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Pension tax relief reducing for higher earners

Tax relief on pensions is to be reduced to fund the cost of changes to Inheritance Tax.

As predicted, the Government is to introduce an additional IHT threshold for those who wish to pass on the family home to their heirs, but this will be paid for by restricting tax relief on pension contributions for higher earners.

For every £2 earned over £150,000 an individual’s annual allowance will be reduced by £1, so those earning over £210,000 will see their annual allowance reduced to £10,000.

The Government also plans to make access to Pension Wise, its retirement options guidance service, available to those aged 50 and over, from the current age of 55 and following consultation will extend the planned date for the implementation of the secondary annuity market to 2017.

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