FT - Tories to raid tax relief pensions

Paul_Herring

Spotted on the news item on here about this, something I'd missed:

The minimum annual allowance you can currently have is £10,000, but this will be reduced to £4,000 from next month – affecting those with an income over £300,000.

ratechaser

Yes the 4K floor is a bit of a sting, but I'd struggle to complain too loudly at that income level (at least without blushing). Does it taper down from 10 to 4K between 300-312 of adjusted income?

ratechaser

marlot said:

ratechaser said: 

Not if 'they' can help it! A couple with decent DC pots can draw a combined £100k pension income at an effective marginal tax rate of 13.33%....

I think you mean an overall tax rate of 13.33%.  The marginal tax rate [ie the tax they'd pay for an additional £1 of income] for someone earning £50,001 is 40%.
Plus, of course, they'll probably trigger the lifetime allowance if they have a big enough pot to sustain £50k a year.

Indeed, mixing my terminology. Been a long couple of weeks in the markets...

As for the LTA point, it could be done at a drawdown rate of just under 5%, which is ballsy and possibly unadvisable, unless of course there were plenty of other assets to fall back on like equity in property. But getting ahead of myself...

Paul_Herring

ratechaser said:

Yes the 4K floor is a bit of a sting, but I'd struggle to complain too loudly at that income level (at least without blushing). Does it taper down from 10 to 4K between 300-312 of adjusted income?

Apparently not - at least not by my reading:

http://www.pulsetoday.co.uk/news/chancellor-raises-income-level-at-which-gp-tax-free-pensions-are-tapered/20040304.article

'For those on the very highest incomes, the minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000 from April 2020. This reduction will only affect individuals with total income (including pension accrual) over £300,000. Proposals to offer greater pay in lieu of pensions for senior clinicians in the NHS pension scheme will not be taken forward.'

zagfles

Paul_Herring said:

ratechaser said:

Yes the 4K floor is a bit of a sting, but I'd struggle to complain too loudly at that income level (at least without blushing). Does it taper down from 10 to 4K between 300-312 of adjusted income?

Apparently not - at least not by my reading:

http://www.pulsetoday.co.uk/news/chancellor-raises-income-level-at-which-gp-tax-free-pensions-are-tapered/20040304.article

'For those on the very highest incomes, the minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000 from April 2020. This reduction will only affect individuals with total income (including pension accrual) over £300,000. Proposals to offer greater pay in lieu of pensions for senior clinicians in the NHS pension scheme will not be taken forward.'

Why apparently not? Exactly what it implies. How else do you think it would taper down from £10k to £4k?