Pension Schemes – Application of special annual allowance charge to non-UK pension schemesWednesday, August 5th, 2009
From April 2011, the tax relief on pension contributions will be restricted to the basic rate where an individual’s annual income is £150,000 or more. To prevent large sums being paid into pension funds in advance of April 2011 in order to obtain tax relief at 40%, transitional provisions apply from 22 April 2009 in the form of a “special annual allowance charge”. The way in which this special charge will be applied in the 2009/10 and 2010/11 tax years (assuming the tax relief change is actually introduced in April 2011) is set out in Schedule 35 of the Finance Act 2009. The measures apply to registered pension schemes.
In order to apply the same tax charge to individuals who are members on non-UK pension schemes that currently enjoy the same tax relief provisions as members of UK registered schemes, the Special Annual Allowance Charge (Application to Members of Currently-Relieved Non-UK Pension Schemes) Order 2009 modifies the text of Schedule 35 solely for that purpose. The adjustments come into force on 12 August 2009 but apply retrospectively to 6 April 2009.
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