Tax-free pension changes: impact on you

Chancellor Jeremy Hunt’s recent changes to UK pension tax breaks are creating a buzz among pensioners, pension savers, and tax planners. The scrapping of the lifetime allowance (LTA) will greatly benefit those with accumulated pots of £1mn or more, while the annual allowance hike will mainly benefit those earning between £100,000 and below £260,000. For those who were planning to withdraw money from their pension, they should wait until April 6, when the new tax year starts. If you earn more than £260,000, this will taper to a maximum of £10,000, up from a previous threshold of £4,000. The lifetime allowance has been abolished, so it’s recommended to invest in a pension from earnings to maximise IHT benefits. Those who are still working, but stopped contributing to their pension because they hit the LTA, should restart payments without any penalty. It is not yet clear what may happen to LTA protections, but all existing protections can be maintained if the conditions on which they were granted are followed.#Taxfree #pension