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Lifetime savings limits
Do you need to register by 5 April 2009?
Following 'A' Day on 6 April 2006, new rules now place an overall lifetime limit on tax-advantaged pension funds of £1.6m (2007/08).
That limit is to increase each year until 2010, when it will reach £1.8m. There is a tax charge for value in excess of the limit at retirement and for excess contributions in a year over the annual limit, which this year is £225,000.
Transitional arrangements protect those who have already reached the 'lifetime' savings limit at 5 April 2006, but protection needs to be registered by 5 April 2009.
| Tax Year |
07/08 |
08/09 |
09/10 |
10/11 |
Annual amount
(input amount) |
£225,000 |
£235,000 |
£245,000 |
£255,000 |
| Tax charge on excess |
40% |
40% |
40% |
40% |
| Lifetime allowance |
£1.6m |
£1.65m |
£1.75m |
£1.8m |
| Tax charge (excess paid as annuity) |
25% on excess value, then up to 40% on annuity |
| Tax charge (paid as lump sum) |
55% on excess value |
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