When will the Chancellor cut your pension allowance?
We reported in our previous briefing that Philip Hammond confirmed that the Money Purchase Annual Allowance was reducing from £10,000pa to £4,000pa from 6 April 2017.
However on 25 April 2017, the Government announced that some clauses in the Finance Bill 2017 would be dropped to allow time for the Bill to come into force before Parliament dissolved on 3 May. Included is the clause reducing the MPAA from £10,000pa to £4,000pa.
The Government has stated its intention to re-introduce the dropped clauses after the general election.
At the moment it's unclear whether the clause will be re-introduced with retrospective effect back to 6 April 2017, as originally intended, or whether the introduction of the reduction will be postponed until 6 April 2018.
Until that's clarified it's safer to assume that the reduction to £4,000 will be re-introduced with an effective date of 6 April 2017: catch-up contributions can always be made if it turns out to be a later date.
John Dowding Dip PFS
Morgan Lloyd Administration Limited
Money Purchase Annual Allowance (MPAA) – if you have taken any form of taxable income from your pension fund (tax free cash doesn't count), then the maximum pension contribution that you can pay to your SSAS or SIPP reduces to £10,000pa
This information reflects the regulatory and taxation situation as it affects pensions at the time of publication in April 2017 and is provided to the best of our knowledge. It is not a complete representation of the pensions legislator landscape and is for guidance and information purposes only. We cannot be held responsible for any errors, omissions or subsequent legislative changes.