Better Business:Taxing pensions

The latest incarnation of the Special Annual Allowance Charge rules cuts the relevant income threshold to £130,000 from 9 December 2009. The tax penalty applied from April 2011 will be set at the ‘appropriate rate’, allowing the tax man to increase it from 20% to 30% to reflect the new 50% income tax band. John Lawson, head of pensions policy at Standard Life, is concerned with the final legislation, which will come into force by 6  April 2011. Once all higher rate allowances disappear, he expects high earners to withdraw from employer schemes, particularly defined benefit structures. In...