The chancellor, Rishi Sunak, has today announced a significant change to the Tapered Annual Allowance (TAA) thresholds as it is raised to £90,000. This means that from 2020-21 the threshold income will be £200,000. But has the government gone far enough?
"The government has not gone far enough to ‘get this done’."
Nilesh Shah, Specialist in Executive Pensions at Barnett Waddingham, believes the government has been too soft on resolving the problems presented by TAA.
Nilesh said: "Tinkering around the edges of pensions taxation is not going to solve the issues. The government have not gone far enough to ‘get this done’.
“While some of the high earners will see their AA tax bills reduced by up to £13,500 net, four years after its introduction the complexities are still there. The chancellor should have got rid of the complex TAA.”
Alongside the changes to the Tapered Annual Allowance, the chancellor has announced the government will be addressing 'net pay' pension schemes. James Jones-Tinsley, Self-Invested Technical Specialist at Barnett Waddingham, is hoping for a speedy solution.
"Let us hope that a speedy and satisfactory solution is found via the Chancellor's initial call for evidence."
James said: "Finally, after too much dithering and passing the problem from one government department to another, the chancellor has today committed the government to addressing the anomaly that exists between 'net pay' pension schemes and those that are administered on a 'relief at source' basis.
"This anomaly currently means that around 1.7 million low-earners - mainly women - who are auto-enrolled into 'net pay' workplace pension schemes receive no tax relief on their contributions. Let us hope that a speedy and satisfactory solution is found via the chancellor's initial call for evidence."