With the Chancellor, Philip Hammond, set to deliver his first Autumn Budget in just under a week, Sacker & Partners LLP (Sackers), the UK’s leading specialist firm for pensions and retirement savings, asks if pensions tax will indeed be a target in light of current economic uncertainty. Contributor Claire Carey, Partner – Sackers.
Claire Carey, partner, Sackers, commented: “There is already a Finance Bill making its way through Parliament which is set to reduce the money purchase annual allowance (triggered when someone accesses their DC benefits flexibly) from £10,000 to £4,000. This change is set to be backdated to 6 April 2017, as it was dropped from the Finance Act 2017 so as to allow that Act to be fast-tracked through Parliament ahead of the General Election shut-down. But is this the only pensions tax change on the cards?
“As ever, rumours abound that the Chancellor could once again look to pensions tax relief to help fill the gaps in Treasury coffers. Possible options include replacing the current system of providing pensions tax relief at an individual’s marginal rate by a flat rate of tax relief for all (for example, aligned to the 20 percent basic rate relief). More recently, it has emerged that plans may be afoot to cut tax relief available to older savers so as to help provide greater relief for those pension savers in their 20s and 30s.”
Carey continued: “Beyond the realms of pensions tax relief, there are already many changes in the offing for pensions, including master trust regulation, further caps on charges in DC arrangements, as well as the greatly anticipated White Paper addressing the security and sustainability of DB schemes. With the economic uncertainty of Brexit looming, and the value of pensions tax relief plummeting over the last six years or so, perhaps this Chancellor will give pensions a wide berth.”