Income matters post 2010

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For those fortunate enough to have a very high income, investing in a pension after 2011 looks less attractive. And remember it is not just earned income which matters - all income, including dividends from shares and interest on savings is taken into account.

 From 2011, high earners are limited to 20% relief on their contributions, and also face a tax charge on any employer contributions. So these people may find alternative investments are more tax efficient. These may include ISAs, pension contributions for a spouse or child, growth investments which give rise to capital gains tax, and qualifying life policies. In this tax year and next, paying in £20,000, or a higher amount justified by existing regular contributions, appears to be a sensible option as this is the final opportunity for high earners to receive higher rate tax relief. But b...

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