Tax Relief for Pension Contributions: Application of Earnings Limit - Transitional Arrangements for 2008

Tax Briefing 74 (issued on 7 September 2009) illustrated the operation of the earnings limit for pension contributions where an individual has both earnings from employment and income from self-employment and makes contributions to both an occupational pension scheme and a personal pension plan.

Following discussions with pensions industry and other representative bodies, the following transitional arrangements will apply in relation to the operation of the earnings limit for 2008 in a "dual income" situation.

Where a personal pension contract was entered into before 7 September 2009 and the contribution

• was actually paid in 2008, or
• was paid before 7 September 2009 in respect of 2008 (i.e. where the taxpayer elects, before the 2008 return filing date, to have the contribution treated as if it was paid in 2008)

Revenue will not seek to apply the Tax Briefing 74 approach and taxpayers may claim relief for 2008 on the same basis as in previous years, subject to the relevant age related and earnings limits.

Contributions made on or after 7 September 2009 in respect of 2008 and contributions made during 2009 in respect of 2009 (whether made before or after 7 September) fall to be treated under the Tax Briefing 74 approach.

In light of the transitional arrangements for 2008, years prior to 2008 are not affected by Tax Briefing 74