A number of changes have come into effect from 6 April 2008, as a result of a variety of tax changes, which will affect those members making personal pension contributions into Small Self-Administered Pension Schemes:
- The maximum “Annual Allowance” for tax-relieved contributions to pension schemes has increased from £225,000 to £235,000 for 2008/9.
- Basic rate tax is reduced from 22% to 20%. Therefore members should pay 80% net of their desired gross pension contribution into the Scheme and the Scheme Administrator will reclaim from HMRC the corresponding 20% of gross – rather than the corresponding 22% in 2007/8.
In consequence, members who are higher rate taxpayers will now need to reclaim the higher rate relief of 20% (rather than the previous 18%) through their self-assessment tax returns.