Philip Hammond’s Budget, announced on 9 March 2017, did not introduce any major unexpected changes to pensions or income tax.
As expected, the personal allowance is rising from £10,000 to £11,500 from 6 April 2017 – reducing an ordinary basic rate taxpayers annual income tax bill by £100.
The Government recently held a consultation on Pension Scams (this term covers any fraudulent activity designed to deny people full enjoyment of their pension savings), and advised that the outcome of this is yet to be published. (The Pensions Advisory Service has produced an online tool for people who fear they have been approached by pension scammers. If you’re concerned about pension scams, you can view this tool by clicking here.)
We previously advised that the Government had introduced the Money Purchase Annual Allowance (MPAA) in 2015; this restricts future defined contribution pension saving to £10,000 a year once a person has exercised the new ‘freedom and choice’ flexibilities. This allowance will be reduced to £4,000 a year from 6 April 2017.
There are also changes being introduced in relation to overseas transfers; these will be subject to a 25% charge in certain circumstances, and will also continue to fall under the scope of the UK tax regime in the 5 years following the transfer. Members with deferred pension rights who are under normal retirement age have a right to request a transfer value. For the avoidance of doubt, pensions already in payment cannot be transferred out of the scheme.
For more information on the Budget, please click here.