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First reaction is blessed relief that Chancellor Hammond has seen fit not to squeeze further the goose that has laid so many golden eggs for the Treasury in recent years. Pensions did not escape completely however.
Following the Autumn Statement, we expected this to reduce from the present £10,000 to £4,000 and that has come to pass. This limits the maximum new tax relievable money purchase contributions that can be made by or for individuals who have previously taken a taxable cash sum under the pension freedoms. The individual incurs an additional income tax liability on any excess amount paid.
HMRC see Qualifying Registered Overseas Pension Schemes as a potential (and well-used) source of abuse with individuals using these as a means of circumventing various aspects of UK pensions taxation. Genuine cases will still be exempt where, for example, the individual and the receiving scheme are resident in the same country, but any QROPS that wants to maintain their status will have to complete new undertakings for HMRC by 13 April or that status will automatically lapse. The tax charge where HMRC’s exemptions do not apply is an automatic 25%.
The forthcoming changes in the registration procedures for master trusts, linked to the new authorisation requirements set out in the Pension Schemes Bill, were also mentioned in Mr Hammond’s speech. Ascot Lloyd is confident that our own master trust, the Ascot Lloyd Pension Trust, will meet the necessary conditions.Coincidentally, the Regulator has issued a press release today listing the master trusts that have made it on to their approved list over the last six months – see http://www.thepensionsregulator.gov.uk/press/pn17-09.aspx
While we are delighted that we aren’t faced with new tougher tax rules in this Budget, there’s the Autumn Budget still to come this year. The likelihood of another easy run for pensions is very low. The Treasury still sees a lot of potential taxation revenue being lost in pensions – variously estimated to be around £50bn a year.
That’s a very attractive target area and unfortunately we can only expect renewed attention from the Chancellor come the Autumn.