Summer 2009 Newsletter Content Pot and kettle No more stealth Pensions hit A place in the sun Ready or not... Nice motor Making allowances Good times, bad times Tax-free checkup Three square meals Funny question Dividend rules OK? Too good to be true? Pay my friend Early EIS Mind the halfpennies Just the ticket Flat rate changes Foreign Service This year, next year Partial exemption Penalties Compliance checks Under their eye Howzat? Know your rights Discipline Don't be mean Redundancy Two sorts of absence Warranties

Pensions hit The tax reliefs for pension contributions have been very generous for many years. Gordon Brown was blamed for many of the troubles of the pension industry in the last ten years because he took away the repayment of tax credits on dividend income, but payments into funds have continued to enjoy tax relief at the individual's marginal rate, and the fund pays no tax on income or gains while the money is there. That's a small comfort if you are looking at your fund valuations at the moment - the state of the stock market has put a much bigger hole in everyone's pension pot than the Chancellor. Now Mr Darling is going to restrict top rate pension relief for high earners. Most people pay tax at 20%, so the tax relief on their contributions is worth 20% - they put in £80 and the Government tops it up to £100. A higher rate taxpayer gets an additional £20 back, so £100 in the fund costs you £60. From 2011/12, the higher rate relief is being withdrawn for people earning over £150,000 a year. It will be phased out as income increases, but we are told that someone earning £180,000 a year will only get the 20% relief that a basic rate taxpayer enjoys. To stop people advancing their contributions to beat the change, anyone earning £150,000 a year who pays extra pension contributions - more than their usual regular payments and more than £20,000 a year - after 22 April 2009 will suffer a clawback of tax relief. This is a complicated area and anyone who earns that much and who wants to pay pension contributions should tread carefully. We will be happy to explain your options to you.