Pension tax allowances are a complicated area of financial planning and over the years there have been a number of changes to both the Annual Allowance (AA) and Lifetime Allowance (LTA).
The Government has now announced that the Lifetime Allowance charge will no longer apply from 6 April 2023, before the LTA is abolished completely, which is expected at some point in the 2024/25 tax year. Although the LTA charge is no longer applied, the limit to the amount of tax-free cash that can be received still exists, and currently stands at £268,275 for most pension members*. Employees impacted by these rule changes will need to review their situation and consider the action they may need to take.
Our services can provide specialist financial education content and guidance support to help employees understand how to mitigate any tax charges. Where appropriate, this could include direct access to our regulated financial advice service. This ultimately could lead to improved outcomes at retirement.
*Your tax-free cash can be higher if your pension has scheme specific tax-free cash protection or you hold valid HMRC lifetime allowance protection