Employer-arranged advice exemption - provisions due to be included in the Finance Bill 2017 will introduce a £500 income tax exemption for employer-arranged financial advice provided to an employee, former employee or prospective employee in a tax year. For these purposes, “pensions advice” also includes advice on general financial and tax issues relating to pensions. This will replace the current £150 cap.
Lifetime allowance charge protection - an individual who wants to claim individual protection 2014 (IP2014) against a lifetime allowance charge must notify HMRC before April 6, 2017. IP2014 allows individuals to retain a personalised lifetime allowance equal to the value of an individual's pension saving on April 5, 2014, subject to a maximum of £1.5 million.
Savers whose pension(s) were worth more than £1 million at April 5, 2016 can still apply for IP2016 if they already have:
- enhanced protection;
- fixed protection;
- fixed protection 2014; or
- fixed protection 2016.
IP2016 will stay dormant until the previous protection is lost or surrendered. HMRC must be informed in writing if this happens.
IP2016 is not available to savers who have either:
- primary protection; or
There is no deadline for making an application for either FP2016 or IP2016, which must be done online.
Lump-sum death benefits – a new provision-of-information requirement is due to be introduced. Under the new requirement, where a scheme pays lump-sum death benefits to a trustee (other than a bare trustee) and the special lump-sum death benefits charge has been deducted, the scheme administrator will be obliged to give the trustee certain information within 30 days of payment. The information comprises the amounts of the lump sum and tax charge, details of the deceased member (including their date of death) and details of the scheme making the payment. The trustee will in turn be required to pass on this information to the beneficiary, within 30 days of payment to the beneficiary.
Consultation on the draft regulations closed on December 5, 2016, and a response is awaited.
Money purchase annual allowance - at the 2016 Autumn Statement, the Government proposed reducing the money purchase annual allowance (MPAA) from its current level of £10,000 to £4,000 from April 2017. The MPAA applies to savers who have already accessed some of their pension savings under the flexible regime, but wish to carry on saving on a tax-relieved basis.
HM Treasury suggested in its consultation paper that while an MPAA of £10,000 was helpful to ensure a smooth introduction of the pension flexibilities, it now believes that a reduced MPAA of £4,000 is “fair and reasonable”. The consultation seeks confirmation that a reduction would not adversely affect the auto-enrolment regime or otherwise disadvantage particular groups.
No other changes to the current MPAA regime are proposed. The consultation period closes on February 15, 2017 and the Government will confirm the revised level of the MPAA at the 2017 Budget.
Overseas pensions - provisions due to be included in the Finance Bill 2017 will make changes to the current tax regime governing the UK tax treatment of overseas pensions. Amending legislation relates to the tax treatment of foreign pensions, including abolishing section 615 schemes and extending from five to ten years the period during which lump sums paid to non-UK residents from foreign pension plans that have benefited from UK tax relief are liable to UK tax. The aim is to achieve better alignment with the tax treatment of UK schemes.