In yesterday's Budget the Chancellor announced - as they do - further changes and proposals to change the basis of taxation of pension schemes. Some changes will take effect from 27th March 2014 while other proposals are subject to a consultation process. The Government hopes to enact and effect the other proposals in 2015.
The changes are welcome in that they will certainly give more flexibility to members of all of our pension schemes. At the same time it should be realised that utilising the extra flexibility will generate substantial tax revenue for the Government earlier!
The current Coalition Government has confirmed that tax free commencement lump sums will continue to be available. There are no current proposals by the Coalition to make further changes to the Standard Lifetime Allowance (SLA) – the cap on tax relieved pension savings, which is set at £1.25 million from 6 April 2014.
Similarly, the Coalition is not proposing to alter the current format for tax relief on pension contributions – but is considering the possibility of allowing those aged 75 and over to continue making tax relieved contributions.
We note, however, that both the Labour and Liberal parties have indicated that they may potentially review higher rate tax relief on pension contributions and/or the Standard Lifetime Allowance should they come into Government following the next General Election.
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