Sadly, the Chancellor didn’t act on ALACE’s representations and simplify the taxation system by scrapping the annual allowance. You can read more about what the Budget meant for taxation of pensions here. [private]
Annual Allowance (AA)
Despite the pundits predicting that the Chancellor would lower the standard Annual Allowance (AA) in his latest Budget on 29 October 2018 he hasn’t done so – hurrah.
The current AA arrangements are, nevertheless, causing problems for many ALACE members who are now finding that they are exceeding the standard AA of £40,000, or their tapered AA of less than this, and are facing significant AA tax charges. If you are in this position, or simply want to know more about how the AA works, please have a look at Annex 2 on the AA to the ‘Pensions: FAQs’ document in the Members’ Zone of the ALACE website and, if necessary, contact one of ALACE’s ‘pensions’ consultants’ – Cheryl Miller or Pete Morris – for further information. They will also be able to help members access the new ‘Annual Allowance and Self-Assessment Tax Return Completion Service’ from Close Asset Management – the full details of which are also on the ALACE website.
Lifetime Allowance (LTA)
A bit of further good news – in his latest Budget the Chancellor has also said that the current standard LTA of £1,030,000 will be going up by inflation from 6 April 2019 to £1,055,000. This could save any ALACE member who is retiring from that date and is subject to the standard LTA (or who has a personally protected LTA below this new figure), up to an additional £13,750 in LTA tax charges – hurrah again!
Full details about the LTA can be found in Annex 1 to the ‘Pensions: FAQs’ document in the Members’ Area of the website. [/private]