Pensions Tax Relief update for Executives – 14 October 2010
Financial Secretary to the Treasury, Mark Hoban MP, announced today that:
- the Annual Allowance will be set at £50,000 from April 2011
- the factor for testing increases in pension against the Annual Allowance will be set at 16:1
- the Lifetime Allowance (LTA) will be set at £1.5m from April 2012
- unused Annual Allowance can be carried forward up to three years
- methods of allowing schemes to meet tax charges will be explored in November
Other issues will be subject to further consultation, such as:
- Protection for pension savings already exceeding £1.5m
- Treatment of those with Enhanced Protection from A-Day (6 April 2006), who are currently exempt from the Annual Allowance and LTA.
It would appear that the current anti-forestalling regime remains in force without change. This provides important planning opportunities for individuals and employers - not only to implement changes for future pension provision from April 2012, but also to make untaxed provision now that would be taxed under the new regime.
The Government has re-affirmed that it will address the use of Employer-Financed Retirement Benefits Schemes (EFRBS) stating that it will 'ensure that funded EFRBS are less attractive than other forms of remuneration'. The measure will be brought forward as part of the consolidated draft clauses planned for Finance Bill 2011, due to be published for consultation towards the end of 2010.
The information in relation to EFRBS on this website and linked documents has NOT been updated in light of the Government’s announcements on changes to EFRBS and Disguised Remuneration. If you wish to discuss EFRBS then please contact the Executive Pensions team.
For more information please contact Bhargaw Buddhdev, in our Amersham office.