With the annual allowance reduced to £50,000 from 2011/12 and the lifetime allowance falling to £1.5m from 2012/13 the total revenue cost for tax relief on pensions will fall even though individuals will still get relief at their marginal rate. The annual allowance exemption for contributions made in the final year on vesting benefits is to be removed but a new rule allowing carry forward of unused relief will soften the blow a little. Transitional rules are required where pension input periods do not match the tax year and these take effect from 14 October 2010.
