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Pensions
In June 2010 the Chancellor indicated that he was unhappy about the way in which pension contributions were supposed to be handled for high rate taxpayers and suggested that an alternative treatment would be considered. From April 2011 the maximum annual contribution will be reduced from £255,000 to £50,000 and the lifetime limit reduced from £1.8m to £1.5m.
This change will obviate the need for very complex tax computations designed to limit the relief for taxpayers liable to tax at the top rate of 50%. It appears that around 100,000 individuals will be affected by this change of whom about 80% will earn in excess of £100,000.
To all intents and purposes the requirement to buy an annuity at age 75 was removed in June when the age was temporarily increased to 77 with the intention that the legislation would, in due course, be amended to eliminate the requirement altogether. This has been effected in the budget.
Furnished Holiday Lets
As a temporary measure, in the Budget, it was announced that the current regime for furnished holiday lets would continue despite previous intimations to the contrary. The Chancellor did indicate that the situation would be reviewed and new rules to apply from April 2011 have now been announced.
The new rules are stricter than previously. The number of days for which a property must be available for let is increased from 140 to 210 and, more significantly, the number of days for which it is actually let increases from 70 to 105. There is also a restriction in the way losses from holiday lets may be relieved. All furnished lets in the UK will be treated as one business. Where a loss is made on this business in a year then that loss may only be carried forward against future profits from furnished holiday letting. Holiday lets elsewhere in the EEA are similarly treated as a single business.
The rules regarding losses have been introduced but the new rules on qualifying properties will not be introduced until 2012.
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