What the proposed Taxation changes in April 2010 will mean for you?
Posted July 16th, 2009
The government announced in April’s budget a number of major changes to the way they intend to tax high earners and their pensions. Of course, these changes may never come in but forewarned is forearmed.
To summarise, the proposed changes are:
1. The personal allowance will be restricted for people whose earnings are over £100,000. So for every two pounds they earn above that level, they will lose one pound in personal allowance.
2. This would mean that for someone earning over £113,000 per annum, there would be no personal allowance available.
3. A new top band higher rate of income tax of 50% will apply to incomes above £150,000.
4. The tax relief on pension contributions will be restricted from April 2011, for those people with incomes of £150,000 and over, and will reduce steadily until it is 20 per cent. That means the 40% tax relief will disappear completely once someone’s income hits £180,000.
Please note that this is all on top of the Lifetime Allowance issues which high earners have to contend with.
One simple way of reducing any tax burden at this level would be to make a gift aid donation to charity (which can even be backdated). This could create a potential win-win situation out of this changes.
If you wish to discuss any of the issues raised, please call us on 01204 663904 or contact us by email on advice@themedicalifa.co.uk
