The UK Government has extended the pension tax changes announced in April’s Budget so people earning £130,000 or more will be hit rather than the original £150,000 threshold.
In the pre-Budget report the Chancellor of the Exchequer predicts the new rules will affect an extra 85,000 people, 300,000 compared to 215,000 originally.
The anti-forestalling regime limits the level of higher rate tax relief savers can receive on pension contributions before April 2011.
The longer-term changes, which will come into force from April 2011, originally meant people with income of £180,000 and more would only receive basic rate tax relief.
Those with income between £150,000 and £180,000 would get tax relief somewhere between basic rate and higher rate on a sliding scale.
But the Government has now decided the definition of relevant income, used in determining whether an individual is affected by these changes, will include employer pension contributions.
Those with incomes below 130,000 before the inclusion of employer pension contributions will not be affected.
