The Finance Bill 2013 will make some changes to pensions. Read this then call us for more information.
Pensions tax relief – annual allowance
The annual allowance for pension relief on contributions to pension schemes will be reduced from £50,000 to £40,000 from April 2014, that is for pension input periods (PIPs) ending in the tax year 2014-15.
Pensions tax relief – lifetime allowance
The lifetime allowance – the tax free limit on a person’s lifetime pension savings – will reduce again in April 2014 (for benefit crystallisation events in the 2014-15 year) to £1.25 million. It is presently £1.5 million.
There will be further “fixed protection” rules at the date of the reduction (fixed protection 2014) to protect those already in excess of the new limit which will work in the same way as previous protection – the beneficiary will no longer be able to make contributions or accrue additional rights under a scheme from 6 April 2014.
There will also be a review of the protection legislation – amendments to ensure that the legislation works as intended and a consultation on a “personal protection” regime which may be more flexible that the current rules. Personal protection is proposed to limit the lifetime allowance to the greater of £1.5 million and the standard lifetime allowance, but they would be permitted to accrue future rights or make additional contributions.
The current limit on pension drawdown is 100% of the Government Actuary annuity figures at the relevant age. Legislation will amend this limit to 120% of the Government Actuary’s figures.
“Family” pension contributions
It has been possible to accept a salary sacrifice and have the contribution paid by your employer into the pension arrangements of a family member. Legislation will remove the additional tax benefits available to higher rate employees under this arrangement from April 2013.