New Pension(er) Tax Allowance

Silvertabby

Sounds complicated. And will still only benefit a tiny minority of pensioners.

westv

Nothing of note for most people pension wise. Then again, I wasn't expecting anything.

What did surprise me this year was that there were no threads on here about the TFLS being changed - which we knew wouldn't happen.

DRS1

I wonder if this will factor into some people deferring the state pension because their other income is just under £13100.

Cobbler_tone

https://forums.moneysavingexpert.com/discussion/comment/82184270#Comment_82184270

Don't worry, they will get them back from the increase in tax on savings interest. 😉

LHW99

For every £3 of income above the full level of the new State Pension, your Pension Tax Allowance will reduce by £1

But hopefully only down to the standard tax-free personal allowance!

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82184276#Comment_82184276

I'll bite…..Knew? Not sure he made that public beforehand, and if he did not, not sure if the risk could have been eliminated for sure. Trying to pin politicians down on even a vague commitment is a mug's game.

However, I fully appreciate that the risk of TFLS being changed (for the worse, obviously) is low for the present, but for the future? I give it 10 years max before they start reducing it in some way and even less for them abolishing higher rate tax relief.

Aretnap

https://forums.moneysavingexpert.com/discussion/comment/82184139#Comment_82184139

"The allowance will apply from 6 April 2027 until 5 April 2030..." does imply (though I suppose doesn't definitively state) that a sunset clause will be written into the legislation. Though new legislation can always be passed in the meantime.

molerat

https://forums.moneysavingexpert.com/discussion/comment/82184141#Comment_82184141

Yes. As it is written in the explainer the new allowance applies to all above state pension age irrespective of when they reached retirement or where their income comes from.

If I receive income from other sources, will I be able to benefit from the Pension Tax Allowance?

If you receive income from the following sources, provided that the total from all of these sources is less than the full annual value of the new State Pension (£13,036.40 in 2027-28), you will receive the full Pension Tax Allowance reduction: • new State Pension • old State Pension • Additional increments on your State Pension, including additional State Pension, Protected Payments, extra payments on deferral or inherited pension • Occupational or private pension • Income from part-time employment or self-employment • Property rental income • Interest on savings, investments and dividends (not including ISAs) • Certain state benefits which are a replacement for earnings

af1963

However, I fully appreciate that the risk of TFLS being changed (for the worse, obviously) is low for the present, but for the future? I give it 10 years max before they start reducing it in some way .

It's been reducing for about 15 years. It was £450K in 2012 ( which is equivalent to about £675k today) and was cut to £375K. Then cut again in 2014 to £312K. Then cut again in 2016 to £268K.

It's been frozen since 2016, which is a further real-terms cut. That's the politically painless way to reduce it, by letting inflation do the work.

Triumph13

The taper is a bit vicious, with an effective tax rate of 53% on earnings in the taper band. The band is small enough next year at £280 that it may go unnoticed, but if the gap between SP and PA continues to increase, we could start to get some "govt takes most of the earnings from my tiny part time job" stories. I can't wait for the "Santa taxed at 53%!" headlines :)