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Tax relief on pensions is reduced | |
(about 1 hour later) | |
The amount of tax-free income that savers can put into pensions has been sharply restricted by the government. | |
The annual limit has been reduced from £255,000 to £50,000. | |
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. | 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. |
The lifetime allowance on money that can be built up in a pension fund and receive tax relief has also fallen from £1.8m to £1.5m. | |
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%. |