You may have read in the press prior to the election that the Conservative party announced in its manifesto that it intends to curtail tax relief for high earners in order to support changes to Inheritance Tax. We currently only have an outline of how this will work, namely that the annual allowance will be reduced in stages, from the current limit of £40,000 to £10,000 for those earning between £150,000 and £210,000.
The effectiveness of pensions as a savings vehicle for anyone earning more than £150,000 would clearly be strikingly reduced and, while the timetable for implementing changes is not yet known, this could be announced as early as the forthcoming 8 July Budget.
As such, it makes sense for anyone earning more than £150,000 to consider pension contribution prior to 8 July if funds are readily available as whilst there can be no guarantee, it would be surprising if any reduction to the Annual Allowance for high earners applied to contributions already made.
There are also further reductions set to be applied to the Lifetime Allowance, which will fall by £250,000 to £1 million in April next year.
See our summary highlighting the key issues and an outline of potential planning.
The current tax year, and the run up to the Budget in particular, present an opportunity to implement planning to lessen the impact of these proposals. If these changes affect you, or anyone you know, our nationwide team of financial planners can help. You can call us on 020 3131 5970, email email@example.com or fill in the form here to arrange a free no-obligation consultation with one of our financial planners.