InvestAcc - The Retirement Planning Experts

Special Annual Allowance Charge - 2009/10 Limits

Thurs, 10 Dec 2009 16:07:31 GMT

The Special Annual Allowance Charge introduced by Finance Act 2009 has been amended by the recent pre-budget report. The charge applies to the tax years 2009/10 and 2010/11 to individuals with relevant income in excess of £150,000 in either of these years or the two preceding years. The charge will apply on total pension contributions paid in excess of £20,000 (the Special Annual Allowance Charge threshold) or in some circumstances, a higher threshold of up to £30,000, dependent upon the level of contributions paid in previous tax years.

The PBR proposed lowering the threshold for triggering the SAA charge by reducing the relevant income level to £130,000 for any pension contributions paid on or after 9th December 2009 AND for individuals with income exceeding £130,000 the value of any employer pension contributions is to be aggregated with other income to calculate total income. Individuals will therefore now be affected if their relevant income in 2009/10 or either of the two previous years exceeds £130,000, this will apply for any contributions paid in the tax year 2009/10 after 9th December 2009.