Pension Premiums

For 2010/11...

• Maximum amount of pension contributions that qualify for tax relief is the greater of £3,600 or the individuals UK relevant earnings.
• Depending on whether the contributions had tax relief in the first place, contributions in excess of £255,000 (was £245,000 for 2009/10) can give rise to a tax charge of 40% on the excess. It is frozen at £255,000 until 2015/16.
• Employer contributions need to be "wholly and exclusively" for the benefit of the trade to obtain tax relief.
• Minimum age for taking benefits is 55. Was 50 Prior to 6 April 2010.
• Maximum age for tax relief on contributions is 74.
• Lifetime allowance is £1,800,000 (was £1,750,000 for 2009/10). It is frozen at £1.8 million until 2015/16.
• There is a tax charge of up to 55% on the excess value of the premium fund used to provide benefits if they exceed the lifetime allowance.
• Maximum tax-free lump sum is 25%.
• Please note there are some complex anti-forestalling rules for the availability of pension relief for those with incomes over £130,000 who are trying to make excessive pension contributions in anticipation of the removal of tax relief of 50% in 2011/12 for those with incomes over £150,000.
  An individual that has a gross income up to £150,000 will still get 40% tax relief on contributions. For those with incomes over £180,000 the idea is that they will only receive tax relief on contribtuions at 20% with a taper between £150,000 and £180,000.