In the lead up to the 2016 Budget on 16 March, there was considerable speculation in the press around potential changes to the tax relief provided on pension contributions. One of the other options considered was the possible introduction of ‘pension ISAs’. However, neither of these potential changes took place in practice.
Key changes from last week were;
- The introduction of Lifetime ISAs from April 2017, for people aged under 40, which appears positive in terms of helping to boost overall savings.
- Consultation will take place on introducing a ‘pensions advice allowance’ whereby members of a defined contribution scheme, who are aged under 55, will be able to withdraw up to £500 tax-free to set against the cost of financial advice.
- There will be an increase from £150 to £500 in the tax and national insurance relief available for employer-arranged pension advice.
- Consultation to begin on the introduction by 2019 of a pensions industry sponsored dashboard, on which members will be able to view all their retirement savings in one place.
The government is considering limiting the range of benefits that attract income tax and national insurance relief when provided as part of salary sacrifice schemes. However, pension scheme salary sacrifice won’t be affected.
As ever, we will continue to monitor the government’s proposals and consultations and will keep you updated.