Call now: 0800 135 7157

Your specialist freelancer and contractor accountant

Pension Tax relief

If you are earning over £150,000 and make pension contributions you maybe in for a shock.

There are proposals by the current Government to restrict pension relief by tapering income tax relief by taking away £1 of pension relief for every £2 earned above £150,000 up to £210,000, so for someone earning over £210,000 per annum they would only receive pension relief on £10,000 as opposed to currently£40,000 for any body below £150,000.

Whilst some people may be unsympathetic to anyone in this position, it does give rise to a position where if somebody who continues to put money into pensions after the reforms come into effect and they are an additional rate tax payer, they will be facing a marginal tax rate of 67.5% something much higher than the headline 45% rate of tax.