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| Version 3 | Version 4 |
|---|---|
| Tax relief on pensions is reduced | Tax relief on pensions is reduced |
| (40 minutes later) | |
| The amount of tax-free income that savers can put into pensions has been sharply restricted by the government. | The amount of tax-free income that savers can put into pensions has been sharply restricted by the government. |
| The annual limit will be reduced from £255,000 to £50,000 in April. | |
| 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 from April 2012. | |
| High earners will continue to be paid tax relief on pension savings at the highest rate at which they pay income tax. | |
| 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%. |
| Numbers | |
| The government said that changing the allowance to £50,000 would affect 100,000 pension savers, and 80% of those had incomes of more than £100,000 a year. | |
| Someone who puts more than £50,000 into a pension in one year will also be able to offset this against their allowance from previous years. | |
| "We have abandoned the previous government's complex proposals and developed a solution that will help to tackle the deficit but not hit those on low and moderate incomes," said Mark Hoban, financial secretary to the Treasury. | |
| "We have taken a tough but fair decision. | |
| "The coalition government believes that our system is fair, will preserve incentives to save and - compared to the last government's approach - will help UK businesses to attract and retain talent." | |
| John Cridland, deputy director general of the CBI, said: "The announcement is not as bad as feared. The government had considered making the annual allowance as low as £30,000. | |
| "It is important now that the government appreciates the short timescale for implementation and works with companies to provide clarity." |