Paul McGlone, President of the Society of Pension Professionals (SPP), commented: “The proposed changes to the Tapered Annual Allowance will positively impact a large number of people not just those high paid medical professionals in the NHS.
“It is however worth bearing in mind that the changes don’t come in until next year, so any work done by doctors until 5th April will still be taxed in a very penal way. Doctors may end up returning to work just in time for the peak of the Coronavirus.”
Steven Cameron, Aegon’s Pensions Director said: “While it’s disappointing that the Chancellor didn’t simply scrap the dreaded ‘tapered annual allowance’, the £90,000 increase in the earnings threshold when it kicks in (now £200k) is greater than expected and should offer comfort to many more higher earners that they shouldn’t be affected. But for those earning above £300k, an annual allowance of just £4,000 surely makes pensions redundant for them.
“Budget 2020 rightly focused on the nation’s health and economic resilience in response to the coronavirus. So it’s perhaps not surprising that the single pensions change was designed to stop senior NHS professionals turning down extra work or retiring early to avoid a pensions tax penalty. The change applies across all occupations and not just to NHS professionals, avoiding making pensions allowances occupation specific.
“Unfortunately, simply moving the thresholds misses the opportunity to start to simplify the fiendishly complex system of pension limits and allowances. This may be something the Chancellor returns to in a future Budget, ideally as part of a wider consultation on how to reform pension tax reliefs.”
Chris Noon, Partner at Hymans Robertson: “The decision today to raise both the annual allowance taper thresholds by £90,000 will be welcome news as it will go a long way towards simplifying pensions taxation for a significant swathe of the population, especially the clinicians and medics who had been affected. However tax relief for pensions is still fiendishly complicated and we’d encourage the chancellor to consider a more fundamental review of pension taxation in the near future.”
“There will be also a collective sigh of relief across the industry today as the Chancellor refrains from implementing immediate wholesale change to the pensions tax relief system.
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