Autumn Statement 2016
Published: 24 Nov 2016
UK Chancellor of the Exchequer, Philip Hammond today delivered the last ever Autumn Statement, where the concept has now been abolished, and replaced by an Autumn Budget.
In the future, the Chancellor will instead deliver a Spring Statement in response to statistics issued by the Office of Budget Responsibility, but this will not contain any fiscal measures.
This will certainly assist the Pensions Industry in its planning, by ensuring that large scale measures are only announced annually.
You can read the entire speech here.
Measures announced which directly impact the Pensions Industry included:
- Money Purchase Annual Allowance (MPAA).
- There is a planned reduction in the MPAA from £10,000 to £4,000 per annum with effect from April 2017. This will initially be via a consultation, details of which can be found here.
- Once a person has accessed pension savings flexibly, if they wish to make any further contributions to a Defined Contribution (DC) pension, tax-relieved contributions are restricted to the MPAA.
This is largely an Anti-Avoidance measure that limits the extent to which pension savings can be recycled to take advantage of tax relief.
Whilst currently in a consultation phase, it’s difficult to see that this measure will not be introduced.
- Foreign Pension income received by UK Residents.
- The Government intends to review the tax treatment of foreign pensions with the intention of better aligning them with the UK’s tax regime.
- Section 575 ITEPA 2003 provides that only 90% of income received from a Foreign Pension Scheme is classed as taxable income, unless charged otherwise. This may no longer be possible, but further details are awaited on this measure.
Whilst this potential measure reduces some LTA planning opportunities, in reality it relates only to Income, and has been seen for some time as an anomaly.
- QROPS – extension from 5 to 10 years of taxing rights and eligible criteria.
- This is material, as it appears to extend the scope of Member Payment Charge provisions from 5 years to 10 years non-residency for lump sum payments. If this is the case, this would limit the tax exempt lump sum paid to a Non-UK resident to 25%, for a period of 10 full tax years, after the year of departure from the U.K. to avoid the Member being subject to a Member Payment Charge.
- In addition, the Government will further update the eligibility criteria for foreign schemes to qualify as Overseas Pension Schemes. Again, details are awaited on this.
- Pension Savers
The Government will shortly issue a consultation on options to tackle pension scams, including;
- Banning cold calling in relation to pensions.
- Giving firms greater powers to block suspicious transfers.
- Making it harder for scammers to abuse Small Self-Administered Schemes.
All of these planned changes are welcomed, and in fact may lead to smoother Pension transfers.
Whilst not dominating the speech, the changes do impact the International Pensions Market, making it all the more important to seek quality advice, and having the option to switch between jurisdictions, depending on the circumstances of the Member.
The Draft Finance Bill will be issued on the 5th December, which will allow us the opportunity to examine the detail behind these announcements.
Published: 26 Jun 2017The UK Government’s reductions in the lifetime allowance from £1.5million to £1.25million in 2014/15 and subsequently from £1.25million to £1million in 2016/17 have limited the amount that savers can put into a private pension fund before the excess becomes subject to relatively high levels of tax.
Published: 16 Jun 2017The countdown for final salary or Defined Benefit (DB) schemes has been a long time coming as they are gradually replaced by Defined Contribution (DC) schemes. But the pace is picking up as the realisation grows that the economics behind DB schemes no longer stack up and they become too expensive to provide – posing a series of questions for anyone with this type of scheme.
Published: 09 Mar 2017Philip Hammond delivered his first full UK Budget speech on Wednesday 8th March 2017, and delivered significant news for the International Pensions industry. Full details of the specific measures can be found here, which will be analysed in detail by us.
Published: 25 Nov 2016A good financial adviser will pride him or herself on getting to know a client inside out, often over a period of many years. They will go that extra mile to find out all about their client, whether it’s the obvious, such as attitude to risk and understanding their retirement ambitions, or the less obvious, such as family background.