2015 Summer Budget – Pensions
The 2015 summer budget announced that from 2016/17 the Annual Allowance for tax relieved pension savings will be reduced for those with incomes of over £150,000. Their annual allowance will be reduced by £1 for every £2 of income they have over £150,000 with a maximum reduction of £30,000.
Also, in advance of the introduction of this tapered annual allowance, transitional rules are being introduced from 8/7/2015 to align Pension Input Periods (PIPs) with the tax year by April 2016 and to protect any savings already made before Budget from retrospective tax charges.
For HMRCs publication of the full details click here
The key points of how transitional rules will work are;
– Savings for pension input periods ending in 2015/16 will then be split into two mini tax years; PIP ending on or before Budget, & a post-Budget PIP which will end on 5 April 2016.
– Individuals will have an Annual Allowance of £80,000, plus any available carry forward, for all their pension savings in all PIPs ending on or after 6/4/2015 – 8/7/2015.
– Savings from 9/7/2015 – 5/4/2016 will have a nil Annual Allowance, but up to £40,000 of any unused annual allowance from the period up to 8/7/2015 is added to this.
– In addition any remaining carry forward from the 2012/13, 2013/14 and 2014/15 is added to this.
– All PIPs are now fixed and can no longer be amended.