HMRC issues guidance on abolition of pensions lifetime allowance

HMRC recently issued preliminary guidance in regard to the abolition of the pensions lifetime allowance.

This measures ensures that no-one will face a Lifetime Allowance charge from April 2023. It increases the Annual Allowance, Money Purchase Annual Allowance, Tapered Annual Allowance, and the adjusted income for the Tapered Annual Allowance.

This measure applies to all members of registered pension schemes. From 6 April 2023, it removes the Lifetime Allowance (LTA) charge and limits the pension commencement lump sum (PCLS) to its current maximum of 25% of the current LTA, unless individuals hold a valid LTA or PCLS protection. It also increases the Annual Allowance from £40,000 to £60,000, the Money Purchase Annual Allowance and Tapered Annual Allowance from £4,000 to £10,000, and the adjusted income for Tapered Annual Allowance from £240,000 to £260,000.

Click here for further information on the pension tax limits.

Source: www.gov.uk