Contents

Summary 4

1 Background 6

1.1 Income tax 6

1.2 Income tax relief 7

1.3 What are the limits on pensions tax relief? 8

1.4 Developing the current pensions tax system 9

2 The annual allowance 10

2.1 What is the annual allowance? 10

2.2 What is the tapered annual allowance? 10

2.3 How are annual allowance contributions calculated? 11

2.4 What is the Money Purchase Annual Allowance? 12

2.5 What happens if someone exceeds the annual allowance? 12

2.6 Pension taxes for public officials 13

3 The abolition of the lifetime allowance 14

3.1 What was the lifetime allowance? 14

3.2 What happened if someone exceeded the lifetime allowance? 15

3.3 Tax-free lump sums 15

3.4 Protections 16

4 Changes to pension tax relief since 2006 18