Whilst this confirmation provides some degree of certainty for those making long-term financial planning decisions, as once these changes have been pushed through via a Finance Bill it will be much more difficult to reverse later on, the SPP would have supported and welcomed a decision by Government to delay the implementation to 6 April 2025.
The SPP submitted a response to the July 2023 consultation (part 1 and part 2) highlighting the tight timeframe as a major concern of our members - all of whom would have welcomed a delay to the implementation so details could be fully considered, understood, consulted on and have sufficient time to implement to avoid any delays to the payment of member benefits. We understand that the majority of pension firms and other industry bodies have expressed similar concerns.
The pensions industry has a very short window to accommodate the changes. Indeed, meaningful progress can only commence once the draft Finance Bill is published and the full detail of the changes are available for review (which, given the number of changes being made, will take time to digest).
Even if the draft Finance Bill is released in the first week of December 2023, the pensions industry will have less than 4 months to review and understand the detail, during which time they will need to put into effect the considerable changes that will be necessary to their systems, communication material, and the necessary training for their staff. Information about some of the work we anticipate being involved and the pressures faced by our member firms and others across the industry, can be found in our letters to HMRC referred above.
Time will tell if the additional changes being proposed, which have not gone through the usual consultation process, will achieve the Government’s policy intent of simplifying the pensions tax system, or, if by sticking to a 6 April 2024 deadline, retrospective changes will be required to correct unintended consequences which (because of time pressures) only later come to light.
Nicholas Nesbitt, Partner at Mazars comments: “The devil is always in the detail and the Chancellor’s full Autumn Statement provides a nod towards clarity over how pensions will be taxed from April 2024.
"The LTA removal has taken away the tax trap which forced high and middle-income earners to decide between cutting their professional lives short or facing a higher tax bill. But hand in hand with this has come new ‘death tax’ proposals which up until now, have been far from clear. Set to be clarified in the Finance Bill, the ‘Lump Sum Allowance’ and ‘Lump Sum and Death Benefit Allowance’ will hit how much people can pass to loved ones if they die before age 75.
“This clarity should come soon and equip pension savers with the information they need to make informed decisions.”
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