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Small firm owners to lose higher tax relief on pension contributions
The announcement by Alistair Darling in the Budget that the higher rate tax relief on pension contributions will be withdrawn from April 2011 for those earning over £150,000 wil lbe felt by many higher earning entrepreneurs from today, according to chartered accountants MacIntyre Hudson.
The Chancellor will withdraw higher rate tax relief for pension contributions from April 2011, with relief beginning to be lost at earnings of £150,000, and being reduced to 20% under a taper when earnings reach £180,000.
"The tax charge will apply to anyone who earns more than £150,000 in the current year, or who has done so in either of the two previous tax years. It will therefore catch many more people, some earning well under £150,000 this year, particularly entrepreneurs whose earnings tend to fluctuate from year to year," says Patrick King, Tax Principal at MacIntyre Hudson.
"For many entrepreneurs and owner managers, prudence requires them to defer making contributions until they know they can afford it. Many therefore make small regular contributions to their pensions, and then make larger occasional contributions as their finances allow. Under these proposals, entrepreneurs taking this sensible approach, face losing some or all of their higher rate tax relief on their pension contributions from today, even though they are contributing no more than they have in previous years."
Post Date: April 23rd, 2009
The Chancellor will withdraw higher rate tax relief for pension contributions from April 2011, with relief beginning to be lost at earnings of £150,000, and being reduced to 20% under a taper when earnings reach £180,000.
"The tax charge will apply to anyone who earns more than £150,000 in the current year, or who has done so in either of the two previous tax years. It will therefore catch many more people, some earning well under £150,000 this year, particularly entrepreneurs whose earnings tend to fluctuate from year to year," says Patrick King, Tax Principal at MacIntyre Hudson.
"For many entrepreneurs and owner managers, prudence requires them to defer making contributions until they know they can afford it. Many therefore make small regular contributions to their pensions, and then make larger occasional contributions as their finances allow. Under these proposals, entrepreneurs taking this sensible approach, face losing some or all of their higher rate tax relief on their pension contributions from today, even though they are contributing no more than they have in previous years."
Post Date: April 23rd, 2009
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