The Government's recently announced change in the Annual Allowance for pensions from 6 April 2011 will drastically reduce the amount that individuals can pay into a pension scheme and benefit from tax relief from £225,000 to just £50,000 a year.

This may come as a surprise to dentists who think their contributions in the current tax year of over £50,000 are safe. This is because pension contributions for the Annual Allowance are subject to what is called a Pension Input Period (PIP) and the PIP for many investors may end during the 2011/12 tax year. In this case, even pension contributions made in the current financial period could be liable for tax. 'The lowering of the Annual Allowance to £50,000 will affect a lot of dentists, particularly those who are members of final salary schemes,' said Clive Weir, Director at Albert Goodman Chartered Financial Planners. 'However, this can be easily avoided by identifying when your PIP ends and then electing to change it.'

Albert Goodman advise any concerned dentists to seek the services of a financial planner or accountant to ensure that tax liabilities are minimised.