Pension contributions (Table B)

The "earnings cap" for personal pension contributions and occupational scheme benefits is set at £99,000 for 2003/04 (2002/03: £97,200). The maximum contributions for different ages are set out in the table.

The Government has been consulting with interested parties about another radical change to the pensions system. Detailed proposals will be published in the summer, and may be in force as early as April 2004. We have been assured that the new rules will preserve the right to take part of the fund as a tax-free lump sum on retirement.



Child trust funds

One of the most striking proposals in the Budget speech is the establishment of a trust fund for every child born from September 2002 onwards. This is intended to start with £250 from the Government (£500 for children from families entitled to the full Child Tax Credit), and parents and others will be able to contribute to it. It appears the child will be free to spend the money on reaching 18. Further details are to be published later.

Life assurance policies

A number of detailed changes have been made to the taxation of life assurance policies, attempting to remove anomalies and loopholes. There has been speculation that the Chancellor could take away the right to withdraw 5% tax-free each year from a policy - but this right remains unchanged, except in connection with one very specific tax avoidance scheme.