yes!!!!!

Malthusian

fizio said:

What about those already having use 100% LTA? Can they start a new pension - though the 25% tax-free makes it less attractive

They can certainly start a new pension (they could before). Even with 100% of the pension fund subject to income tax, it could be attractive depending on the tax relief in vs. tax out equation. 
It will be interesting to see the detail and how this effects people who fully crystallised with an LTA of £1 million. Will we have to declare how much PCLS we've taken rather than how much LTA we've used?

Pat38493

Beddie said:

Makes sense to remove it. The annual limit is enough, although it could have stayed at £40k + inflation.

Great for the people who are already wealthy enough not to need it. Perhaps he could have helped people nearer the bottom by doubling employer pension contributions - 3% is woeful.

As  I expected they framed it as specifically to help NHS doctors and consultants not to retire early.  From what I understand, the AA limit is actually in some ways the bigger issue as it could in extreme cases result in very large and immediately payable tax bills landing on the doormats of some consultants or doctors, to pay tax right now on money which they wouldn't be able to get for many years into the future.

drjohn67

IHT and pension.

Tax is typically paid on the lump sums when they are drawn down by the those inheriting.

1. If you die <75 it is tax free though that saves approx 10 years of state pension and in part compensates your family as they may still have been receiving support.

2. If those inheriting are on lower rate tax then the tax rate on funds drawn may be less than tax benefit that you had going in.

Albermarle

Alexland said:

ukdw said:

'The maximum Pension Commencement Lump Sum for those without protections will be retained at its current level of £268,275 and will be frozen thereafter.'
https://www.gov.uk/government/publications/spring-budget-2023/spring-budget-2023-html

So over time with a few decades of inflation the PCLS become more a token gesture in spending power rather than a substantial pot of money. So paying income tax on what would have previously been possible to withdraw tax free (and for some that could push them into higher rate as pensioners) is helping to pay for the policy of abolishing the LTA charge.

As already said in one of the other threads. The PCLS will remain at 25% for the large majority. This cap ( already effectively in place for the last couple of years) only affects those with big pension pots. Although the longer it is frozen the more people it will affect, but it will be many, many years before it starts to impact on the average person, if ever.

fizio

Malthusian said:

fizio said:

What about those already having use 100% LTA? Can they start a new pension - though the 25% tax-free makes it less attractive

They can certainly start a new pension (they could before). Even with 100% of the pension fund subject to income tax, it could be attractive depending on the tax relief in vs. tax out equation. 
It will be interesting to see the detail and how this effects people who fully crystallised with an LTA of £1 million. Will we have to declare how much PCLS we've taken rather than how much LTA we've used?

True - if tax relief in is same as tax out then I'm not sure there is any point (for me anyway) of taking advantage of the MPAA going from 4 to 10k..

artyboy

Firefly12345 said:

Stargunner said:

Helping the very rich that will be able to benefit from the tax relief when contributing £60k per annum.

Really high earners can't put much in. There will always be loop holes but in general this simplification must be applauded. Look at the amount of time spent on here talking about it that could have been used to do something useful!

Right now, the sweet spot will be those earning £160-260k of relevant taxable income because they'll get the maximum possible relief on the way in while still having the full untapered AA.

Mrs Arty and I are both happy today 

dunstonh

bostonerimus said:

Wonderful news if you have enough lifetime income to take advantage, but it will only increase wealth inequity. It's a nice gift for the best off and irrelevant to the majority of people.

The UK tax system has been punishing wealth generation for a while now.    

Do not forget that the super wealthy get their annual allowance tapered. So, they didn't get £40k before and wont get £60k now.   The most they could pay in is £4,000 and that is going upto £10,000.  

The changes to the pension allowances affect basic rate taxpayers through to the lower end of high earners (sub 250k a year)

jim8888

The bit that had people's tongues hanging out (when speculating on the move from £1m to £1.8m) on the LTA was the prospect of maybe getting a TFLS of £400k instead of £268k. Oh the disappointment now in realising that this bit was capped all along. 

zagfles

jim8888 said:

The bit that had people's tongues hanging out (when speculating on the move from £1m to £1.8m) on the LTA was the prospect of maybe getting a TFLS of £400k instead of £268k. Oh the disappointment now in realising that this bit was capped all along. 

Yes most people likely to exceed the current LTA would probably have been happier with the rumoured increase to 1.8M and associated increase in the PCLS. 

bostonerimus

dunstonh said:

bostonerimus said:

Wonderful news if you have enough lifetime income to take advantage, but it will only increase wealth inequity. It's a nice gift for the best off and irrelevant to the majority of people.

The UK tax system has been punishing wealth generation for a while now.    

Do not forget that the super wealthy get their annual allowance tapered. So, they didn't get £40k before and wont get £60k now.   The most they could pay in is £4,000 and that is going upto £10,000.  

The changes to the pension allowances affect basic rate taxpayers through to the lower end of high earners (sub 250k a year)

I don't see a progressive tax system as punishing, just sensible. The UK is very generous in it's pension and tax free investing options and this is adding to that for the few that can afford to take advantage.