- new Lifetime ISA (“LISA”) available to under 40s from April 2017
- pensions tax relief unchanged for now
- lifetime allowance confirmed as down to £1m (from £1.25m) for the 2016/17 tax year, with protections available for those already over the new limit
- annual allowance (including the complex new regime for high earners starting on 6 April 2016) unchanged
- pensions salary sacrifice continues and, unlike some forms of salary sacrifice, appears safe from further change for now
- shake-up of financial guidance and advice with knock-on impacts on disclosure requirements for pension schemes, and an increased tax break for employer-funded financial advice
- increased incentive to pay termination payments into pension schemes as there will be employer NICs on payments over £30,000 from April 2018
- technical changes to make certain aspects of last year’s flexibilities work better
- tax rules on bridging pensions to be aligned with new single-tier State pension
- employers participating in public sector pension schemes will pay higher contributions from 2019-20
- Pensions Dashboard to be funded by the industry so individuals can view all their pensions at once
As you were, for now
The lack of change to the pensions tax regime will be welcome news to employers and trustees, particularly whilst last year’s major pensions and tax legislative changes continue to bed in.
The Chancellor has not given up on revolutionising pensions tax relief, merely held off for now. The response to the consultation consisted of a summary of the views received and an assertion that there was no consensus. A substantive Government response was conspicuous by its absence.
It may be that the LISA is being used to test the water and that we will see more and bigger of the same in the future. There was no mention of auto-enrolment, which may be telling. Could there be a change of policy to come?
LISA versus pension
We compare LISAs and pensions.
Click here to view table.