News updates

05 April 2018

Hot topic

Tax allowance changes

The Lifetime Allowance is now £1.03 million.

On 6 April 2018, the Lifetime Allowance increased from £1 million to £1.03 million.
 
The Lifetime Allowance is the amount you can build up tax-free in all of your pension arrangements (excluding the State Pension) until you retire. 
 
Tax will be charged on any pension savings you make over the Lifetime Allowance limit.
 
The Lifetime Allowance now increases at the start of each financial year in line with the Consumer Prices Index (CPI) figure from the previous September. As the CPI figure from September 2017 was 3%, the Lifetime Allowance has increased by 3%.


 

Remember your tax limits for pension savings:

Lifetime Allowance = £1.03 million

 
Annual Allowance = £40,000

(unless you are affected by the tapered Annual Allowance)

 
Money Purchase Annual Allowance = £4,000

(affects those who have already taken some of their defined contribution pension savings using certain options)

 
Tapered Annual Allowance = between £10,000 and £40,000

(could affect those with a taxable income of more than £110,000)  

 
You could face large tax bills if you exceed either the Annual Allowance or the Lifetime Allowance and it may be your responsibility to report these to Her Majesty’s Revenue & Customs (HMRC). 
 
You can learn more about all of the above Allowances in the glossary, FAQs and at www.gov.uk/tax-on-your-private-pension

 

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