Protecting your pension
30 August 2016
The referendum vote has disrupted many plans and timetables this year. Among them is the passage of the Finance Bill, which in any other year would by now have been given Royal Assent and become a Finance Act. In 2016 it looks as if the transition from Bill to Act may not occur until shortly before the new Chancellor announces his first fiscal measures in the Autumn Statement.
The delay in passing the Bill has had some curious consequences. One relates to the 20% reduction in the pension lifetime allowance to £1 million and the associated transitional protections. The third cut in the lifetime allowance and the new protections took effect from 6 April 2016, but the legislation underlying them is in that slow-moving Finance Bill.
Initially, HM Revenue & Customs (HMRC) announced an interim paper-based procedure for claiming the new protections, primarily for anyone starting to draw benefits before the Finance Act 2016 came into being. HMRC promised to set up an on-line application process by the end of July, at which point the interim procedure would end. The timing was taken to be driven by the (then) likely Royal Assent date.
The online procedure is now in place – you can find out more at https://www.gov.uk/guidance/pension-schemes-protect-your-lifetime-allowance . Unlike earlier versions of transitional protection, there is no deadline for applications. However, this does not mean you can ignore the provisions until you start to draw your benefits, because they revolve around values as at 6 April 2016 and subsequent actions.
If you think these new protections might be relevant to you, please contact us as soon as possible to discuss your options. Even if you have already started to draw benefits, the new protections could still be worth claiming.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
If you have any queries or concerns please email us or call 0141 221 2984.