The Government proposes radical changes to the annual allowance (AA) and lifetime allowance (LTA) limits. The need to provide an appropriate or equitable system for pension provision is clearly secondary to deficit reduction: to quote from the document ‘the Government’s overriding concern will be the delivery of the fiscal objective.’ The objective is to recoup at least as much tax as before possibly more but to redistribute the burden of deficit reduction.
Who is potentially affected?
The AA is to be reduced from £255 000 to between £30 000 and £45 000 and the LTA from £1 800 000 to nearer £1 500 000 but no mention is made of any income threshold above which all pension relief would be withdrawn. Those with the highest incomes will still get some relief and more of the burden will fall on people with more modest incomes.
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