Main changes include:
Lifetime Allowance (LTA) cut from £1.8m to £1.5m to £1.25m to £1m; (since then it has been frozen and now increased to £1.03m);
Main Annual Allowance (AA) cut from £50,000 to £40,000;
Annual Allowance for large contributors / high earners tapered down to as little as £10,000 with effect from 2016/17;
Money Purchase Annual Allowance (MPAA) cut from £10,000 to £4,000
New figures published today on the AA are here:
The number of people paying a tax charge through their self-assessment return tripled from 5,430 to 16,590 and the amount contributed in excess of annual limits (which will attract a tax charge) rose from £143m to a massive £517m. This is likely to be both a delayed effect of the cut in the annual allowance from £50,000 to £40,000 and the impact of the first year of the tapered annual allowance down to £10,000. This suggests that the tax take from these charges could increase significantly in the coming years.
New figures published today on the LTA are here:
They show that in 2016/17 the number of cases where schemes paid tax bills because of exceeding the Lifetime Allowance nearly doubled from 1180 to 2120, while the amount raised in such charges rose from £66m to £102m.
Commenting on the figures, Steve Webb, Director of Policy at Royal London said: “We are now starting to see the multiple cuts to pension tax relief bite on pension savers. Although relatively small numbers of people are affected, the tax bills are huge. On annual allowance charges alone, the amount of contributions which exceeded the annual limit trebled in a single year up to 2016/17. These impacts will get bigger as the ability to carry forward higher unused allowances from previous years works its way out of the system.
“Regrettably, the Chancellor will be looking at these figures with great interest as they suggest that pension tax relief could be a rich source of additional revenue for a cash-strapped government.
|
