George Osborne in his 8th July 2015 Budget proposed radical changes to wealth and pensions taxation. These changes must be viewed in the context of the other dramatic taxation reforms, legislated in 2014, which permit full lifetime access to money purchase pension pots - plus the ability to leave pension savings, either tax free on death before age 75 - or subject to marginal Income Tax on death thereafter.
Key pension measures in the Budget are as follows:
- From 6th April 2016, a reduction in the limits on tax relieved pension contributions for “high earners” – but with some opportunities for additional contributions in the current tax year.
- Alignment of “Pensions Input Periods” with the fiscal year from 2016 – and with transition measures for the current year.
- Confirmation of the reduction of the Lifetime Allowance from £1.25 million to £1 million with effect from 6 April 2016 – but with opportunities for protection still available.
- Further possible reductions in the tax payable on lump sum death benefits – where a pension scheme member dies post 75.
- A complete review of the Pension Taxation System.
- Implementation of a secondary annuity market from 2017.
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