Changes to pensions tax relief
8 Jul 2015
In today's Budget Statement the Chancellor announced that the Annual Allowance (the maximum amount an individual can save each year before facing a tax charge) will reduce for those earning over £150,000 (including their own and employer pension contributions) and over £110,000 (excluding pension contributions) a year.
The Annual Allowance is currently £40,000 a year but this will reduce at the rate of £1 for every additional £2 of income between £150,000 and £210,000 so that for anyone earning over £210,000 (including pension contributions) the allowance will be £10,000.
Around 300,000 individuals could be affected including senior staff in local and central government, health and policing.
Confirmation of the reduction in the Lifetime Allowance (the maximum pensions savings that an individual can make over their lifetime without facing a tax charge) from £1.25m to £1m from next April. This means that anyone retiring with a pension of more that £50,000 a year (or a pension of £43,478 and lump sum of £130,434) could face a 55% tax charge.
The Chancellor also published a consultation on reforming pensions tax relief. Measures to be considered include a Taxed-Exempt-Exempt approach with a government top-up on contributions.
MyCSP offers seminars and 1-2-1s which allow employers to support their senior employees in understanding the changes, their responsibilities and the options available to them.
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