The tax regime for pensions introduced on 6 April 2006 ("A-day") affected the way in which share schemes and pensions interact. Profits from certain employee share plans can be included in pensionable earnings. Also, shares from certain employee share plans can be transferred directly to a pension scheme. This means that employers can offer the opportunity for some employees significantly to increase their pension contributions. In some cases, tax payable as a result of the share scheme can be cancelled out by the tax relief given on the associated pension contribution.

Note that there have been changes to the rules on pension contributions, which are not reflected in this non-maintained note. For information on these changes, see PLC Pensions, Practice note, Restricting pensions tax relief.