It had been thought that as a trade-off for a reduction in the 50p tax rate pensions tax relief would be hit but this is not the case as there will be “no significant” changes to higher-rate tax relief. The minor changes which have been announced include:
- tax and NIC advantages for employers making contributions into employees’ family members’ pensions as part of their employees’ remuneration package will be removed; and
- technical changes will be made to improve the operation of the lifetime allowance fixed protection legislation and the annual allowance rules.
Allied to this the proposed limit (25% of income) for anyone seeking relief on £50,000 or more would not extend to reliefs that are already capped, including pension contributions.
And there is still good news on personal taxation – the personal allowance is going up to £9,205 and the top rate coming down to 45p from April 2013.
However, it is not all good news. As part for the Government’s drive to simplify taxation the personal age allowances (currently £9,940 a year for everyone aged 65 or more and £10,090 for everyone aged 75) will be frozen from April 2013 – the upshot is that pensioners are likely to be taxed more heavily than ever before.