174 How Lifetime Allowance Changes May Affect You
In this episode Kathy & Justin chat about the important changes to the lifetime allowance announced in the Chancellor’s budget in March. It’s fair to say that the extent of the changes has taken the financial advice sector by surprise. It was widely anticipated that the lifetime allowance would be increased, but not fully abolished. We aim to clear up any confusion about what this latest change to pensions legislation means for you, by reminding you first of the annual allowance rules and when the Tapered Annual Allowance and Money Purchase Annual Allowance take effect. The contribution limits for these two allowances have increased from £4,000 to £10,000, so it’s important to understand if you’re affected. We also go into detail about the impact of scrapping the Lifetime Allowance Tax Charge, the change to tax-free cash levels (also known as the Pension Commencement Lump Sum), the anticipated scrapping of the Lifetime Allowance itself, and what this means if you have fixed protection in place. We don’t have all the answers as yet, so this episode covers what we know to date.