Hi All,
There has been a lot of talk about the potential changes in budget 2013 regarding pensions tax relief. I understand the impact of reducing the tax relief for contributions (which basically means I'll stop any AVCs immediately as there'll be little or no incentive). But what does it mean if there's a cap put on private pension tax relief at 60K? How would that effectively work for a defined contribution pension?
1) Would that mean that until a fund reaches 2Million (e.g. 60K by a multiplier of 30 + 200K tax free) one can continue to get tax relief at the marginal rate?
2) Or does it mean that a tax payer can only tax efficiently contribute each year up to a maximum of your aged limited max contribution percentage of 60K? E.g. if you are between 40-45 you can only contribute 25% of 60K as an personal contribution?
Bovis
There has been a lot of talk about the potential changes in budget 2013 regarding pensions tax relief. I understand the impact of reducing the tax relief for contributions (which basically means I'll stop any AVCs immediately as there'll be little or no incentive). But what does it mean if there's a cap put on private pension tax relief at 60K? How would that effectively work for a defined contribution pension?
1) Would that mean that until a fund reaches 2Million (e.g. 60K by a multiplier of 30 + 200K tax free) one can continue to get tax relief at the marginal rate?
2) Or does it mean that a tax payer can only tax efficiently contribute each year up to a maximum of your aged limited max contribution percentage of 60K? E.g. if you are between 40-45 you can only contribute 25% of 60K as an personal contribution?
Bovis