Probably the biggest news story to come out of the Budget is the removal of higher rate tax relief for higher earners on pension contributions made on or after 6 April 2011.

The good news is that Alistair Darling has not scrapped higher rate tax relief for all, as was widely rumoured in the run up to the Budget (and as reported in some 'hot off the press' publications).

He has, however, announced two changes in a bid to limit tax relief for high earners.

New rules will apply immediately for those whose income now is more than £150,000, or was in the previous two tax years, and who make any change from today to their normal pattern of contributions, or the normal way benefits are accrued, where the benefit accrued exceeds £20,000 a year. These new rules are intended to remove any advantage from increasing pension contributions before 6 April 2011.

From 6 April 2011, it is intended to restrict relief for those earning over £150,000. Tax relief will be gradually tapered so that anyone earning over £180,000 will only receive basic rate tax relief.

Alistair Darling's comment was: "It is difficult to justify that a quarter of all money the country spends on tax relief on pensions goes as now to the top 1.5 per cent of earners. I believe it is fair that those who have gained the most should contribute more."

It is estimated that the cut in tax relief for the 225,000 people affected by this change will earn the Treasury approximately £4.75bn.

This follows on from announcements in the Pre-Budget Report intended to curb tax relief on pensions by freezing the lifetime allowance and the annual allowance for the five years following 5 April 2011, that is up to and including the tax year 2015/2016.