Introduction Background Note
10.At Budget 2009, the Chancellor announced changes to the tax relief available on pension savings for individuals whose income is £150,000 or higher.
11.The Government intends to restrict the availability of tax relief to basic rate on contributions to registered pension schemes for individuals whose income is £150,000 or higher with effect from 6 April 2011.
12.In anticipation of that new restriction, Schedule 35 to FA 2009 introduced new rules to apply from 22 April 2009 to restrict higher rate tax relief on pension contributions for individuals. This introduced the special annual allowance charge, an income tax charge at 20 per cent for certain individuals on certain pension contributions and benefits accrued.
13.These restrictions apply to people:
	whose income is £150,000 or higher;
	who change their normal ongoing regular pension savings; and
	whose total pension savings exceed £20,000 (or the lower of £30,000 and average contributions over the past three years if contributions are less regular than quarterly).
These restrictions remove the advantage to those individuals of increasing their pension contributions in excess of their normal pattern.
14.At the 2009 Pre-Budget Report, the Government announced a change in the income definition for the 2011 restriction which includes the pension benefit provided by an employer. This is set at £150,000 and is subject to a £130,000 floor which excludes employer contributions.
15.The change introduced by the section prevents individuals who may be brought into the restriction as a result of the change in the income definition from making substantial additional pension contributions in order to take advantage of higher rate pensions tax relief while this level of relief is still available to them.