Summer Budget 2015
The Chancellor George Osborne, delivered his Summer Budget today, the first of the new Parliament. There are several changes affecting pensions which were addressed, and several more which might come into force in due course.
- Pensions tax relief for higher earners will be reduced from April 2016. For individuals earning over £150,000 (including employer’s contributions), for every £2 of earnings above this level the annual allowance of £40,000 will be reduced by £1. Those earning £210,000 or above, will therefore have a reduced annual allowance of £10,000. This will cover the amount the individual and their employer can contribute on a tax free basis.
- Possible radical changes to pension taxation - the Chancellor announced a Green Paper which would consult on potentially significant changes to the way in which pensions are taxed, including treating them in a similar way to ISAs in terms of, how they are taxed at entry and exit points. Consultation runs to the end of September and the proposal document can be found here.
- Pension Wise access will be extended to those aged 50 and above.
- The implementation of the proposed second-hand annuity market will be delayed until 2017.
- The Government will consult over the summer on options aimed at making the process for transferring pensions quicker and smoother. The consultation will also consider charges imposed by providers.
- A £5,000 tax-free dividend allowance will be introduced. Dividends paid via pensions and ISAs are already tax free.
- From April 2016, the personal allowance will be increased to £11,000 and the higher rate tax threshold will increase to £43,000. Additionally, from 2017 there will be a new £175,000 allowance on homes left as part of an inheritance, allowing £1m to be passed on inheritance tax-free.
If you’d like to talk through how any of these changes might affect you, you can call our team of pension specialists on 0300 123 1047 or send us your questions through our online form here.