Alongside the restrictions on pension funding (covered in our companion pension blog published today) he also announced the following:
- The Autumn Statement 2014 had included some radical changes to the treatment of a pension fund at death. This included a tax rate of 45% on lump sums paid from the pension of someone who died aged 75 and over. At the same time it was proposed that this tax rate would change to the marginal tax rate of the recipient from April 2016 and this has been confirmed (where the beneficiary is an individual, not a trust or company). This is a positive change for those affected.
- The government had run a consultation on introducing a secondary market for annuities. This would allow those already in receipt of annuity income to sell this and instead receive a lump sum. Implementation of this has been postponed by at least a year, so those interested will have to wait until at least 2017.
- The Chancellor announced that he will "actively monitor" the growth in salary sacrifice and its impact on tax revenues. Salary sacrifice works by an employee agreeing to receive a lower salary, with the foregone salary instead being placed into their pension. This has the usual income tax saving, but also reduces both the employee's and employer's National Insurance liability. Those considering starting or altering such an arrangement may be wise to act sooner rather than later in the hope that any future change is not retrospective.
Please get in touch if you would like to discuss how these changes might impact upon your future plans.