Five tax changes coming in tomorrow

Tomorrow marks the start of the tax year, and it also marks the day a number of pieces of pensions legislation come into force.

It follow's Monday's green paper revealing details of the £140 single-tier state pension.

Pension changes effective from 6 Apr:

1). Pension contribution cap for many high earners rises from £20k to £50k

• However high earners can use ‘carry forward' to pay in up to £200k
• Like this year up to 50% tax relief is available on pension contributions (60% for some)
• Higher National Insurance rates make salary sacrifice more attractive

2). Tomorrow marks the 10th anniversary of the universal £3,600 pension allowance (for non-earning spouses and children), but it has never been increased.

3). This is the last year for contracting out of the State Second Pension into a Personal Pension or SIPP.

4). Default retirement age abolished- this will lead to longer working lives and has implications for final salary schemes and lifestyled pension funds.

5). The end of compulsory annuitisation; investors can now run a Drawdown plan for as long as they wish with some being able to make unlimited withdrawals State Second Pension/SERPS and public sector pensions switch from RPI to CPI increases.