Budget 2012: Pensions tax relief in the spotlight

The Liberal Democrats have pledged to raise the threshold at which people start paying income tax from current levels to £10,000. However, to pay for it, experts have predicted the government will cut tax relief on pensions. There are a number of ways to reduce the pensions tax relief bill, and each has potential consequences for your clients… Current tax relief In October 2010, the government reduced the annual allowance (AA) on tax privileged pension contributions from £255,000 to £50,000 per year. The lifetime allowance (LTA) was reduced from £1.8m to £1.5m. The government ...