Post by mostlywrong on Jun 21, 2024 10:37:15 GMT
I cheered when the Chancellor du jour scrapped the Lifetime Allowance (LTA) back in Nov 2022. My opinion was that it was a really stupid tax and was responsible for the early retirement of a lot of senior personnel who could have carried on working (paying 40% tax and NI) for years. My understanding was that it ended completely in April 2024 but I had heard on the grapevine that pension companies were so tied up in knots trying to administer the “new” system, that they were delaying peoples’ retirement. That didn’t sound right to me because cancelling something usually just means removing the statute. What could be complicated about that?
An article in a recent Telegraph has just, partially, enlightened me. The Chancellor did not just remove the LTA as he crowed at the Despatch Box; he actually imposed a whole new tax regime that seeks to tax any “pension event”, even those that are triggered by your death. The devil is always in the Budget detail…
www.gov.uk/guidance/find-out-the-rules-around-individual-lump-sum-allowances
I have read this HMRC guidance (which is poorly written and not recommended for grammar pedants) and I cannot yet make head nor tail of it.
My thoughts are that if you have retired over the last 20 years, your pension has already been assessed with reference to the LTA of the day. Over – pay 55% tax on the excess. Under – pay nothing. But the Treasury has worked out that the LTA was missing out on the various wider benefits sometimes associated with pensions (death in service benefits, pension for your spouse and children etc). And the Treasury has decided that it wants its share: 55% again on the excess above the sum of £1.073m that was fixed several years ago.
My amateurish interpretation is that these new taxes will catch the estates of those wealthy pensioners who retired more than 20 years ago before the imposition of the original LTA.
So, I look to the more educated board members for enlightenment!
MW
An article in a recent Telegraph has just, partially, enlightened me. The Chancellor did not just remove the LTA as he crowed at the Despatch Box; he actually imposed a whole new tax regime that seeks to tax any “pension event”, even those that are triggered by your death. The devil is always in the Budget detail…
www.gov.uk/guidance/find-out-the-rules-around-individual-lump-sum-allowances
I have read this HMRC guidance (which is poorly written and not recommended for grammar pedants) and I cannot yet make head nor tail of it.
My thoughts are that if you have retired over the last 20 years, your pension has already been assessed with reference to the LTA of the day. Over – pay 55% tax on the excess. Under – pay nothing. But the Treasury has worked out that the LTA was missing out on the various wider benefits sometimes associated with pensions (death in service benefits, pension for your spouse and children etc). And the Treasury has decided that it wants its share: 55% again on the excess above the sum of £1.073m that was fixed several years ago.
My amateurish interpretation is that these new taxes will catch the estates of those wealthy pensioners who retired more than 20 years ago before the imposition of the original LTA.
But that cannot be it... surely?
MW