HMRC’s Pension Schemes Newsletter 155 (January 2024) leads with the further changes (i.e. full abolition) to the pensions lifetime allowance, as introduced in Finance Bill 2024 Sch 9. Although the legislation now seems likely to be enacted in its original form (without amendment – other than for the correction of minor typographical errors), HMRC have acknowledged that a number of unintended consequences could arise as a result of the changes.
Concerns have been raised that linking eligibility for a pension commencement excess lump sum with the lump sum and death benefit allowance ‘has created unintended consequences for members with multiple pension schemes’. HMRC say that it is ‘considering how to address this including whether it may require legislative change’. (This relates to Sch 9 para 26.)
The newsletter also sets out HMRC’s basic view on the following areas, which it says may require further legislation:
scheme-specific lump sum protection (Sch 9 para 87);
event 24: payment of lump sum or lump sum death benefit in relation to relevant benefit crystallisation event (Sch 9 para 106); and
the requirement to report tax due on lump sum death benefits to HMRC (also Sch 9 para 106).
The newsletter also explains HMRC’s view on the new powers at paras 133 and 134 of the Bill, which allow HMRC to amend the legislation ‘where the current provisions do not achieve the correct policy outcome’. HMRC say there is no intention here to create more widespread changes without consultation and that ‘should any changes increase a person’s liability to tax, these will need to be debated in Parliament’.
HMRC’s Pension Schemes Newsletter 155 (January 2024) leads with the further changes (i.e. full abolition) to the pensions lifetime allowance, as introduced in Finance Bill 2024 Sch 9. Although the legislation now seems likely to be enacted in its original form (without amendment – other than for the correction of minor typographical errors), HMRC have acknowledged that a number of unintended consequences could arise as a result of the changes.
Concerns have been raised that linking eligibility for a pension commencement excess lump sum with the lump sum and death benefit allowance ‘has created unintended consequences for members with multiple pension schemes’. HMRC say that it is ‘considering how to address this including whether it may require legislative change’. (This relates to Sch 9 para 26.)
The newsletter also sets out HMRC’s basic view on the following areas, which it says may require further legislation:
scheme-specific lump sum protection (Sch 9 para 87);
event 24: payment of lump sum or lump sum death benefit in relation to relevant benefit crystallisation event (Sch 9 para 106); and
the requirement to report tax due on lump sum death benefits to HMRC (also Sch 9 para 106).
The newsletter also explains HMRC’s view on the new powers at paras 133 and 134 of the Bill, which allow HMRC to amend the legislation ‘where the current provisions do not achieve the correct policy outcome’. HMRC say there is no intention here to create more widespread changes without consultation and that ‘should any changes increase a person’s liability to tax, these will need to be debated in Parliament’.
