Chancellor Philip Hammond announced plans to reduce the Money Purchase Annual Allowance from £10,000 to £4,000. It has been announced in July that this reduction is to apply retrospectively, from April 2017.
Take a look at our guide to the changes, especially if you are an employer. Most at risk are employees who have accessed pension funds through the new ‘Pensions Freedom’ rules.
Nick Allen, Head of Corporate Pensions, Jelf
Following the announcement of the general election, some measures, including the reduction of this allowance and also the introduction of the £500 tax-exempt employer-arranged pensions advice allowance were removed from the Finance Bill.
The Treasury stated that items removed would be re-addressed at the start of the next Parliament. On 13 July 2017, the Government confirmed that the second Finance Bill of 2017 would bring into force all those that were due in April 2017 and would remain effective from that date.
The government statement on this matter: “The government confirms that intention. It expects to introduce a Finance Bill as soon as possible after the summer recess containing the withdrawn provisions. Where policies have been announced as applying from the start of the 2017-18 tax year or other point before the introduction of the forthcoming Finance Bill, there is no change of policy and these dates of application will be retained. Those affected by the provisions should continue to assume that they will apply as originally announced.”
It is suggested that this change will save the Government around £70m per annum. The reduction was designed to limit the recycling of pension savings that can benefit from tax relief.
Read our guide to the changes, here.
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