My previous article was written before the last UK government budget announcement, it detailed the basis of a budget and was written on the eve of the budget revelations. I highlighted the fact that there is often speculation prior to the speech but until the announcement has been revealed it is only guess work. Also, I pointed out there have been many decisions over the years that have been memorable and for me this budget was one of those.
This time the speculation was around the Lifetime allowance increase, but for me the big surprise was that this was removed, although there were a few conditions put in place. So what does this mean? Prior to the budget if you built up over a certain amount in a Pension you would be subject to a tax charge unless your Pension had a form of protection from this charge. The budget removed this rule but there are still restrictions with regard to the amount of tax free lump sum which can be enjoyed. I know I was not the only one surprised by this announcement.
But this may not be the end of the Lifetime allowance. Labour have said if they were to get back into power they will reintroduce the rule. So care still needs to be taken, especially if you have protection in place, which due to the changes may not seem to be relevant at this stage but may be important in the future. This could mean that if you break the terms of your protection now, you may regret it later.
This was not the only Pension announcement, the government also increased the annual allowance from £40,000 to £60,000pa. Now all has been revealed, should you need some help understanding the implications of the latest UK budget and how this is likely to affect you personally, do not hesitate to call us for a free, without-obligation consultation.
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