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| Version 1 | Version 2 |
|---|---|
| Tax relief on pensions to be reduced | Tax relief on pensions to be reduced |
| (about 2 hours later) | |
| The Treasury is due to announce sharp restrictions on the amount of tax-free income that savers can put in pensions. | The Treasury is due to announce sharp restrictions on the amount of tax-free income that savers can put in pensions. |
| The annual limit is expected to be reduced from £255,000 to £40,000. | The annual limit is expected to be reduced from £255,000 to £40,000. |
| Experts say that many people with long service in final-salary pension schemes could face unexpected tax bills as a result of modest pay rises. | |
| The Treasury hopes the changes will eventually save it more than £4bn a year - which could be used to reduce the budget deficit. | The Treasury hopes the changes will eventually save it more than £4bn a year - which could be used to reduce the budget deficit. |
| It is also thought it will reduce the lifetime allowance on money that can be built up in a pension fund and receive tax relief from £1.8m to £1.5m. | It is also thought it will reduce the lifetime allowance on money that can be built up in a pension fund and receive tax relief from £1.8m to £1.5m. |
| But it is expected to continue allowing high earners to benefit from tax relief at 40% or even 50%. | But it is expected to continue allowing high earners to benefit from tax relief at 40% or even 50%. |
| Under the Treasury plan, a £40,000 limit to the annual allowance - after which an extra tax bill would be generated - might be exceeded by someone whose pension entitlement in a final salary scheme had risen by just over £2,000 in a year. | Under the Treasury plan, a £40,000 limit to the annual allowance - after which an extra tax bill would be generated - might be exceeded by someone whose pension entitlement in a final salary scheme had risen by just over £2,000 in a year. |
| The coalition government began a consultation after the Labour government announced plans to gradually reduce the tax relief available on pension contributions for people earning more than £150,000 to just 20%, despite the fact that these people pay income tax of 50%. | The coalition government began a consultation after the Labour government announced plans to gradually reduce the tax relief available on pension contributions for people earning more than £150,000 to just 20%, despite the fact that these people pay income tax of 50%. |
| It is due to announce the results of its consultation on the issue later. | It is due to announce the results of its consultation on the issue later. |
| The Treasury consultation document illustrated the possible effects of the new approach for the Exchequer. | The Treasury consultation document illustrated the possible effects of the new approach for the Exchequer. |
| Its figures suggested that by 2012-13, a £45,000 annual pension allowance would raise a similar amount to that expected under Labour's plans - in the region of £3.6bn. | Its figures suggested that by 2012-13, a £45,000 annual pension allowance would raise a similar amount to that expected under Labour's plans - in the region of £3.6bn. |
| But a lower £30,000 annual allowance would raise £4.8bn - £1.2bn more than Labour intended. | But a lower £30,000 annual allowance would raise £4.8bn - £1.2bn more than Labour intended. |