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2009 Budget - Key issues for financial planners
The definition of a high-income individual depends on income during the applicable tax year and the two preceding tax years. Thus some individuals may currently earn below £150,000 and still qualify as a high-income individual.
Protected pension input amounts (PPIAs)Protected pension input amounts are regular payments that were paid at least quarterly prior to 22 April. They provide protection against the special annual allowance charge for future regular payments up to the level that was previously being paid.
In order to qualify as PPIAs regular payments must continue to be paid to the same scheme. Clients who switch providers or leave an employer’s scheme will lose protection against the special annual allowance. However the Government has stated that it will consult with the industry on how this requirement might be relaxed.
Higher special annual allowance
Payments made less frequently than quarterly prior to 22 April to a money purchase scheme can lead to a higher special annual allowance. If the average of such payments made in the last three tax years exceed £20,000, this average will be the special annual allowance for the member. The amount is however capped at £30,000.
Contributions refund lump sums (CRLS)HMRC have added an additional authorised lump sum payment which may be paid by scheme administrators, the contributions refund lump sum.
What you can do for high-income clientsThe main issue for most IFAs is what action they can take to help high-income clients now. We have created a short list of do's and don’ts based on our understanding of the rules as they stand at present.
Note - The information provided is based on our current understanding of the 2009 Budget and associated documents and may be subject to alteration as a result of changes in legislation or practice.
Published 22 May 2009
Updated 29 July 2009
