opportunity during 2015/16 to maximize pensions saving tax relief.
This briefing looks at why pension input periods are important, why there are transitional rules and how these rules operate, detailing various examples of different scenarios of pension input periods.
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