A welcome (tax!) relief from the Chancellor
In his first Budget since the Government's significantly reduced majority, it was a startling fact that Phillip Hammond barely uttered the word ‘pension' at all!
As suspected, the Government's Brexit focus meant less of an emphasis on the pension policy areas that are usually subject to Government meddling, but it came a surprise that the world of pensions would again be spared of any changes at all.
In recent months, there have been murmurings of some inevitable tinkering to the tax relief rules. The lack of a strong Government meant that we were unlikely to see any big reforms such as the much feared abolition of tax relief.
However with the Government short of cash, it was widely predicted that there would be some measure of tinkering to tax relief, most likely a reduction in the relief awarded on pension contributions.
It would be comforting to think this is a planned period of stability on pension reform, but in reality it a more likely a reflection of the Brexit distractions coupled with a paper thin majority preventing any significant changes.
The one change that has been confirmed in the Budget papers is the modest uplift in the lifetime allowance. As previously announced, this will increase in line with the Consumer Prices Index by £30,000 to £1,030,000 from April next year.
This is a reversal of successive reductions in the lifetime allowance that was as high as £1.8m back in 2012, so whilst a modest amount, any increase is welcomed. In these times, we need to be thankful for small mercies!
John Dowding Dip PFS
Morgan Lloyd Administration Limited
The information above is based on our understanding of the legislation applicable to UK Registered Pension Schemes, and HM Revenue & Customs rules. It is provided as a summary only and should not be taken as advice - Morgan Lloyd SIPP Services Ltd and Morgan Lloyd Administration Ltd are not authorised to give financial advice and will not be responsible for any decision or action taken as a result of relying on this information. If you are a retail client you should seek financial advice from a financial adviser who is authorised by the Financial Conduct Authority and/or seek guidance from the Government’s Pension Wise service.